Does the new rule apply to existing SGB holdings?

Yes, from 1 April 2026 the exemption applies only if you subscribed in the original issue and hold to maturity. If you bought in the secondary market, or plan to redeem early, capital gains will be taxed under applicable rules. Past redemptions remain unchanged.

How are early redemptions treated after April 2026?

Premature redemptions will not enjoy the capital gains exemption. Any gain will be taxed under the prevailing capital gains framework for your holding period. This alters return math for investors planning exits via the RBI early‑redemption window or through market sales before maturity.

Are SGB interest payments affected by Budget 2026?

No. The proposal targets capital gains relief, not interest. Semi‑annual interest continues to be taxable as income, as before. Only the scope of the capital gains exemption is being narrowed to original subscribers who hold to maturity, effective from 1 April 2026.

What should secondary market buyers do now?

Reassess after‑tax returns. Avoid paying high premiums over spot, consider holding period, and compare with gold ETFs or funds for liquidity and taxation. Factor brokerage, spreads, and taxes into expected returns. If you want tax relief, consider applying in new primary issues and plan to hold to maturity.

Global Market Insights

Sovereign Gold Bonds February 2: Tax Break Only for Original Buyers

ByDanny Kontos February 2, 2026February 2, 2026

Budget 2026 India clarifies the sovereign gold bonds capital g rule: capital gains will be tax‑free only for original subscribers who hold to maturity from 1 April 2026. Buyers in the secondary market SGB segment and investors redeeming early will lose the exemption. The SGB tax change already nudged prices lower and may trim premiums over spot gold. We explain who is affected, how returns could shift, and what practical steps Indian investors can take now.