Sovereign Gold Bond 2016-17 Series IV premature redemption on this date

The premature redemption date of the Sovereign Gold Bond (SGB) 2016-17, Series IV is 17 September, the Reserve Bank of India has announced. The RBI has also stated that the redemption price for premature redemption of the SGB will be Rs 5,077 per gram. In its statement dated 9 September, the RBI had declared, “In terms of GOI Notification F.No.4(16) - W&M/2016 dated February 23, 2017 (SGB 2016-17 Series IV - Issue date March 17, 2017) on Sovereign Gold Bond Scheme, premature redemption of Gold Bond may be permitted after fifth year from the date of issue of such Gold Bond on the date on which interest is payable. Accordingly, the second due date of premature redemption of the above tranche shall be September 17, 2022.”

The redemption price of the SGB is based on the average of the closing gold price of 999 purity of the week preceding the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA).

As per the rules of the Sovereign Gold Bond scheme initiated by the RBI, investors can opt for premature redemption of the bonds after the fifth year from the date of issue on the coupon payment date. According to the RBI, premature redemption can be entertained only if the buyer approaches the concerned post office/bank at least one day prior to the coupon payment date. The proceeds will be credited to the designated bank account of the investor.

What does the premature redemption price indicate?

The SGB 2016-17 Series IV scheme had an issue price of Rs 2,893 per gram after the government had offered a discount of Rs 50 on the nominal value. On premature redemption, investors will get an amount 75.49 percent higher than the SGB issue price.

Is income tax to be paid for premature withdrawal of SGB?

There is no tax deducted at source (TDS) for the gold bonds. The capital gains earned on the time of redemption are tax-free. If you opt for premature withdrawal from the SGB scheme, you will have to pay long-term capital gains tax at 20 percent with indexation benefit.

Importance of Sovereign gold Bond Scheme:

SGBs are a substitute for holding physical gold. These government securities, denominated in grams of gold, offer several benefits and eliminate the risks associated with buying and storage of physical gold.

Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook , Twitter and Instagram .