Budget 2026: Sovereign Gold Bonds Get Tax Clarity; No Tax Exemption On Secondary Market Purchases

Capital Gains Exemption For Sovereign Gold Bonds Tightened In Budget 2026–27: The government has proposed a significant change to the capital gains tax treatment of Sovereign Gold Bonds (SGBs) as part of the Union Budget 2026–27 speech, narrowing the scope of the long-standing tax exemption available to investors.

Exemption Limited To Original Individual Subscribers

Under the proposal announced in the Budget 2026–27 speech, the exemption from capital gains tax on redemption of Sovereign Gold Bonds will now be available only if the bonds are subscribed to by an individual investor at the time of original issue. In addition, such bonds must be held continuously until redemption on maturity to qualify for the exemption.

This marks a clear shift from the earlier framework, under which the capital gains

exemption was available more broadly on redemption, including in cases where bonds had changed hands through transfer. The proposed change is aimed at aligning the tax benefit more closely with the original policy intent of encouraging long-term household investment in gold-linked financial instruments rather than secondary market trading.

Uniform Rule Across All Sovereign Gold Bond Issuances

The Budget proposal also clarifies that the revised exemption condition will apply uniformly across all issuances of Sovereign Gold Bonds made by the Reserve Bank of India. This removes any ambiguity between older and newer tranches of SGBs and establishes a consistent tax treatment framework.

According to the Budget speech, the intent is to bring certainty and simplicity to the tax regime governing SGBs, while ensuring that the exemption benefits genuine long-term individual investors who subscribe at issuance and remain invested until maturity.