When will the capital gains tax exemption for secondary buyers of Sovereign Gold Bonds end?

The capital gains tax exemption for secondary buyers of Sovereign Gold Bonds will end starting April 1, 2026.

Who will receive capital gains exemption on Sovereign Gold Bonds after April 1, 2026?

Only primary subscribers who hold their Sovereign Gold Bonds until maturity will continue to receive capital gains tax exemption.

Is the annual interest on Sovereign Gold Bonds taxable?

Yes, the 2.5% annual interest paid on Sovereign Gold Bonds is fully taxable for all categories of holders.

Home / Business and Economy / Sovereign Gold Bond Tax Rules Tighten April 1

Sovereign Gold Bond Tax Rules Tighten April 1

1 Feb

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Summary

Capital gains tax exemption for SGBs ends for secondary buyers.
Only primary subscribers holding bonds till maturity get exemption.
Annual 2.5% interest on SGBs remains taxable for all investors.

Sovereign Gold Bond Tax Rules Tighten April 1

As of April 1, 2026, a significant change will impact Sovereign Gold Bond (SGB) investors. The proposed Union budget for FY27 withdraws the capital gains tax exemption for those acquiring SGBs from the secondary market. This means investors who did not subscribe directly during the initial Reserve Bank of India (RBI) issuance window, and instead purchased bonds later from other investors or exchanges, will face capital gains tax upon redemption.

This amendment to the Income Tax Act means only primary subscribers who hold their SGBs continuously until maturity will continue to enjoy full exemption from capital gains tax. The 2.5% annual interest paid on SGBs, however, remains taxable for all investors regardless of how they acquired the bonds. This development affects a large number of investors, particularly as fresh SGB issuances have ceased, leading to most trading occurring on the secondary market.