The Union Finances 2026–27, introduced by Finance Minister Nirmala Sitharaman on 1 Feb 2026, has launched a important change in how capital good points on Sovereign Gold Bonds (SGBs) are taxed — particularly on redemption at maturity.
What Are Sovereign Gold Bonds?
Sovereign Gold Bonds are government-backed debt devices linked to gold costs. Buyers purchase them from the Reserve Financial institution of India (RBI), earn 2.5 % annual curiosity, and upon maturity (often 8 years), redeem the bond on the prevailing value of gold. Traditionally, capital good points at maturity have been utterly tax-free, making SGBs a well-liked and tax-efficient method to spend money on gold.
Sovereign Gold Bonds Capital Features Tax | Finances 2026
Earlier than Finances 2026, the rule was easy: Should you held the SGB till maturity — even when purchased on the secondary market — your capital good points at redemption have been absolutely exempt from tax.
Nevertheless, Finances 2026 has provide you with a brand new tax rule efficient from 1st April 2026;
From the upcoming tax 12 months 2026-27:
- Capital good points at maturity shall be tax-exempt ONLY if:
- You’ve gotten subscribed to the Sovereign Gold Bond on the time of the unique challenge (main issuance by RBI), and
- You held the bond repeatedly till redemption at maturity.
- Should you purchased the SGB within the secondary market, even if you happen to maintain it till maturity, your good points on redemption will not be exempt — they are going to be handled as taxable capital good points.
- Which means if you happen to purchase an SGB later from another person (as an example, from the inventory market) after which redeem it at maturity, you won’t qualify for the capital good points tax exemption. Solely authentic traders who maintain the bond till maturity will obtain the tax profit.
This modification clarifies the tax exemption’s supposed scope underneath Part 70(1)(x) of the Revenue-tax Act: that the profit is supposed to encourage long-term investing in SGBs by authentic subscribers.
SGB Secondary Market | Applicability of Capital Features Tax
Should you acquired the SGB available in the market – Going ahead, you’ll NOT get the capital-gains exemption at maturity.
Your good points (if any) on redemption shall be taxed like different capital property:
- If offered earlier than maturity:
• Lower than 12 months — short-term good points shall be taxed at slab price.
• Greater than 12 months — long-term good points shall be taxed at 12.5 % (no indexation). - If held till maturity and eligible underneath new guidelines:
• Secondary market SGB patrons can pay 12.5% LTCG tax on long-term good points even when bonds are redeemed at maturity.
What are the explanations for this variation?
The federal government’s goal with this tax tweak is to:
- Curb tax arbitrage — Beforehand, some traders purchased SGBs on the secondary market at a reduction solely to learn from tax-free redemption.
- Align the exemption with its authentic goal — Reward real long-term participation through main subscription as an alternative of buying and selling.
Proceed studying:
(Submit first revealed on : 01-Feb-2026)
