Budget 2026: Big announcement on Sovereign Gold Bond, tax exemption will change; New rules will be implemented from this day, who will be affected?
New Delhi A major tax change was proposed for those investing in gold in Budget 2026. The government has decided to clarify and limit the rules for capital gains tax exemption on Sovereign Gold Bond (SGB). These bonds are issued by the Reserve Bank of India (RBI) and their price is linked to the price of gold.
Till now the rule was that if the investor held the SGB till maturity, then the capital gain on redemption was tax free. This provided clear benefits to investors, whether they purchased the bonds directly at the time of issue or later from the market.
But there was an ambiguity in the law whether the same tax exemption would be available on SGBs purchased from the secondary market? Confusion remained due to different interpretations.
So tax exemption will not be available on maturity
Now the government has proposed amendments to the Income Tax Law. Under the new rules, capital gains tax exemption will be available only to those investors who had subscribed to SGB at the time of its original issue and held it till maturity without selling. That is, those who have purchased bonds from the stock market or other investors will not get tax exemption on maturity.
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The new rule will come into effect from April 1, 2026
This new rule is proposed to be implemented from April 1, 2026 and will be effective from assessment year 2026-27. This means that the date and manner of purchase of investments will become very important in the upcoming tax return.
The objective of the government is clear. The scheme was meant to promote long-term investments and not trading. Therefore, the tax benefits are now being limited only to genuine, early investors.
This is a big signal for investors that now while buying SGB, not only the price of gold but also the method of purchase will decide the tax savings.
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