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Invested in Sovereign Gold Bond? SGBs offer tax-free early redemption within a 21-day annual window; Here’s how it works india business news

Sovereign Gold Bond: Investing in Sovereign Gold Bond (SGB) can be beneficial for a particular person investors Trying to protect their savings with gold. If there is a need to withdraw cash prematurely, investors can do so without any hassle Income tax On their benefits. premature discharge The window opens for 21 days. This is how it works.
As per the information provided by RBI in its FAQ section on SGBs, reserve Bank of India (RBI) allows early redemption of SGB, but there are clear rules to follow. Typically, the redemption window opens annually, starting from the fifth year of the SGB series. Despite the eight-year tenure of the bond, early cash-out is allowed after the fifth year coupon payment dates,
What is the time limit for submitting SGB for premature redemption to RBI?
There is an annual deadline for SGB investors to request premature redemption after five years of investment. If an investor misses this deadline, they will not be able to redeem the SGB that year and will have to wait for the next opportunity when the premature redemption window for that specific SGB opens again.
As per the FAQs provided by RBI on SGBs, investors can initiate premature redemption by approaching the concerned bank, SHCIL office, post office or agent at least thirty days before the coupon payment date.
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Mukesh Chand, senior lawyer at Economic Law Practice, told ET that investors must act within a specific time frame to request premature redemption. They must inform the concerned receiving office, bank, SHCIL or post office before the 29th day of the coupon date.
Chand explains the time frame for premature redemption of SGBs with an example. Suppose an investor has purchased SGB 2018-19 Series V tranche issued on January 22, 2019, on which interest payment date is January 22, 2024. In this case, the period for submission of request for premature redemption of SGB will be from December. 22, 2023 to January 12, 2024.
Another example could be SGB Series VI, issued on February 12, 2019, with interest payment due on February 12, 2024. To request early redemption for this series, investors must submit their request between January 12, 2024 and February 2. 2024. Chand emphasizes the importance for SGB investors to adhere to the dates notified by RBI.
Rajeev Sharma, partner, Singhania & Co, agrees with Chand’s view and further points out that SGB investors will get access to a premature redemption window starting from the fifth year of the bond, which usually coincides with the interest payment date.
Sharma further said, “Premature redemption window opens thirty days before the interest payment date and closes one day before the respective interest payment date. Investors wishing to exercise the premature redemption option should keep this in mind, as the request for premature redemption must be made within this time frame, after which the investor will have to wait for the next premature redemption window.
It is important to note that interest on SGBs is paid twice a year, and the premature redemption window for each specific SGB is available twice annually.
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Why is there a 10 day difference in SGB premature redemption timelines?
There is a gap of 10 days between the last day of premature redemption and the date of interest payment. For example, if the interest payment date for SGB 2018-19 Series V was January 22, 2024, the premature redemption window will be open from December 22, 2023 to January 12, 2024. This is a difference of 10 days from January 22. The last date for submitting SGB for premature redemption before 2024 (interest payment date), which is January 12, 2024.
Below is a table presenting the interest (coupon) payment dates of the bonds along with the last date of offering the respective SGBs for premature redemption:

RBI SGB Premature Redemption Calendar

Source: RBI Press Release
Chand further explains that as per RBI’s operational guidelines for banks, requests for premature redemption of SGBs should be submitted to the receiving office or depository at least 10 days before the next interest payment date. This requirement is for the 10-day period preceding the coupon date. If SGB is held in a demat account, the request should be sent through the Depository Participant.
He clarified that the gap of 10 days between the last date of interest payment and premature redemption of SGBs acts as a buffer period. This time allows the SGB to satisfy any additional needs of the investor.
Chand further explains that the time gap is necessary to allow the receiving office, depository participant or depository to request any additional documents, KYC proof or declaration from the SGB investor, if necessary.
He further said, “Each SGB redemption request is scrutinized to verify the correctness of the details and before submitting it to RBI through e-Kuber portal at least four days before the due date of interest payment for the concerned SGB. Should go.”

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