Sovereign Gold Bond 2016 Series II final redemption is today: 3 things these SGB investors need to check before maturity

The final redemption date and price for the Sovereign Gold Bond (SGB) Scheme SGB 2016-II has been announced by the Reserve Bank of India. According to an RBI notification released on March 22, 2024, the date has been set as March 28, 2024 (March 29, 2024 being a holiday). The SGB 2016 Series II tranche was issued on March 29, 2016

The redemption price for the final redemption due today is Rs 6,601 per unit of SGB based on the simple average of closing price of gold for the week March 18-22, 2024

Also read: Sovereign Gold Bond (SGB): Final redemption price of SGB 2016 Series II announced

What are SGBs

SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.

Sovereign Gold Bond 2016 Series II maturity

If you are an investor in this SGB tranche, then here are a few important things to keep in mind.

1. Final interest payment
The Bonds carry interest at a set rate of 2.50 percent per year on the initial investment. Interest will be credited semi-annually to the investor's bank account, and the final interest will be repaid at maturity together with the principle.

2. How the final payment will be made
Both interest and redemption proceeds will be credited to the bank account furnished by the customer at the time of buying the bond. So, one should make sure to check the bank account is active mentioned in the application.

If a person has opted for ECS credit or payment through cheque, the address mentioned in the application should be valid.

In case there are changes in any details, such as, account number, email ids, then the investor must intimate the bank/SHCIL/PO promptly.

3. Procedures involved during redemption
The investor will be advised one month before maturity regarding the ensuing maturity of the bond.
On the date of maturity, the maturity proceeds will be credited to the bank account as per the details on record.

Also read: Sovereign Gold Bonds up for final redemption in 2024: Tentative dates of SGBs up for redemption this year

Procedure in the eventuality of death of an investor

According to the RBI website, “The nominee/nominees to the bond may approach the respective Receiving Office with their claim. The claim of the nominee/nominees will be recognized in terms of the provision of the Government Securities Act, 2006 read with Chapter III of Government Securities Regulation, 2007. In the absence of nomination, claim of the executors or administrators of the deceased holder or claim of the holder of the succession certificate (issued under Part X of Indian Succession Act) may be submitted to the Receiving Offices/Depository. It may be noted that the above provisions are applicable in the case of a deceased minor investor also. The title of the bond in such cases too will pass to the person fulfilling the criteria laid down in Government Securities Act, 2006 and not necessarily to the Natural Guardian.”

What are the tax implications on i) interest and ii) capital gain?

The interest on the bonds will be taxed in accordance with the terms of the Income-tax Act, 1961 (43 of 1961). The capital gains tax imposed on the redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long terms capital gains arising to any person on transfer of bond.