The Reserve Bank of India (RBI) has announced an early redemption of sovereign gold bonds (S G B s) issued between May 2017 and March 2020. The redemption will take place in two phases, starting from October 11, 2024, and extending to March 1, 2025. Early redemption of S G B s gives flexibility and allows investors to access their funds if needed. However, it is crucial to consider the potential drawbacks of premature redemption such as missing out on potential future gold price appreciation and the interest payments for the remaining years.
Tax implications if you hold the bonds until the end of the complete tenure: If you hold S G B s until maturity, there shall be no capital gains tax on gains on redemption. On the other hand the income tax act provides for exemption to individual on redemption/maturity of the S G B s by the RBI, since they are not regarded as a transfer and hence not chargeable to capital gains tax. Therefore, premature redemption when done through RBI, within the designated time frames/windows, does not attract capital gains tax in the hands of individuals.
Source: Business Standard
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