Sovereign Gold Bond 2017-18 Series-VI Matures with 307% Returns, RBI to Repay Rs 12,066 per Gram

The Sovereign Gold Bond (SGB) 2017-18 Series-VI matures on November 6, 2025, eight years after issuance. The Reserve Bank of India (RBI) announced a redemption price of Rs 12,066 per gram. This yields an approximate 307% absolute return on the initial Rs 2,961 per gram investment from 2017, combining gold's price appreciation with a fixed 2.5% annual interest, outperforming physical gold and ETFs.

Redemption price is the simple average of 999 purity gold's closing prices from the India Bullion and Jewellers Association (IBJA) over the three business days before maturity.

The SGB scheme, a government initiative, promotes financial assets over physical gold imports. Bonds have an eight-year tenure, with early redemption possible after five years on interest payment dates. They are also tradable on stock exchanges, transferable, and usable as collateral for loans.

Taxation: Interest earned on SGBs is taxable. However, capital gains realized upon redemption of the bonds are exempt from capital gains tax. Capital gains from the transfer of bonds on exchanges qualify for indexation benefits.

Impact: This maturity rewards long-term SGB investors, reinforcing the scheme's attractiveness for gold investment in India and boosting confidence in government instruments. Rating: 7/10

Difficult Terms: Sovereign Gold Bond (SGB): A government security denominated in grams of gold, offering investors interest and capital gains linked to gold prices. Tranche: A part of an offering of securities or bonds, released in stages. Redemption price: The price at which an investment, such as a bond, is repaid to the holder at maturity or upon early exit. Capital appreciation: An increase in the market value of an asset over time. India Bullion and Jewellers Association (IBJA): A national body representing bullion dealers and jewelers in India, often used for setting benchmark gold prices. Indexation benefits: A tax provision that adjusts the cost of an asset for inflation, reducing the taxable capital gains.