If you're holding a Sovereign Gold Bond (SGB) and wondering whether it can be sold before the 8-year maturity period, the answer is yes. Here's a detailed look at how early redemption works, what you can earn, and the key terms involved.
Can You Sell Before Maturity?
Yes. While Sovereign Gold Bonds have an 8-year maturity period, early redemption is permitted after 5 years, but only on interest payment dates. For example, investors holding SGB 2019-20 Series V, issued in October 2019, had the option to redeem it early by 15 April 2025.
How Much Can You Earn?
- Issue Price (2019): ₹3,788 per gram
- Redemption Price (2025): ₹9,069 per gram
- Return in 5.5 years: Approximately 139 percent purely from price appreciation
- Interest: An additional 2.5 percent annual interest, credited semi-annually to your bank account
These returns combine both the market price gain and the interest earned during the holding period.
What Are the Rules for Selling?
- Lock-in period: 5 years before early redemption is allowed
- Redemption price: Determined by the average closing price of 999-purity gold over the last three working days, as published by the India Bullion and Jewellers Association (IBJA)
- Where to redeem: Through your bank, post office, or demat provider where the bond was originally purchased
Hold vs Sell: What’s Better?
If you sell now:
- You receive ₹9,069 per gram
- You retain any interest already received
If you hold until maturity:
- You continue receiving 2.5 percent interest annually
- Capital gains at maturity are completely tax-free
Selling before maturity, especially through the stock exchange, could lead to capital gains tax, depending on how long you've held the bonds and your mode of sale.
Can You Invest in SGBs Now?
Currently, the government has not issued any new SGB series recently. However, you can still invest by buying existing SGBs on the stock exchange, where they trade like shares. The price may differ from the current gold rate depending on market conditions.
