SGB 2018-19 Series-II Final Redemption Price Set at ₹14,425: Tax on Maturity Explained
The Reserve Bank of India has fixed ₹14,425 per unit as the final redemption price for Sovereign Gold Bond 2018-19 Series-II, which completes its eight-year term today, 23 October 2026. RBI announced the price in press release 2026-2027/1369 dated 22 October 2026. As the scheme requires, the figure is the simple average of the closing price of 999-purity gold published by the India Bullion and Jewellers Association for the three business days before repayment, which this time were 19, 21 and 22 October 2026; 20 October was a holiday and drops out of the average.
The tranche was issued on 23 October 2018 under the Government of India notification F.No.4(22)-B(W&M)/2018 dated 8 October 2018. Investors subscribed between 15 and 19 October 2018 at a nominal value of ₹3,146 per gram, while those who applied online and paid digitally were allotted at ₹3,096 per gram, as set out in RBI press release 2018-2019/874 of 12 October 2018. On those numbers the maturity value works out to about 4.59 times the offline issue price and 4.66 times the online price, before the sixteen half-yearly coupons at 2.50 per cent a year that holders have collected along the way.
The price itself is a mechanical outcome of the scheme. What practitioners will be asked about this week is the tax on the ₹14,425, because this maturity falls in Tax Year 2026-27, the first year of the Income-tax Act, 2025, and the Finance Act, 2026 has redrawn the exemption for gold bonds.
Section 70(1)(x): maturity redemption is exempt only for the original subscriber
Under the Income-tax Act, 1961, redemption of a sovereign gold bond by an individual was simply not a transfer, so no capital gain arose, whoever the individual had bought the bond from. RBI's own FAQs on the Sovereign Gold Bond Scheme still describe that older position, stating that capital gains tax arising on redemption to an individual has been exempted. That answer is now incomplete.
From 1 April 2026, section 70(1)(x) of the 2025 Act, as amended by the Finance Act, 2026, keeps the exemption only where an individual subscribed to the bond at its original issue and held it continuously until maturity. The Income Tax Department addressed the change in its FAQs on Budget 2026. Two consequences follow for Series-II. Units bought on NSE or BSE, or received from another holder, lose the exemption even when they are held to the last day. And the carve-out is written for individuals, so a trust or other non-individual holder of Series-II units is outside it.
The position for the 23 October 2026 redemption therefore splits by how the units were acquired.
| Holder of SGB 2018-19 Series-II | Cost of acquisition | Tax on the ₹14,425 maturity value |
|---|---|---|
| Individual who subscribed in October 2018 and held throughout | ₹3,146 or ₹3,096 per gram | Gain exempt under section 70(1)(x) |
| Individual who bought the units on the exchange | Price paid on the exchange | Taxable capital gain; long-term at 12.5 per cent if held for more than 12 months |
| Individual who bought on the exchange within the last 12 months | Price paid on the exchange | Short-term gain taxed at the slab rate |
| Trust or other non-individual holder | Price actually paid | Outside the individual exemption; gain taxable |
The coupon is a separate matter for every one of these holders. The final half-yearly interest at 1.25 per cent of the initial investment is paid along with the principal on maturity, and like the fifteen coupons before it, it is taxable as income. RBI's FAQ also confirms that no tax is deducted at source on the bond, so nothing in the bank credit will show whether tax has been paid.
Working out the gain for a secondary-market holder of Series-II
For an investor who bought on the exchange, the arithmetic is straightforward once the purchase contract note is traced. Take, purely as an illustration, an individual who bought 50 units of Series-II on the exchange at ₹6,200 per unit in March 2024 and held them to maturity.
The maturity proceeds are 50 × ₹14,425 = ₹7,21,250. The cost is 50 × ₹6,200 = ₹3,10,000. The long-term capital gain is ₹7,21,250 − ₹3,10,000 = ₹4,11,250. At 12.5 per cent the tax is ₹51,406, and 4 per cent health and education cess adds ₹2,056, taking the outgo to about ₹53,462 before any surcharge. An original online subscriber holding the same 50 units, with a cost of 50 × ₹3,096 = ₹1,54,800, receives the same ₹7,21,250 and carries a gain of ₹5,66,450, all of it exempt.
The same 50 units therefore produce very different after-tax results depending only on where they were bought. Because there is no TDS, the secondary-market holder's tax on the October 2026 maturity has to be paid through the remaining advance tax instalments of Tax Year 2026-27 rather than left for the return.
Paperwork that decides the exemption
An investor claiming that the gain is exempt must be able to show original subscription. RBI's FAQ notes that a Certificate of Holding is issued on the date of issuance, and that document, together with the allotment in the investor's name in October 2018, is what separates an original subscription from a later purchase. For a client who holds Series-II partly from the 2018 allotment and partly from later exchange purchases, the two lots need to be separated: only the allotted lot is exempt, and the purchased lot is taxed on its own cost.
The RBI FAQ also says holders are advised about a month before maturity and that the proceeds are credited to the bank account recorded at the time of purchase. Where that account has since been closed, the holder has to inform the issuing bank, SHCIL office or post office so that the maturity proceeds reach the right account.
The contrast with a premature exit matters for advice on the tranches still running. Under the amended clause, a redemption through RBI's premature window after the five-year lock-in is not a maturity redemption, so even an original subscriber pays tax on it; the SGB 2020-21 Series VII premature redemption earlier this month worked through that case with a full computation. For Series-II, maturity has arrived and the exemption, where it applies, is intact.
The next maturity in the same year's series is SGB 2018-19 Series-III, issued on 13 November 2018, which completes eight years on 13 November 2026. RBI will announce its final price from the IBJA average of the three business days before that date, and the same split between original subscribers and exchange buyers will decide who pays tax on it.
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