If you want to exit, act quickly.
The Reserve Bank of India’s rules are as follows: Request for premature redemption can only be entertained if the investor approaches the bank/post office at least one day before the coupon payment date.
Experts suggest providing a 10-day buffer. The proceeds will be credited to the bank account you provided while applying.
Who should stay put?
If you don’t need the money, stay put as experts believe gold’s price could rebound.
Ajay Kedia, director, Kedia Advisory, says, “There is ample scope for gold to scale its previous highs once again for several reasons: Increased liquidity due to global stimulus measures, Covid-related uncertainty, vaccine-related issues in Europe, global bankers projecting 5-6 per cent fall in the US dollar, and inflation concerns.”
In short, the bearish sentiment towards gold could change over the medium term.
Pay tax on early exit
SGBs enjoy special tax treatment, which makes it attractive to hold it till maturity. Gopal Bohra, partner, N.A. Shah Associates, says, “No capital gain tax is payable by an individual on redemption of SGBs on maturity after eight years.”
On the other hand, if you redeem after the fifth year, your capital gains will be taxed.
“In case of early redemption/encashment of the bond after five years, the long-term capital gains will be taxed at 20 per cent with indexation plus surcharge and cess,” says Bohra.