Sovereign Gold Bond 2020–21 Series-I: Investors to receive Rs 12,198 per gram, 166% gain, on early redemption
The RBI said the redemption price has been determined based on the simple average of closing prices of gold (999 purity) for the three business days preceding the redemption date — October 23, 24, and 27, 2025 — as published by the India Bullion and Jewellers Association Ltd (IBJA).
- Oct 28, 2025,
- Updated Oct 28, 2025 1:37 PM IST
Investors in the Sovereign Gold Bond (SGB) 2020–21 Series-I will receive Rs 12,198 per gram on premature redemption due October 28, 2025, according to data released by the Reserve Bank of India (RBI). The redemption value represents a 165.8% gain over five years from the issue price of Rs 4,589 per gram, excluding the 2.5% annual interest paid semi-annually under the scheme.
The RBI said the redemption price has been determined based on the simple average of closing prices of gold (999 purity) for the three business days preceding the redemption date — October 23, 24, and 27, 2025 — as published by the India Bullion and Jewellers Association Ltd (IBJA).
As per the government notification dated April 13, 2020, early redemption of SGBs is permitted after the fifth year from the date of issue and only on the interest payment dates. The Series-I tranche was issued on April 28, 2020, making it eligible for early encashment in October 2025. Investors can redeem their holdings through banks or depository participants, with proceeds credited directly to their linked accounts.
SGB overview
The Sovereign Gold Bond scheme, launched in 2015, was designed to reduce the country’s reliance on physical gold imports while offering investors a secure and convenient means to gain exposure to the precious metal. The bonds are government-backed securities denominated in grams of gold, providing returns linked to market prices along with a fixed interest component.
According to Minister of State for Finance Pankaj Chaudhary, as of March 31, 2025, the government had mobilised 146.96 tonnes of gold worth around Rs 72,275 crore through 67 tranches of SGBs since inception. Of this, approximately 18.81 tonnes had been redeemed by investors as of June 15, 2025.
Chaudhary noted that the sharp rise in gold prices amid geopolitical tensions and global uncertainties has increased returns for investors but also raised borrowing costs for the government under the SGB programme.
Performance and benefits
SGBs offer investors dual benefits — capital appreciation from rising gold prices and a fixed 2.5% annual interest, payable semi-annually. The combination of steady income and market-linked returns has made the scheme a preferred choice among long-term savers. In addition, capital gains on SGBs are tax-free at maturity, adding a significant advantage compared with other gold investment instruments.
Gold prices have surged in recent months as investors seek safety amid ongoing geopolitical risks and volatile global markets. The RBI’s latest bulletin highlighted that strong central bank purchases and safe-haven demand have pushed international gold prices higher, benefiting SGB holders.
Other gold investments
A recent analysis by Sujit Bangar, founder of TaxBuddy.com, compared the real-world costs and returns of different gold investment avenues — including jewellery, coins, Gold Exchange Traded Funds (ETFs), and SGBs. His findings showed that SGBs significantly outperform other forms of gold investments once costs and taxes are factored in.
Bangar’s data indicated that for an investment of Rs 1 lakh, physical gold in the form of coins or jewellery generates lower compounded returns due to GST, making charges, and locker fees, while SGBs preserve the full value of investments.
Over a five-year period, physical coins yielded a CAGR of 5.19%, jewellery about 3.66%, Gold ETFs 8.76%, and SGBs an impressive 10.59%, excluding additional tax benefits.
“SGBs stand out because they involve no GST, no making charges, and no storage cost,” Bangar said. “They offer 2.5% annual interest, and on maturity, the capital gains are tax-free.”
Tax and liquidity factors
Physical gold and ETFs attract a 12.5% long-term capital gains tax (LTCG) if held beyond 24 and 12 months, respectively. Shorter holding periods invite taxation at the investor’s income slab rate. By contrast, SGBs enjoy a complete exemption from LTCG at maturity, though the semi-annual interest payments are taxable as regular income.
Liquidity remains a differentiating factor. While ETFs can be traded intraday, they are affected by tracking errors and bid-ask spreads. Physical gold is easy to sell but often at a discount to market value. SGBs, though tradable on stock exchanges, typically have lower secondary market volumes and trade at a premium or discount depending on prevailing gold prices and interest expectations.
Overall, the RBI’s October 28 redemption highlights the growing maturity of India’s gold investment ecosystem, where financial instruments like SGBs are increasingly complementing — and in some cases replacing — traditional forms of gold ownership.
Investors in the Sovereign Gold Bond (SGB) 2020–21 Series-I will receive Rs 12,198 per gram on premature redemption due October 28, 2025, according to data released by the Reserve Bank of India (RBI). The redemption value represents a 165.8% gain over five years from the issue price of Rs 4,589 per gram, excluding the 2.5% annual interest paid semi-annually under the scheme.
The RBI said the redemption price has been determined based on the simple average of closing prices of gold (999 purity) for the three business days preceding the redemption date — October 23, 24, and 27, 2025 — as published by the India Bullion and Jewellers Association Ltd (IBJA).
As per the government notification dated April 13, 2020, early redemption of SGBs is permitted after the fifth year from the date of issue and only on the interest payment dates. The Series-I tranche was issued on April 28, 2020, making it eligible for early encashment in October 2025. Investors can redeem their holdings through banks or depository participants, with proceeds credited directly to their linked accounts.
SGB overview
The Sovereign Gold Bond scheme, launched in 2015, was designed to reduce the country’s reliance on physical gold imports while offering investors a secure and convenient means to gain exposure to the precious metal. The bonds are government-backed securities denominated in grams of gold, providing returns linked to market prices along with a fixed interest component.
According to Minister of State for Finance Pankaj Chaudhary, as of March 31, 2025, the government had mobilised 146.96 tonnes of gold worth around Rs 72,275 crore through 67 tranches of SGBs since inception. Of this, approximately 18.81 tonnes had been redeemed by investors as of June 15, 2025.
Chaudhary noted that the sharp rise in gold prices amid geopolitical tensions and global uncertainties has increased returns for investors but also raised borrowing costs for the government under the SGB programme.
Performance and benefits
SGBs offer investors dual benefits — capital appreciation from rising gold prices and a fixed 2.5% annual interest, payable semi-annually. The combination of steady income and market-linked returns has made the scheme a preferred choice among long-term savers. In addition, capital gains on SGBs are tax-free at maturity, adding a significant advantage compared with other gold investment instruments.
Gold prices have surged in recent months as investors seek safety amid ongoing geopolitical risks and volatile global markets. The RBI’s latest bulletin highlighted that strong central bank purchases and safe-haven demand have pushed international gold prices higher, benefiting SGB holders.
Other gold investments
A recent analysis by Sujit Bangar, founder of TaxBuddy.com, compared the real-world costs and returns of different gold investment avenues — including jewellery, coins, Gold Exchange Traded Funds (ETFs), and SGBs. His findings showed that SGBs significantly outperform other forms of gold investments once costs and taxes are factored in.
Bangar’s data indicated that for an investment of Rs 1 lakh, physical gold in the form of coins or jewellery generates lower compounded returns due to GST, making charges, and locker fees, while SGBs preserve the full value of investments.
Over a five-year period, physical coins yielded a CAGR of 5.19%, jewellery about 3.66%, Gold ETFs 8.76%, and SGBs an impressive 10.59%, excluding additional tax benefits.
“SGBs stand out because they involve no GST, no making charges, and no storage cost,” Bangar said. “They offer 2.5% annual interest, and on maturity, the capital gains are tax-free.”
Tax and liquidity factors
Physical gold and ETFs attract a 12.5% long-term capital gains tax (LTCG) if held beyond 24 and 12 months, respectively. Shorter holding periods invite taxation at the investor’s income slab rate. By contrast, SGBs enjoy a complete exemption from LTCG at maturity, though the semi-annual interest payments are taxable as regular income.
Liquidity remains a differentiating factor. While ETFs can be traded intraday, they are affected by tracking errors and bid-ask spreads. Physical gold is easy to sell but often at a discount to market value. SGBs, though tradable on stock exchanges, typically have lower secondary market volumes and trade at a premium or discount depending on prevailing gold prices and interest expectations.
Overall, the RBI’s October 28 redemption highlights the growing maturity of India’s gold investment ecosystem, where financial instruments like SGBs are increasingly complementing — and in some cases replacing — traditional forms of gold ownership.