The Reserve Bank of India (RBI) on October 29 announced the final redemption price for the Sovereign Gold Bond (SGB) 2017-18 Series-V, which is due for maturity on October 30, 2025. Investors in this tranche are set to book remarkable gains of around 303% over the eight-year holding period, underscoring the long-term strength of gold as an investment asset.
In a notification issued on Tuesday, the central bank said the final redemption price for the ‘SGB 2017-18 Series-V’ (issue date October 30, 2017) has been fixed at Rs 11,992 per gram. The bond was originally issued at ₹2,971 per gram, translating into an impressive return of over three times the initial investment.
As per the terms of the Sovereign Gold Bond scheme, the bonds mature after eight years, with the redemption amount linked to the prevailing market price of gold. “The redemption price of SGB shall be based on the simple average of closing price of gold of 999 purity for the previous three business days before the redemption date, as published by the India Bullion and Jewellers Association Ltd (IBJA),” the RBI said. Accordingly, the average of gold prices from October 27 to October 29, 2025, has determined the final payout.
Premature redemption option
Alongside the final redemption announcement, the RBI also released details regarding the premature redemption of the SGB 2019-20 Series-VI (Issue date October 30, 2019). Though SGBs carry an eight-year maturity period, investors are allowed to exit after the fifth year from the date of issue on specific interest payment dates.
For investors opting for early redemption on October 30, 2025, the RBI has set the redemption price at Rs 11,992 per gram, based on the same three-day average price calculation method.
This series was issued at Rs 3,835 per gram for offline investors and Rs 3,785 per gram for those who subscribed online. Accordingly, investors will earn an absolute gain of around Rs 8,207 per gram, or approximately 217%, excluding the periodic interest component.
The RBI said, “In terms of GOI notification F.No.4(7)-B (W&M)/2019 dated September 30, 2019, premature redemption of Gold Bonds may be permitted after the fifth year from the date of issue, on the date on which interest is payable. Accordingly, the next due date for premature redemption of this tranche shall be on October 30, 2025.”
Tax-free capital gains for individual investors
One of the key attractions of the SGB scheme is the tax exemption on capital gains upon redemption. The RBI reiterated that the capital gains arising on redemption of these bonds for individual investors are fully exempt from income tax. However, the annual interest of 2.5% payable on the bonds remains taxable as per the provisions of the Income-tax Act, 1961.
“The interest on the Gold Bond shall be taxable as per the provisions of the Income-tax Act. The capital gains tax arising on redemption of these bonds to an individual is exempted,” the RBI clarified in its 2017 notification.
This feature makes SGBs particularly attractive for long-term investors seeking both wealth preservation and tax efficiency, especially in comparison to physical gold, which attracts capital gains tax and storage costs.
What investors should do
Investors planning to redeem their bonds must check the issue date and series of their SGBs to ensure eligibility for redemption – whether final or premature. Requests for redemption should be submitted through the designated channels, such as the issuing bank, Stock Holding Corporation of India Limited (SHCIL), post office, or depository participant, within the prescribed time frame.
The RBI reiterated that the redemption price is derived from the average gold price of 999 purity published by the IBJA over the last three business days prior to the redemption date.
With gold prices witnessing a sharp rise over the past few years, the Sovereign Gold Bond scheme has emerged as one of the most rewarding and tax-efficient avenues for investors. The 2017-18 tranche delivering over 300% returns reinforces the yellow metal’s role as a strategic long-term investment and a hedge against inflation and market volatility.
Financial advisors suggest that investors continue to view SGBs as a long-term store of value, balancing them within a diversified portfolio. As India’s gold investment culture deepens, the RBI’s SGB scheme continues to offer investors a transparent, secure, and cost-effective alternative to physical gold.