Does this change apply to past SGB tranches or only new ones?

The proposal targets redemptions from 1 April 2026. Original subscribers who hold to maturity would receive tax-free redemption, regardless of tranche year. Secondary buyers would not. Selling on exchange remains subject to capital gains rules applicable at sale. Watch for the final Finance Bill text and CBDT clarifications.

How could this affect premiums on listed SGBs in India?

Premiums likely compress as the market prices in taxes for secondary buyers. With fewer tax-driven trades, quotes may track spot gold more closely, and depth could thin. Investors should expect wider bid-ask spreads at times, making limit orders and patience more important when building or exiting positions.

Are SGBs still better than gold ETFs after the proposal?

It depends on your status and horizon. Original allottees holding to maturity still have a strong tax edge. Secondary buyers must compare after-tax outcomes versus ETFs, weighing coupon taxes, exit taxes, and ETF expenses. If secondary SGBs trade at a discount, that can offset future taxes better than a premium trade.

Could the proposal change before it becomes law?

Yes. Budget announcements are proposals that must pass Parliament, and rules can be refined via notifications and circulars. Track official updates and reputable coverage to confirm scope, dates, and definitions. Until enacted, treat details as subject to change and avoid decisions based solely on early interpretations.

Global Market Insights

February 03: India SGB Tax Shift Hits Secondary Market Premiums

ByHuzaifa Zahoor February 3, 2026

India’s Budget 2026 proposes a major change to sovereign gold bonds capital g treatment. From 1 April 2026, only original subscribers who hold to maturity would get the capital gains exemption, while secondary buyers lose it. Prices of secondary market SGBs have already slipped about 5%, trimming lofty premiums. We explain what this means for liquidity, pricing, and portfolio choices in India, and how investors can plan around SGB tax exemption changes without overpaying for gold exposure.