Sovereign Gold Bond Final Redemption On May 4: This SGB Turns Rs 1 Lakh To Rs 4.86 Lakh, 386% Returns

The final redemption date for the sovereign gold bond of 2018-19 Series-I-Issue is on May 4, 2026. The due date issue price is fixed at Rs 14,901 per unit of SGB, which results in a whopping over 386% return in a span of 8 years. If you had invested Rs 1 lakh in this SGB, your corpus would be more than Rs 4.86 lakh by now.

Sovereign Gold Bond 2018-19 Series-I-Issue Final Redemption:

As per RBI, the Gold Bond shall be repayable on the expiration of eight years from the date of issue of the Gold Bonds. Accordingly, the final redemption date of the tranche is May 04, 2026.

Further, redemption price of SGB shall be based on simple average of closing price of gold 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, RBI said that the redemption price is fixed at Rs 14,901 per unit of SGB based on the simple average of closing price of gold for the three business days i.e., April 28, April 29, and April 30, 2026.

Sovereign Gold Bond 2018-19 Series-I-Issue 386% Gains

This bond which was released on May 04, 2018, had an issue price of Rs 3,114. But RBI also offered a discount of Rs 50 to those investors who bought the SGB through online method. Accordingly, if you bought this SGB during the issue date via online, the issue price was Rs 3,064 per unit.

At the offline issue price, SGB 2018-19 series 1 has given a whopping 378.52%. But if included the online discount, the returns are breathtaking by 386.32%.

Here's how much gains you have made:

1. Final Redemption Price of Rs 14,901 - Issue Price Of Rs 3,114 = Rs 11,787 real gains on 1 unit.

2. Final Redemption Price of Rs 14,901 - Discounted Issue Price of Rs 3,064 = Rs 11,837 real gains on 1 unit.

For example: If you invested Rs 1 lakh on the issue date, then your corpus would be following:

1. Rs 1 lakh investment + 378.52% Returns = Rs 3,78,520 corpus on maturity. You gain up to RS 2,78,520 on your investment.

2. Rs 1 lakh investment + 386.32% Returns = Rs 486,320 corpus on maturity. You gain up to Rs 386,320 on your investment.

Apart from this, SGBs have a coupon rate of 2.50% which was paid half yearly. Thereby, 2.5% was paid 16 times for 8 years. Hence, in a year, investors received 5% rate per annum.

Sovereign Gold Bonds Rules & Benefits:

Sovereign gold bonds are securities denominated in grams of gold and issued by RBI on behalf of the government. They are majorly substitutes of physical gold.

These bonds are issued in the denomination of 1 gram of gold and in multiples thereof. The minimum investment in SGB is of one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April - March).

According to RBI's guidelines, there may be a risk of capital loss if the market price of gold declines. However, the investor does not lose in terms of the units of gold which he has paid for.

Further, the guidelines pointed out that the quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.

SGBs also have tax benefits. Interest on the Bonds will be taxable as per the provisions of the Income-tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.

How To Claim Sovereign Gold Bonds On Maturity?

According to RBI, on maturity, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment, published by the India Bullion and Jewelers Association Limited. Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond.

1. Firstly, an investor will be advised one month before maturity regarding the ensuing maturity of the bond.

2. Secondly, on the date of maturity, the maturity proceeds will be credited to the bank account as per the details on record.

3. In case you are required to make any changes such as revision in account number, email ids, then the investor must intimate the bank/SHCIL/PO promptly.

Disclaimer:The views and recommendations expressed are solely those of the individual analysts or entities and do not reflect the views of Goodreturns.in or Greynium Information Technologies Private Limited (together referred as "we"). We do not guarantee, endorse or take responsibility for the accuracy, completeness or reliability of any content, nor do we provide any investment advice or solicit the purchase or sale of securities. All information is provided for informational and educational purposes only and should be independently verified from licensed financial advisors before making any investment decisions.