Sovereign Gold Bonds: RBI Announces Redemption Price At Rs 8,624 Per Unit, Check Details – News18
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The gold bond shall be repayable on the expiration of eight years from the date of issue of the gold bonds (March 17, 2025, for the 2016-17 Series IV tranche).
Introduced In November 2015, sovereign gold bonds are government securities denominated in grams of gold. The plans to close the scheme.
The Reserve Bank of India (RBI) has declared the fixed rate for the redemption of the sovereign gold bonds (SGB) from the 2016-17 Series IV tranche at Rs 8,624 per unit. The final redemption date of the tranche, which was issued on March 17, 2017, will be March 17, 2025.
“The redemption price for the final redemption due on March 17, 2025, shall be Rs 8,624 per unit of SGB based on the simple average of closing gold price for the week March 10-13, 2025, (published by the Indian Bullion and Jewellers Association),” the RBI said in a press release dated March 13.
The week was a truncated one as March 14, 2025, was a holiday on account of Holi.
The gold bond shall be repayable on the expiration of eight years from the date of issue of the gold bonds (March 17, 2025, for the 2016-17 Series IV tranche), the central bank said.
What Are Sovereign Gold Bonds?
Introduced In November 2015, sovereign gold bonds (SGBs) are government securities denominated in grams of gold. They substitute for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The SGBs are issued by the RBI on behalf of the government.
Govt Plans To Close Sovereign Gold Bonds Scheme
The government is planning to close the sovereign gold bonds scheme.
During a media interaction after the Budget 2025, Finance Minister Nirmala Sitharaman said the government is considering to close the SGB Scheme in 2025. Following her, Economic Affairs Secretary Ajay Seth also said SGBs are proving to be an expensive borrowing for the government.
So, there will be no further issue of SGBs going forward.
What Are Its Key Features?
Eligibility: Only resident individuals, Hindu Undivided Family (HUF), trusts, universities and charitable institutions could buy sovereign gold bonds.
Denominations: The bonds are denominated in multiples of gram(s) of gold with a basic unit of one gram.
Tenure: There is a holding period of eight years of SGBs with an option of premature redemption after 5th year to be exercised on the date on which interest is payable.
Minimum and Maximum Limit for Buyers: A person could buy a minimum of 1 gram of gold in SGBs, while the maximum limit is 4 kg for individuals, 4 kg for HUF, and 20 kg for trusts and similar entities per fiscal year (April-March). In the case of a joint holder, the investment limit of 4 kg is applied to the first applicant only.
Redemption Price: The redemption price will be in Indian rupees based on a simple average of the closing price of gold of 999 purity, of the previous three working days published by IBJA Ltd.
Interest Rate: The investors are compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.
KYC Norms: Know-your-customer norms are the same as that for the purchase of physical gold.
Collateral: The SGBs can be used as collateral for loans.
Tax Treatment: The interest on SGBs shall be taxable as per the provision of the Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual is exempted. The indexation benefits will be provided to long-term capital gains arising to any person on transfer of the SGB.
Tradability: SGBs are eligible for trading.
