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Aug 30, 2024
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RBI announces early redemption for SGB: Tax implications explained
The Reserve Bank of India (RBI) has announced an early redemption for Sovereign Gold Bonds (SGBs) issued between May 2017 and March 2020. The redemption process will take place in two phases, starting from October 11, 2024, and extending to March 1, 2025.
Sovereign Gold Bonds have a maturity period of eight years, but investors have the option of premature redemption after 5, 6, and 7 years.
Premature redemption
Early redemption of SGBs gives flexibility and allows investors to access their funds if needed. However, it is crucial to consider the potential drawbacks of premature redemption, such as missing out on potential future gold price appreciation and the interest payments for the remaining years.
Tax implications if you hold the bonds until the end of the complete tenure
If you hold your sovereign gold bonds until maturity, there shall be no capital gains tax on gains on redemption, in case of individuals, due to the express exemption provided in the Income Tax Act. Therefore, the gains on redemption shall be tax free.
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