Budget 2026 SGB Update: Held RBI-Issued SGBs Over 5 Years; Redeem Before April 1 or Wait Until April 1?

Investors who hold Sovereign Gold Bonds (SGBs) issued by the Reserve Bank of India beyond 5 years face a key decision regarding redemption or sale, as tax exemptions change effective April 1, 2026. 

Tax treatment for primary subscribers 

Primary subscribers who bought SGBs directly from RBI can redeem on maturity at the end of eight years without paying capital gains tax.  

Premature redemption before April 1, 2026, also remains tax-free. After this date, premature redemption will be taxable at 12.5% as long-term capital gains. Holding until maturity continues to offer tax exemption. 

Selling SGBs on the secondary market 

If a primary subscriber sells SGBs in the secondary market, gains are taxed at 12.5% as long-term capital gains regardless of the sale date.  

The tax exemption applies only if the bond is held until maturity and redeemed by RBI. Secondary market buyers face capital gains tax on sale, irrespective of holding period. 

Read More: Union Budget 2026: Finance Bill 2026 Tightens Tax Exemption Rules on Sovereign Gold Bonds, Prices Drop 10%! 

Secondary market buyers: maturity redemption taxed 

Investors who bought SGBs from the secondary market will no longer receive tax exemption on maturity proceeds from April 1, 2026.  

Any redemption or sale, whether before or after this date, attracts long-term capital gains tax at 12.5% if held over 12 months. Short-term gains apply for holdings under 12 months. 

Conclusion 

Primary subscribers retain tax exemption on maturity redemptions regardless of April 1, 2026, date. Premature redemption before this date remains tax-free. Secondary market buyers face capital gains tax on any sale or maturity redemption after April 1, 2026. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.