The Reserve Bank of India (RBI) has fixed the premature redemption price of Sovereign Gold Bond (SGB) 2020-21 Series I at ₹14,159 per unit, with the redemption date set for October 28, 2026. The price represents an absolute gain of approximately 208.5% for investors who originally purchased the bonds online at the discounted issue price of ₹4,589 per gram.
Investors who bought the bonds at the regular issue price of ₹4,639 per gram have gained approximately 205.2%, excluding interest. In addition to the rise in gold prices, SGB holders have received fixed annual interest of 2.5% on their original investment, making the total return higher than the capital appreciation alone.
Key Takeaways
- RBI fixed the premature redemption price at ₹14,159 per gram for SGB 2020-21 Series I.
- The redemption date was October 28, 2026.
- The original issue price was ₹4,639 per gram, reduced to ₹4,589 for eligible online subscribers.
- Online subscribers earned an absolute capital gain of ₹9,570 per gram, or approximately 208.54%.
- A ₹1 lakh investment at the discounted issue price would be worth approximately ₹3.09 lakh, excluding interest.
- Investors also received 2.5% annual interest on the original investment amount.
- The revised tax rules effective April 1, 2026 make premature redemption taxable, even for original subscribers.
RBI Fixes SGB 2020-21 Series I Redemption Price at ₹14,159
The RBI announced the redemption price on October 27, 2026, for investors holding Sovereign Gold Bond 2020-21 Series I.
The tranche was originally issued on April 28, 2020. Under the Sovereign Gold Bond Scheme, investors can request premature redemption after completing five years from the issue date, provided the redemption takes place on an eligible interest-payment date.
The RBI fixed the redemption price at ₹14,159 per unit for October 28, 2026.
The price was calculated using the simple average of the closing prices of 999-purity gold for the three preceding business days, as published by the India Bullion and Jewellers Association (IBJA).
The three reference dates were October 23, October 26 and October 27, 2026.
This is a premature redemption price for this particular SGB tranche, not a universal price applicable to every Sovereign Gold Bond series.
How Much Return Have SGB 2020-21 Series I Investors Earned?
The SGB 2020-21 Series I tranche was issued at ₹4,639 per gram.
Investors who applied online and made digital payments received a discount of ₹50 per gram, reducing their effective purchase price to ₹4,589.
With the redemption price reaching ₹14,159, investors have earned substantial capital appreciation.
| Particulars | Amount |
|---|---|
| Original issue price | ₹4,639 |
| Online subscription discount | ₹50 |
| Effective online issue price | ₹4,589 |
| Premature redemption price | ₹14,159 |
| Gain for online subscribers | ₹9,570 |
| Absolute return for online subscribers | 208.54% |
| Gain at regular issue price | ₹9,520 |
| Absolute return at regular issue price | 205.21% |
These returns represent price appreciation only. They exclude interest payments and applicable taxes.
What Happens to a ₹1 Lakh SGB Investment?
For investors who subscribed online at ₹4,589 per gram, an investment of approximately ₹1 lakh would have purchased around 21.79 grams of gold exposure.
At the redemption price of ₹14,159 per gram, that investment would be worth approximately ₹3.09 lakh.
| Investment calculation | Amount |
|---|---|
| Initial investment | ₹1,00,000 |
| Value at redemption | ₹3,08,540 |
| Capital gain | ₹2,08,540 |
| Absolute return | 208.54% |
The calculation uses a proportional investment amount for illustration. Actual SGB subscriptions are made in whole units of one gram.
SGB Investors Also Earned 2.5% Annual Interest
One important feature of Sovereign Gold Bonds is that investors receive interest in addition to gold-price appreciation.
The SGB scheme offers a fixed interest rate of 2.5% per year on the original investment amount.
Interest is paid semi-annually and is not calculated on the changing market value of gold.
For example, an investor who purchased 20 units at ₹4,589 per gram invested ₹91,780.
The annual interest entitlement would be:
| Particulars | Amount |
|---|---|
| Units purchased | 20 grams |
| Original investment | ₹91,780 |
| Annual interest rate | 2.5% |
| Annual interest | ₹2,294.50 |
| Interest over 6.5 years (illustrative) | ₹14,914.25 |
The interest calculation assumes the investor received all scheduled payments over the period. Actual payment dates and amounts depend on the bond’s interest schedule.
Interest income is taxable according to the investor’s applicable income-tax rules.
How Does the RBI Calculate SGB Redemption Prices?
Sovereign Gold Bonds are government securities denominated in grams of gold. They are issued by the RBI on behalf of the Government of India.
Their redemption value is linked to the price of gold rather than a fixed repayment amount.
For premature redemption, the RBI uses the simple average of the closing price of 999-purity gold over the three preceding business days.
The reference prices are published by the IBJA.
This mechanism allows investors to receive a redemption amount linked to prevailing gold prices.
SGBs have an original tenure of eight years, but premature redemption is permitted after the fifth year on designated interest-payment dates.
For the April 2020 Series I tranche, the October 28, 2026 redemption was an early exit opportunity. Its scheduled eight-year maturity falls in April 2028.
New SGB Tax Rules: Why Premature Redemption Is Taxable
The strong returns also bring an important tax consideration.
Budget 2026 changed the capital gains exemption available on Sovereign Gold Bonds. The revised provisions took effect from April 1, 2026, applying to tax year 2026-27 and subsequent years.
Under the revised rule, the capital gains exemption is available only when an individual:
- Subscribed to the SGB at the time of its original issuance.
- Held the bond continuously from the original issue.
- Redeems it at the scheduled maturity after eight years.
The exemption does not apply to premature redemption, even when the investor originally subscribed to the bond.
It also does not apply to bonds purchased through secondary-market transactions, including cases where the investor holds them until maturity.
This means investors who redeemed SGB 2020-21 Series I on October 28, 2026, cannot claim the maturity-based capital gains exemption under the revised provisions.
For eligible long-term capital gains, the generally applicable rate is 12.5% without indexation, along with applicable surcharge and cess. The precise tax treatment should be checked against the investor’s acquisition history and individual circumstances.
Importantly, the 2.5% interest earned on SGBs remains taxable according to the investor’s applicable income-tax slab.
What Should SGB Investors Know Before Redemption?
The October 28 redemption window for this particular tranche has passed. Investors should not assume that the announced price remains available for a new premature redemption request.
For those holding other SGB series, the redemption date and price depend on the individual tranche’s issue date and eligible interest-payment schedule.
Investors should check:
- The exact SGB series and issue date.
- The next eligible premature redemption date.
- The applicable RBI redemption price announcement.
- Whether the bonds were purchased during the original issue or through the secondary market.
- The capital gains tax implications before making a redemption decision.
Investors who originally subscribed to this April 2020 tranche and continue holding it may be eligible for the revised maturity-based exemption if they satisfy the conditions and hold it until April 2028.
The Bigger Picture
The return delivered by SGB 2020-21 Series I demonstrates how gold-linked government securities can combine capital appreciation with periodic interest income. Investors benefited from the rise in gold prices while receiving a fixed 2.5% annual coupon on their original investment. The result is a substantial nominal return over approximately six-and-a-half years.
However, the revised tax rules have changed an important part of the SGB investment proposition. Premature redemption no longer carries the same capital gains exemption available to qualifying original subscribers who hold their bonds until maturity. Investors therefore need to consider taxes, liquidity requirements and gold-price movements together rather than looking at the headline return alone.
Looking Ahead
The next major milestone for SGB 2020-21 Series I is its scheduled maturity in April 2028. Investors who continue holding the bonds should monitor RBI announcements and confirm that they meet the original-subscription and continuous-holding conditions for the capital gains exemption.
For investors holding other SGB tranches, the ₹14,159 redemption price should not be used as a benchmark for every series. Each tranche has its own redemption schedule and price calculation. The broader lesson is that SGB returns depend on gold prices, interest receipts, holding period and the tax rules applicable when the bonds are redeemed.
Frequently Asked Questions
1. What is the SGB 2020-21 Series I redemption price?
The RBI fixed the premature redemption price at ₹14,159 per gram for October 28, 2026.
2. What was the original issue price of SGB 2020-21 Series I?
The original issue price was ₹4,639 per gram. Eligible investors who subscribed online and paid digitally received a ₹50 discount, reducing the effective price to ₹4,589.
3. What return did SGB 2020-21 Series I deliver?
Online subscribers earned an absolute capital appreciation of approximately 208.54%, excluding interest and taxes. Investors who paid the regular issue price earned approximately 205.21%.
4. How much would ₹1 lakh invested in this SGB be worth?
At the ₹14,159 redemption price, an investment of ₹1 lakh made at the discounted issue price would be worth approximately ₹3.09 lakh, excluding interest and taxes.
5. Do SGB investors receive interest?
Yes. Sovereign Gold Bonds carry fixed interest of 2.5% per year on the original investment amount. Interest is paid semi-annually and is taxable according to the investor’s applicable income-tax slab.
6. Is premature SGB redemption tax-free?
No. Under the revised provisions effective April 1, 2026, the capital gains exemption is restricted to qualifying individual investors who subscribed at the original issue and held the bonds continuously until their scheduled maturity. Premature redemption is taxable.
7. When will SGB 2020-21 Series I mature?
The tranche was issued on April 28, 2020, and has an eight-year tenure. Its scheduled maturity is in April 2028.
8. How is the SGB redemption price calculated?
The RBI calculates the redemption price using the simple average of the closing prices of 999-purity gold over the three preceding business days, as published by the IBJA.
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