NEW DELHI: Saddled with outstanding dues of over Rs 18.5 lakh crore on Sovereign Gold Bonds (SGBs), the government has decided to withdraw the capital gains tax exemption for investors who purchase SGBs from the secondary market.
In her Budget speech, Finance Minister Nirmala Sitharaman said that the exemption from capital gains tax on redemption of SGBs will now be available only to individuals who subscribe to the bonds at the time of the original issue and hold them continuously until maturity.
“It is also proposed to provide that this exemption applies uniformly to all issuances of Sovereign Gold Bonds by the Reserve Bank of India,” she said. Section 70(1)(x) of the Income Tax Act currently provides an exemption from capital gains tax on income arising from the redemption of Sovereign Gold Bonds issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015.
SGBs have been issued by the RBI in multiple series over the years, with each series treated as a separate issuance.
To ensure uniform application of the exemption across all such issuances and to align the provision with its intended scope, the government has proposed amending the Income Tax Act to clarify that the exemption will apply only where the SGB is subscribed to at the time of original issue and held continuously until redemption on maturity.
These amendments will take effect from April 1, 2026, and will apply from the assessment year 2026–27 onwards.