SGB : Early Redemption (Post-Budget 2026)

General
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Hey Traders and Team Zerodha.
I called up your customer care, but the person did not have accurate knowledge about this.

I am worried about my SGBs, as they will be taxed on maturity (since I bought them from the exchange).
I hold SGBSEP28VI and SGBAUG28V bonds that mature in SEP-28 and AUG-28 respectively. Coupon date falls on 10th March and 10th February.
I know that these bonds qualify for early redemption from RBI (after 5 years from issue date- 2020-21 series).
I also know that, earlier redemption through RBI did not qualify for LTCG Tax- At maturity or Early.

Query 1. Post budget, will I have to pay LTCG if I apply for early redemption, as it will be done before April 2026. (new tax rule applies after 31st March, 2026)

Query 2. When does the actual early redemption take place. Coupon date or on the date Zerodha processes the redemption. Is there a fix date from the RBI’s end?

Query 3. Is it possible to know the price at which it will be redeemed?

I plan to book my profits in these old series (tax free) and buy the new series near the price at which these old SGBs will be redeemed.

Early response will be really appreciated, as there is not much time for me to place the redemption request.

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@Quicko

3

Hello @Rahul_Shah1

Please find our response as below:

Answer to Query 1: SGBs can be redeemed through the RBI’s premature redemption window after completion of five years, and the capital gains exemption will apply if the redemption is completed before April 2026.

Answer to Query 2 : The actual redemption occurs on the specific date notified by the RBI for the respective tranche, and not on the date when the broker processes or forwards the redemption request.

Answer to Query 3 : The redemption price cannot be known in advance, as it is determined by the RBI based on the average closing price of gold (999 purity) for the three business days immediately preceding the redemption date.

Hope, this helps!