How to Redeem Sovereign Gold Bonds?

Eligibility Criteria to Invest in Sovereign Gold Bonds

The eligibility criteria for Sovereign gold bonds are as follows:

1. The investor must be an Indian resident
2. Individuals, universities, HUFs, trusts and charitable institutions can invest in SGB

How to redeem Sovereign Gold Bonds?

The bond's maturity will be notified to investors at least one month in advance. The bank account that was registered at the time of investment or that is currently associated with the investor's records will receive a direct credit of the redemption amount on the maturity date.  

suppose your email, phone number, or bank account information has changed. To guarantee an easy redemption procedure, you must update this information with the post office or Stock Holding Corporation of India Limited. 

Maximum and Minimum Limit for SGB investment?

The investor can buy Sovereign Gold Bonds in denominations of 1 gram gold and its multiples. The minimum investment in SGB is one-gram up to 4kg for an individual investor. A Hindu Undivided Family can invest in up to 4kg of SGB and a trust can hold up 20kg of gold.

The SGB holding limit applies to the first applicant in case of joint holding.

How Does SGB's Premature Redemption Operate? 

The following process shows how Sovereign Gold Bonds can be redeemed early: 

1. Eligibility to redeem early: After five years have passed since the purchase date, you may prematurely redeem your Sovereign Gold Bonds, but only on the days when interest is due. For instance, if you purchased SGBs in 2020, you could begin redeeming them in 2025, if you choose the interest-due date 

1. Redemption Price Calculation: The average closing price of 999 purity gold over the previous three working days, as issued by the India Bullion and Jewelers Association Ltd (IBJA), serves as the basis for the SGB redemption price. This guarantees that the redemption price accurately represents the gold's current market value 

1. Premature Redemption Process: Visit the bank, Stock Holding Corporation of India Ltd. (SHCIL), or post office where you purchased your bonds if you want to redeem them early. To start the redemption process, notify the relevant institution before. 

Taxes on Sovereign Gold Bond Redemption 

You must pay capital gains tax on the money you make from investing in SGBs. Profits on your SGBs are taxable to LTCG tax when you redeem them after keeping them for more than a year. Without the benefit of indexation, long-term capital gains are charged at a 12.5% tax rate. Additionally, SGB is tax-free and can be redeemed after 8 years. 

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