🪙 Sovereign Gold Bond Scheme Delivers Massive 316% Return on Maturity
The Sovereign Gold Bond (SGB) 2017–18 Series VI, issued on November 6, 2017, has officially matured today, November 6, 2025. Investors who held onto their bonds for the full eight-year term have received a staggering 316% return, excluding the semi-annual interest payouts. The Reserve Bank of India (RBI) has confirmed the final redemption price at ₹12,066 per gram.
📈 What Triggered the 316% Windfall?
💡 Redemption Price Calculation
The final redemption price was determined based on the average closing price of 999 purity gold published by the India Bullion and Jewellers Association (IBJA) over the last three business days—October 31, November 3, and November 4, 2025.
- Issue Price (Offline Investors): ₹2,945 per gram
- Issue Price (Online Investors): ₹2,895 per gram
- Redemption Price (2025): ₹12,066 per gram
- Absolute Return: ~316% (excluding interest)
This return does not include the 2.5% annual interest, which was paid semi-annually throughout the bond’s tenure.
🏦 How Investors Received Their Payouts
🔄 Automatic Redemption Process
Investors were not required to take any action to redeem their bonds. As per the scheme’s terms, maturity-based redemption is automatic, and the proceeds are directly credited to the investor’s registered bank account.
- No redemption request needed
- Funds transferred on maturity date
- RBI handles the entire process seamlessly
📜 Understanding the Sovereign Gold Bond Scheme
🏛️ Government’s Vision Behind SGB
Launched in November 2015, the Sovereign Gold Bond scheme was introduced as a strategic alternative to physical gold. Managed by the RBI on behalf of the Government of India, the scheme aimed to:
- Reduce India’s dependence on physical gold
- Curb hoarding and import burden
- Channel household savings into financial assets
📊 Key Features of SGBs
- Denominated in grams of gold
- Fixed annual interest rate of 2.5%
- Interest paid semi-annually
- Capital gains linked to gold price appreciation
- No storage or purity concerns
🪙 Performance Snapshot of SGBs Till 2025
As of March 31, 2025, the government had issued 67 tranches, raising approximately ₹72,275 crore, equivalent to 146.96 tonnes of gold. By June 15, 2025, investors had redeemed bonds worth 18.81 tonnes of gold, showcasing the scheme’s popularity and profitability.
🚫 Why the Government Halted New SGB Issues
📉 Scheme Closure in October 2023
In October 2023, the government announced the discontinuation of new SGB tranches. The decision was based on several factors:
- Objectives Achieved: Reduction in physical gold demand and increased financial asset participation.
- Rising Management Costs: Operational expenses for servicing and managing bonds had escalated.
- Alternative Investment Options: Growth of Gold ETFs, Digital Gold, and other instruments reduced the need for periodic SGB issuance.
Despite the halt, existing bonds remain valid and can be held until maturity or redeemed early as per scheme guidelines.
💸 Tax Implications for SGB Investors
🧾 Interest Income is Taxable
While the capital gains on redemption are tax-free for individual investors, the 2.5% annual interest earned during the bond’s tenure is fully taxable.
- Interest credited every 6 months
- Taxed under “Income from Other Sources”
- Tax liability depends on individual’s income slab
✅ Capital Gains Exemption
If held till maturity, the capital gains from SGBs are exempt from capital gains tax, making them a highly tax-efficient investment option.
📊 Comparative Analysis: SGB vs Other Gold Investments
🥇 Why SGBs Outperformed
| Investment Type | Return (8 Years) | Tax Benefit | Interest Income | Storage Risk |
|---|---|---|---|---|
| Sovereign Gold Bond | ~316% | Yes | 2.5% annually | None |
| Physical Gold | ~300% | No | None | High |
| Gold ETF | ~290% | No | None | Low |
| Digital Gold | ~295% | No | None | Low |
📌 Key Takeaways for Investors
- SGBs have proven to be one of the most lucrative government-backed investment schemes in recent years.
- The automatic redemption process ensures hassle-free maturity payouts.
- Tax-free capital gains and fixed interest income make SGBs a unique hybrid investment.
- With the scheme discontinued, investors may explore Gold ETFs or Digital Gold for future allocations.
❓ FAQs
🤔 What was the issue price of SGB 2017-18 Series VI?
The issue price was ₹2,945 per gram for offline investors and ₹2,895 for online applicants.
📅 When did the bond mature?
The bond matured on November 6, 2025, completing its 8-year tenure.
💰 How much return did investors earn?
Investors earned approximately 316% return, excluding the 2.5% annual interest.
🏦 Is redemption automatic?
Yes, redemption is processed automatically by RBI, and funds are credited to the registered bank account.
🧾 Is the interest income taxable?
Yes, the 2.5% annual interest is taxable under “Income from Other Sources”.
🏁 Conclusion: Sovereign Gold Bond Proves Golden for Long-Term Investors
The maturity of the SGB 2017-18 Series VI marks a milestone in India’s financial landscape. With a 316% return, tax-free capital gains, and secure government backing, the scheme has delivered exceptional value to investors. As the government phases out new issuances, the legacy of SGBs continues to shine as a benchmark for gold-linked financial instruments.
External Source: Patrika Report
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