How to redeem an SGB at maturity

This guide explains the process of redeeming a Sovereign Gold Bond (SGB) at its 8-year maturity date. SGBs are issued by the Government of India under the SGB Scheme, administered by the Reserve Bank of India (RBI). Each SGB tranche has a fixed tenor of 8 years from its original issue date. At maturity, RBI redeems the bonds at the prevailing gold price and the capital gains arising from the maturity redemption are exempt from capital gains tax for all holders, including secondary market buyers who hold to maturity.

The maturity redemption process is entirely automatic for investors who hold SGBs in their demat accounts (including through Zerodha). No instruction needs to be submitted to Zerodha, CDSL, or RBI. This guide explains what happens behind the scenes and what investors should monitor.

For buying SGBs in the secondary market before maturity, see How to buy a Sovereign Gold Bond on the secondary market via Kite. For the early-exit option before the 8-year maturity, see How to redeem an SGB early (5th-year window). The encyclopedic overview of SGBs on Zerodha covers the full scheme design.

Background: maturity mechanics

The maturity date of an SGB is exactly 8 calendar years from the date of the original issue of that tranche. For example, the RBI SGB Series I issued in November 2015 matured in November 2023. The SGB Series issued in February 2021 matures in February 2029.

Maturity is independent of when you purchased the SGB. If you bought an SGB on the secondary market in 2024 that was originally issued in 2019, it matures in 2027 (8 years from 2019). You do not need to hold it for 8 years from your purchase date; the maturity clock runs from the original issue date.

Redemption price

The RBI calculates the maturity redemption price as the simple average of the closing price of 999-purity gold (24-carat, as published by the India Bullion and Jewellers Association, IBJA) for the three business days immediately preceding the maturity date.

For example, if the SGB matures on 30 November 2027 and the IBJA 999-gold prices on 25, 26, and 27 November 2027 are Rs 7,200, Rs 7,250, and Rs 7,180 per gram respectively, the redemption price per unit is:

(7,200 + 7,250 + 7,180) ÷ 3 = Rs 7,210 per unit (each unit = 1 gram)

This price may be higher or lower than the price at which you originally bought the SGB. If you bought the SGB in the secondary market at Rs 6,800 per unit and the redemption price is Rs 7,210, your gain is Rs 410 per unit. This gain is exempt from capital gains tax under Section 47(viic) of the Income Tax Act, 1961 as amended by the Finance Act, 2024.

Final coupon payment

On the maturity date, RBI also credits the final semi-annual coupon (2.5% per annum on the original issue price, prorated to the semi-annual period ending on maturity). This final coupon is credited to the linked bank account simultaneously with or just before the maturity redemption proceeds. The coupon amount is taxable as Income from Other Sources at your income tax slab rate, even though the capital gains are exempt.

Step-by-step procedure

Confirm the maturity date of your SGB holding

Before the maturity date arrives, verify the exact date of your SGB tranche.

On Zerodha Kite:

1. Log in to Kite.
2. Go to Portfolio → Holdings.
3. Find the SGB instrument (search by series name or ISIN).
4. The maturity date is typically displayed in the instrument description on Kite or can be confirmed from the SGB’s exchange listing page.

On Zerodha Console:

1. Log in to console.zerodha.com.
2. Go to Portfolio → Holdings.
3. Find the SGB by name or ISIN.
4. Cross-check the maturity date with the RBI’s SGB series list published at rbi.org.in.

From the RBI SGB series list: The RBI publishes a list of all outstanding SGB series with issue dates and maturity dates on its website (rbi.org.in → Notifications → SGB). Each tranche’s maturity date can be confirmed here.

Verify the linked bank account is active

The maturity proceeds (and the final coupon) are credited to the primary bank account linked with your Zerodha account via NEFT/RTGS from RBI through the registrar (typically the Reserve Bank of India itself acts as the registrar for SGB redemptions, coordinating with the depository).

To verify and update:

1. Log in to console.zerodha.com.
2. Go to Profile → Bank details.
3. Confirm the primary bank account number and IFSC code are correct.
4. If the account has changed, initiate a bank change request in Console. Bank changes go through CDSL verification and may take 7–10 business days; initiate at least 30 days before maturity.

For SGBs held in an RBI Retail Direct (RDGA) account, the linked bank account in the RDGA portal must be verified separately at rbiretaildirect.org.in.

No action required, RBI processes maturity automatically

This is the most important operational point for SGB investors: you do not need to submit any redemption request, form, or instruction for maturity redemption.

The process is as follows:

1. On the maturity date, RBI instructs CDSL (the depository) to extinguish the SGB units held in all demat accounts.
2. CDSL debits the SGB units from all investor accounts (including Zerodha customers).
3. RBI transfers the maturity proceeds (redemption price × units) to each investor’s linked bank account via NEFT/RTGS.
4. The final coupon, if falling on the maturity date, is credited simultaneously.

For most investors, the entire process is invisible: one morning you have SGB units in your Holdings, and the next (on or after the maturity date) the units are gone and the equivalent rupee amount is in your bank account.

For dematerialised SGBs held through Zerodha, Zerodha’s role in the maturity process is limited. Zerodha does not take any action; the demat extinguishment is handled by CDSL on RBI’s instruction. Zerodha support cannot accelerate or modify the maturity timeline.

Track the maturity credit in your bank account

On the maturity date or within one business day (if the maturity date falls on a holiday), check your primary bank account for two credits:

1. Final coupon: 2.5% per annum on the original issue price, for the 6-month coupon period ending on maturity. This is a smaller amount.
2. Principal redemption: Redemption price per unit × number of units held.

The redemption credit appears in the bank statement with a reference noting “SGB redemption” or an RBI NEFT reference. Save this bank statement entry for your income tax records.

If the credit does not appear within 2 business days of the maturity date, contact Zerodha support with your SGB ISIN and demat account number. Zerodha will escalate to CDSL if required.

Reconcile in the Annual Information Statement

After the financial year ends, download your Annual Information Statement (AIS) from the Income Tax portal (incometax.gov.in → AIS tab).

The SGB maturity redemption proceeds will appear in the AIS under Proceeds from SGB redemption or a similar category. The income tax return (ITR) must reflect this correctly:

• The capital gain (redemption price minus purchase cost) is exempt under Section 47(viic). Report the exemption in Schedule EI (Exempt Income) of the ITR, under Any other income exempt under any provision of the Income Tax Act.
• The coupon income is taxable. Report it under Income from Other Sources in the ITR. Cross-check the total coupon received during the year across all coupon payment dates from your bank statement.

Capital gains tax exemption in detail

The Finance Act, 2024 amended Section 47 of the Income Tax Act to explicitly extend the capital gains exemption on SGB maturity redemption to all holders, not only those who received primary allotment, but also investors who acquired SGBs in the secondary market.

Conditions for the exemption:

1. The SGB must be redeemed at the 8-year maturity date, not at the 5th-year early exit window.
2. The holder must be a resident Indian individual. NRIs held SGBs under different regulations, and their tax position on redemption should be verified with a tax adviser.
3. The SGB must be a bond issued under the RBI SGB Scheme (not other gold-linked instruments).

What is exempt:

The entire capital gain, whether the SGB was purchased in the primary issue or the secondary market, is exempt. There is no lock-in requirement from the investor’s purchase date; only the maturity of the bond matters.

What is not exempt:

• Coupon income (taxable at slab rate regardless).
• Capital gains from selling the SGB in the secondary market before maturity (STCG if less than 36 months; LTCG at 20% with indexation if 36 months or more).
• Capital gains from early exit via the 5th-year window (treated as capital gains, not exempt, see How to redeem an SGB early).

What can go wrong

• Bank account closed or frozen at maturity. If the primary bank account linked to Zerodha is inactive, the NEFT credit from RBI bounces. RBI and CDSL typically hold the funds and retry, but recovering them requires a formal request to RBI’s registrar. Maintain the primary bank account in good standing throughout the SGB tenor.
• SGB not visible in Holdings. In rare cases, dematerialisation issues or depository processing delays can make the SGB units disappear from Kite Holdings before the maturity proceeds arrive. This is usually a timing issue resolved within a day; if the bank credit is not received within 2 business days of maturity, raise a Zerodha support ticket.
• AIS shows taxable proceeds. The AIS may not automatically classify the SGB maturity proceeds as exempt. This is normal; the classification happens at the ITR filing stage, not in the AIS. Ensure Schedule EI is populated correctly in the ITR.
• Confusion with early-exit window. The 5th-year window is different from the 8-year maturity. Maturity redemption is fully automatic and capital gains are exempt; early exit requires an instruction and capital gains are taxable. Do not confuse the two processes.
• Multiple SGB holdings with different maturity dates. Investors with SGBs from multiple tranches must track each series’ maturity date separately. The maturity dates span across several years; a 2021 issue matures in 2029, a 2022 issue in 2030, and so on.

Related guides

• How to buy a Sovereign Gold Bond on the secondary market via Kite
• How to redeem an SGB early (5th-year window)
• SGBs on Zerodha, encyclopedic overview of the scheme
• Reserve Bank of India, issuer and administrator of SGBs
• Capital gains tax in India, for context on Section 47 exemptions

Conflict of interest disclosure

WebNotes Editorial Team has no financial relationship with Zerodha, RBI, IBJA, or any gold-related entity. This guide is for informational purposes only and does not constitute investment advice. Tax-related steps should be verified with a qualified tax adviser.

References

1. Ministry of Finance, Sovereign Gold Bond Scheme, 2023-24: Terms and Conditions Notification, S.O. [Gazette number], 2023, rbi.org.in.
2. Finance Act, 2024, Amendment to Section 47(viic) of the Income Tax Act, 1961 (extension of CGT exemption to secondary market buyers).
3. Income Tax Act, 1961, Section 47(viic), Section 56 (coupon income as other sources).
4. RBI, Operational Guidelines for Sovereign Gold Bond Scheme, rbi.org.in.
5. CDSL, Demat account services: SGB redemption procedures, cdslindia.com.
6. Zerodha Support, “SGB maturity redemption, what to expect”, support.zerodha.com.
7. IBJA, Gold price (999 purity) daily closing rates, ibja.co.
8. CBDT, Annual Information Statement: Instructions for reporting SGB proceeds in ITR, incometax.gov.in.