SGB 2020-21 Series X opens for early redemption, delivers over 175% gains

Central bank set premature redemption price for tranche at Rs 14,130 per unit

Investors in Sovereign Gold Bond (SGB) 2020–21 Series X can now exit with gains of over 175 per cent, as the tranche opens for premature redemption following its fifth anniversary.

 

The Reserve Bank of India (RBI) has enabled early redemption in line with the scheme’s rules, with January 19, 2026 being the eligible interest payment date.

 

Under the SGB framework, bonds can be redeemed before maturity only after the fifth year on dates when semi-annual interest is paid. This window allows investors to monetise gains without waiting for the full eight-year tenure.

Redemption price and how it is fixed

The RBI has set the premature redemption price for this tranche at Rs 14,130 per unit. The price was fixed from the simple average of the closing price of gold of 999-purity for the previous three business days, as published by the India Bullion and Jewellers Association.

 

For this redemption cycle, gold prices for January 13, 14 and 16, 2026 were considered. Once redeemed, the amount is credited directly to the investor’s registered bank account.

Returns for investors

The SGB 2020–21 Series X was issued in January 2021 at a price of around Rs 5,117 per unit. At the current redemption price, investors have earned a capital appreciation of nearly Rs 9,000 per unit, translating into gains of about 175 per cent from gold price movement alone.

 

This implies that the investment value has almost tripled over five years. In addition to this, investors have earned 2.5 per cent annual interest, paid semi-annually, on the issue price throughout the holding period.

 

For instance, an investor who invested Rs 50,000 at the time of issue will receive almost Rs 1.38 lakh on premature redemption, excluding the cumulative interest received over the years.

How premature redemption works

Premature redemption requests must be submitted through the bank, post office, or agent from whom the bond was originally purchased. Investors are typically required to place the request a few days before the interest payment date to ensure timely processing.

Key points to note:

• Early exit is allowed only after five years
• Redemption dates coincide with interest payment dates
• Proceeds are credited directly to the linked bank account

Tax treatment and scheme status

Interest earned on SGBs is taxable, according to the Income Tax Act. However, capital gains arising from redemption with the RBI are exempt from capital gains tax for individual investors. Capital gains from selling SGBs on exchanges, if any, are eligible for indexation benefits.

 

The Sovereign Gold Bond scheme, launched in 2015, has been discontinued for new issuances. The government said in Budget 2025–26 that no fresh tranches will be issued, citing the high cost of borrowing under the scheme. Existing bonds, however, will continue to run their course until maturity or redemption.