Missed Sovereign Gold Bond premature exit on April 16? Here's what you need to know

Investors who missed the April 16, 2025, premature redemption of Sovereign Gold Bond 2017-18 Series III won't lose out entirely. Bonds continue to accrue 2.5% interest annually, with options to hold until October 2025 maturity or trade in secondary markets.

The Sovereign Gold Bond (SGB) 2017-18 Series III was scheduled for premature redemption on April 16, 2025, with the Reserve Bank of India (RBI) setting the redemption price at Rs 9,221 per unit. This redemption offered investors a robust 211.1% return, excluding interest, on their initial 2017 investment of Rs 2,964 per gram. However, for those who missed the chance to redeem, the bonds remain valuable. 

Not opting out means the bond will continue to earn a 2.5% annual interest, disbursed biannually. Investors can either wait for the final maturity in October 2025 or choose to sell the bonds in the secondary market, albeit at potentially different pricing from the RBI's redemption rate due to variability in market demand and liquidity.

The RBI said in a circular dated April 15, 2025: “The next due date of premature redemption of the Series III of SGB 2017-18 tranche shall be April 16, 2025. Further, the redemption price of SGB shall be based on the simple average of closing gold price of 999 purity of previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA). Accordingly, the redemption price for premature redemption due on April 16, 2025, shall be Rs 9221 per unit of SGB based on the simple average of closing gold price for the three business days i.e., April 09, April 11, and April 15, 2025.”

SGB tenure

Sovereign Gold Bonds have an 8-year tenure, but the government permits early exit starting from the fifth year, exclusively on interest payment dates. For the 2017-18 Series III bonds, issued on October 16, 2017, the initial premature redemption opportunity arose on October 16, 2022. The recent opportunity was on April 16, 2025. Missing these windows means maintaining the bond until maturity, which still ensures a return based on the prevailing gold prices at that time. Experts recommend keeping track of these critical dates and consulting financial institutions well in advance to plan redemption. 

According to official guidelines, the RBI calculates the redemption price using the average closing price of gold (999 purity) over the last three working days preceding the redemption date. For the recent April 16, 2025, redemption, this calculation used prices from April 9, April 11, and April 15, with April 10 being a public holiday. Investors who opted for redemption through their bank or demat service providers received this price. For those who missed out, the option to sell on the stock exchange remains, though this might not match the RBI's redemption price due to differing market conditions. 

Despite the cessation of new SGB issuances, as declared in the Union Budget 2025, existing bonds continue to function under the previously established terms, redeemable on schedule or during eligible early redemption dates. This ensures that investors with existing holdings are not disadvantaged by the policy change. Thus, it remains crucial for investors to stay informed about upcoming interest dates across their SGB holdings to optimise their financial strategies. 

Experts advise checking with your bank or depository participant well in advance of such dates to secure a favourable redemption process. Even if investors miss a premature exit window, the bonds' continued accrual of interest and the final maturity payout serve as significant benefits. By staying vigilant and informed, bondholders can effectively manage their SGB investments to align with their financial objectives. 

Tax implications: Redemption vs secondary sale

The capital gains tax exemption is only applicable to individual investors who redeem through the RBI's official window.
Companies, Hindu Undivided Families (HUFs), and other entities do not qualify for this exemption.
Even individuals selling Sovereign Gold Bonds (SGBs) on the stock exchange are subject to capital gains tax, resulting in the loss of this tax benefit.

What should you consider as an investor?

If you are an individual investor holding the 2017-18 Series III SGBs, you have already experienced substantial returns, along with interest income. With the redemption price set at Rs 9,221 on April 16, this presents a lucrative opportunity to cash out, particularly if you are looking to reallocate funds or decrease your exposure to gold.

However, if you anticipate a further increase in gold prices by October 2025, holding onto the SGBs until their final maturity could yield greater returns.