Recently, after the reduction in import duty in the budget, there was a big fall in the price of gold, but after this, now gold has again reached close to 70 thousand rupees. Meanwhile, the government has announced the final redemption price of another tranche of Sovereign Gold Bond. Its price is Rs 6,938 per gram. The government has fixed the average price from July 29 to August 2 as the redemption price. This tranche of Sovereign Gold Bond was released on 5 August 2016.
The Reserve Bank of India had released gold under this tranche in August 2016 at a price of Rs 3,119 per gram. In such a situation, investors who invested money under SGB have got good returns. Till the completion of maturity, it has given more than double returns on gold to the investors. According to calculations, this scheme has given a return of 122 percent in 8 years.
According to RBI rules, any investor in Sovereign Gold Bond can encash the profit by selling gold prematurely. In such a situation, after the announcement of the redemption price of gold bonds by RBI, if someone wants to sell gold under SGB now, he will get 2.2 times the money. Therefore, if someone had invested Rs 1 lakh in Sovereign Gold Bond 2016 during this period, he would have got Rs 2.22 lakh today.
How much fixed interest is available?
Under this scheme, investors are given a fixed return of 2.75 percent. In such a situation, investors have got a total return of 144 percent in eight years. That means there has been a CAGR of 12 percent. The redemption date has been fixed as 5th August 2024.
How to do SGB premature redemption?
For SGB premature redemption, investors can approach the bank/Stock Holding Corporation of India Limited (SHCIL) office/post office/agent 30 days before the coupon payment date. After the request is accepted, money will be sent to the given bank account. Premature payment and interest are paid within 10 days.
Tax on premature withdrawal
Sovereign gold bond returns are divided into two types. Capital benefit and half yearly interest income received on bond maturity. RBI says that the interest on the bonds will be taxable as per the provisions of the Income Tax Act, 1961 (43 of 1961). An individual is exempted from capital gains tax arising on redemption of SGBs. Indexation profit will be given on long term capital gain arising to any person on transfer of bonds. TDS is not applicable on this bond.