SGB 2021-22 Series V premature redemption today: ₹4,740 investment becomes ₹15,295, giving investors 223% gain

Investors holding Sovereign Gold Bond (SGB) 2021-22 Series V are set to receive a substantial payout as the tranche becomes eligible for premature redemption on 17 August 2026. The Reserve Bank of India (RBI) has fixed the premature redemption price at ₹ 15,295 per unit, compared with the issue price of ₹ 4,740 for investors who subscribed online and ₹ 4,790 for other investors.

That means an investor who bought the bond online at ₹ 4,740 will see an absolute capital gain of about 223%, or ₹ 10,555 per unit. For an investor who paid the regular issue price of ₹ 4,790, the gain works out to about ₹ 10,505 per unit, translating into an absolute return of around 219%.

For example, 10 units bought online for ₹ 47,400 would be worth ₹ 1,52,950 at the premature redemption price, giving a capital gain of ₹ 1,05,550. This calculation does not include the 2.5% annual interest that SGB investors received separately during the holding period.

SGB 2021-22 Series V was issued on 17 August 2021. Under the SGB framework, premature redemption is permitted after five years from the date of issue, on the date on which interest is payable. RBI's premature redemption calendar for April-September 2026 lists 17 August 2026 as the redemption date for this tranche.

The ₹ 15,295 redemption price is based on the simple average of the closing price of 999-purity gold for the three business days preceding the redemption date. For this tranche, the relevant dates were 12, 13 and 14 August 2026. RBI uses the gold prices published by the India Bullion and Jewellers Association (IBJA) for determining the premature redemption price.

There is, however, an important point for investors looking to exit today. The redemption date is 17 August, but the request submission window for this tranche ran from 17 July to 7 August 2026. Therefore, investors who did not submit their request within the prescribed window cannot simply place a fresh premature redemption request on the redemption date.

SGBs also carry a fixed interest rate of 2.5% per annum, payable semi-annually. This interest is separate from the gain arising from the rise in the gold-linked redemption price and is taxable at the investor's applicable income-tax rate.

The tax treatment of SGBs has changed from 1 April 2026. The Union Budget 2026 amended the capital gains exemption so that it is available only when the SGB was subscribed to at the time of original issue and is held continuously until maturity. In other words, the exemption is tied to holding the bond for its full eight-year term, rather than simply holding an originally issued SGB for five years and redeeming it prematurely.

This makes the tax treatment relevant for investors receiving the ₹ 15,295 premature redemption value today. Unlike a redemption at the end of the eight-year maturity period by an eligible original subscriber, a premature redemption after 1 April 2026 does not qualify for the capital gains exemption. Long-term capital gains on SGBs are generally taxed at 12.5% without indexation, subject to the applicable provisions.

Therefore, the headline 223% gain should not be interpreted as the investor's post-tax return.