SGB 2019-20 Series VI Premature Redemption Price ₹14,213: Why the Gain Is Now Taxable
The SGB 2019-20 Series VI premature redemption price is ₹14,213 per unit for the redemption due on 30 October 2026, the Reserve Bank of India said in Press Release No. 2026-2027/1406 dated 29 October 2026. One unit is one gram of gold, so a holder exiting 50 units today receives ₹7,10,650 in the bank account registered with the bond.
The price is the simple average of the closing price of gold of 999 purity published by the India Bullion and Jewellers Association Ltd for the three business days before the redemption date: 27, 28 and 29 October 2026. Series VI was issued on 30 October 2019, and the scheme permits early encashment after the fifth year from the date of issue, only on an interest payment date. Today is one of those dates for this tranche.
What SGB 2019-20 Series VI investors earn on exit
The tranche was priced in October 2019 at ₹3,835 per gram, with a ₹50 per gram discount for investors who applied online and paid digitally, taking their cost to ₹3,785. The RBI press release fixing the Series VI issue price records a subscription window of 21 to 25 October 2019 and a price based on IBJA rates for 16 to 18 October 2019.
Against the redemption price of ₹14,213, the price appreciation alone works out to 270.6% for an investor who paid ₹3,835 and 275.5% for one who paid ₹3,785. That is before the 2.5% annual interest the bond has paid every six months on the initial investment, which reaches the investor's bank account separately and is taxed at slab rates as and when received.
Investors who exited Series VI at the previous window in April 2026 received ₹14,931 per unit. Today's price is ₹718 lower, a fall of about 4.8%, reflecting the softer gold prices of late October. The same pattern shows in the tranche redeemed two days ago: SGB 2020-21 Series I was redeemed on 28 October 2026 at ₹14,159, based on IBJA prices for 23, 26 and 27 October.
Why the Series VI gain is taxable on premature redemption
Until 31 March 2026, an individual who redeemed an SGB with the RBI, whether at maturity or through the five-year early exit window, did not pay capital gains tax on the gold price gain. Budget 2026 narrowed that relief. As the Finance Minister's proposal reported by Business Standard put it, the exemption is now available only where the bond was subscribed by an individual at the time of original issue and held continuously until redemption on maturity. The change sits in section 70(1)(x) of the Income-tax Act, 2025 and applies to redemptions from 1 April 2026.
A premature redemption on 30 October 2026 fails the second condition even for an investor who subscribed in October 2019, because the bond is being encashed before its eight-year term ends. The gain is therefore chargeable as long-term capital gain for Tax Year 2026-27, since the bond has been held for seven years. Long-term capital gain on SGBs held for more than 12 months is taxed at 12.5% without indexation, plus applicable surcharge and cess.
The table below sets out how the three common holding situations are treated for this tranche.
| Holder of SGB 2019-20 Series VI | Exit route | Tax on gold price gain |
|---|---|---|
| Individual who subscribed in October 2019 | Premature redemption with RBI on 30 October 2026 | Taxable as long-term capital gain at 12.5% |
| Individual who subscribed in October 2019 | Holds until maturity on 30 October 2027 | Exempt under the amended section 70(1)(x) |
| Investor who bought the bond on the stock exchange | Premature redemption or maturity | Taxable, as the bond was not subscribed at original issue |
Worked example: tax on redeeming 100 units today
Take an illustration. A resident individual applied online in October 2019 for 100 units at ₹3,785 each and redeemed all of them on 30 October 2026.
- Redemption proceeds: 100 × ₹14,213 = ₹14,21,300
- Cost of acquisition: 100 × ₹3,785 = ₹3,78,500
- Long-term capital gain: ₹14,21,300 − ₹3,78,500 = ₹10,42,800
- Tax at 12.5%: ₹1,30,350
- Add 4% health and education cess: ₹1,35,564 (surcharge ignored, assuming total income below the surcharge threshold)
After tax, the investor keeps ₹12,85,736, or about ₹12,857 per unit. Had the same units been held for one more year to maturity on 30 October 2027, the entire gain would have been exempt. Ignoring interest and the time value of money, holding on would have left the investor better off unless the maturity price fell below about ₹12,857, a drop of roughly 9.5% from today's ₹14,213. That arithmetic matters for the remaining 2019-20 tranches that open for early exit over the coming months, and for any Series VI holder who did not apply this time.
What Series VI holders should do now
For investors who applied for this window, the proceeds will be credited to the bank account given at the time of applying for the bond, along with the interest due on 30 October 2026. Partial redemption is permitted in multiples of one gram, so the units actually redeemed should be matched against the holding certificate or demat statement before the gain is computed.
Because the capital gain arises on 30 October 2026, it falls into the third advance tax instalment. Individuals whose total tax liability for Tax Year 2026-27 crosses the advance tax threshold should include this gain when working out the cumulative 75% due by 15 December 2026, to avoid interest for shortfall. Salaried holders whose employer deducts TDS on salary do not escape this: the employer's TDS does not cover capital gains, and the gap has to be met through advance tax or self-assessment tax.
The cost to be claimed is the actual price paid: ₹3,835 for branch or post office applicants and ₹3,785 for those who received the online discount. Investors who bought Series VI units on the exchange must use their purchase price on the exchange, and the holding period runs from that purchase date. The redemption will be reflected in the return as a long-term capital gain on a listed security other than equity shares.
Next exit window and maturity for SGB 2019-20 Series VI
A Series VI holder who did not apply for the 30 October 2026 window has three options: wait for the next interest payment date on 30 April 2027, sell the bond on the exchange if it is held in demat form, or hold it to final maturity on 30 October 2027. Only the third route keeps the capital gains exemption, and only for an individual who subscribed at original issue. Requests for early redemption have to be lodged with the issuing bank, SHCIL office, designated post office or agent ahead of the interest payment date, and the RBI publishes the redemption price a day before each window.
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