RBI Fixes SGB 2021-22 Series VII Premature Redemption Price at Rs 14167 per Unit
The Reserve Bank of India (RBI) has set the premature redemption price for the Sovereign Gold Bond (SGB) 2021-22 Series VII at ₹14,167 per unit, providing long-term investors with capital gains of up to 200.7% over a five-year holding period.
The early redemption window falls due on November 2, 2026, marking the completion of the mandatory five-year lock-in period from the tranche's original issue date of November 2, 2021. Under the provisions of the Government of India notification dated October 21, 2021, bondholders are permitted premature exit on coupon payment dates from the fifth year onward.
Pricing Formula and Returns
As per the scheme's statutory guidelines, the redemption price is determined based on the simple average of the closing prices of 999-purity gold published by the India Bullion and Jewellers Association Limited (IBJA) over the preceding three working days. For this tranche, the benchmark rate of ₹14,167 per unit reflects the average closing rates recorded on October 28, October 29, and October 30, 2026.
Breakdown of Investor Realisations:
- Original Issue Price: The tranche was offered between October 25 and October 29, 2021, at a nominal price of ₹4,765 per gram.
- Digital Discount Price: Retail applicants who applied online and transacted via digital payment modes received an upfront concession of ₹50 per gram, setting their net cost at ₹4,715 per unit.
- Capital Gains: Offline subscribers realise an absolute price appreciation of 197.3%, while digital investors gain approximately 200.7%.
- Additional Interest Income: Over the five-year holding tenure, investors also received semi-annual interest at the rate of 2.50% per annum on the original issue price.
Tax Treatment and Redemption Process
For individual investors in India, premature redemption executed through the RBI's window retains complete exemption from capital gains tax under Section 47 of the Income-tax Act. However, the 2.50% annual interest received over the holding tenure remains taxable under "Income from Other Sources" at the applicable slab rate.
Investors holding units in physical or demat accounts can submit premature redemption requests through their respective banks, post offices, depository participants, or the RBI Retail Direct platform. Payouts are credited directly to the registered bank account linked to the investor's bond ledger.
The rally in bullion prices over the last five years has made sovereign gold debt issuances one of the highest-performing asset classes in the Indian debt and commodities landscape, outperforming traditional fixed-income instruments by a wide margin.
