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If you have also invested money in the Sovereign Gold Bond (SGB), then this news will bring a big smile to your face. Those who had expressed faith in this scheme of the government about five years ago must be very happy with their decision today. The Reserve Bank of India (RBI) has announced the price of premature redemption for two series of SGB, and in this, investors have got a bumper return of up to 20 percent per annum, much more than expected.

This return is a big lesson for those who still consider buying gold and keeping it in the vault as the best investment. Let us understand what this whole news is and how SGB is giving you double the benefit of gold.

What is this great news?

On Monday, August 11, 2025, the RBI has fixed the price of premature redemption for two different installments of SGB. These are the installments:

SGB 2019-20 Series IX, which was issued in February 2020.

SGB 2020-21 Series V, which was issued in August 2020.

According to the RBI, investors of these two installments can withdraw money by selling their bonds for Rs 10,070 per gram.

Now, understand the whole math of profit.

The real fun of any investment is in understanding its returns. These installments of SGB have made investors rich.

20% return

When SGB 2019-20 Series IX was issued in February 2020, its issue price was Rs 4,070 per gram. Today, after five years, its redemption price is Rs 10,070. This means that investors got a compound average growth rate (CAGR) return of 20% annually. This is much more than any fixed deposit or traditional investment.

The second installment also gave great profit.

At the same time, the issue price of SGB 2020-21 Series V issued in August 2020 was Rs 5,334 per gram. On this, too, investors have had a strong CAGR return of 13.5% in 5 years.

Icing on the cake: Extra interest of 2.5%

The most special thing about SGB is that it not only gives you the benefit of rising gold prices. On this, you also get a fixed interest of 2.5% every year. This interest is deposited in your bank account every six months. This means that the 20% and 13.5% returns mentioned above have been received only from the increase in gold prices; the 2.5% interest is on top of it. This is the benefit that you never get in physical gold, gold ETF, or gold mutual fund.

Why is SGB the smartest way to invest in gold?

Sovereign Gold Bond is a digital gold backed by the government. You do not get gold, you just get its certificate or entry in the demat account. It has many benefits:

Double tax savings
The 2.5% annual interest on SGB is added to your income and is taxed according to your slab. But the biggest benefit is its maturity. If you hold the bond till maturity of 8 years or premature redemption after 5 years, then you do not have to pay any tax on the profit (capital gain) made due to the increase in gold prices. This is its biggest feature.

How is the price decided?
RBI does not decide the redemption price on its own. It is decided on the basis of the average closing price of 999 purity gold in the three business days just before the redemption date, which is published by the India Bullion and Jewelers Association (IBJA).

Experts believe that due to the ongoing geopolitical tensions around the world and the declining trust in the US dollar, gold prices may continue to rise. In such a situation, investing in SGB is not only safe but also very beneficial.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.