Sovereign Gold Bonds: In the budget, Finance Minister Nirmala Sitharaman announced changes to the taxation of SGBs (Sovereign Gold Bonds). This change comes at a time when gold prices have doubled and tripled in the past 1-2 years. Under the new rules, the capital gains tax exemption on Sovereign Gold Bonds will only be available to investors who purchased them at the time of issue.

The tax exemption on Sovereign Gold Bonds will be available on all gold bonds launched so far. Furthermore, only investors who purchased them at the time of issue will receive the capital gains tax exemption. According to current rules, capital gains tax benefits are also available on purchasing SGBs from the secondary market.

What rules have changed regarding Sovereign Gold Bonds?

From April 1, 2026, not everyone will be eligible for the capital gains tax exemption on Sovereign Gold Bonds. If you purchased at the time of issue and held until maturity, capital gains will not be taxed.

If you purchased at the time of issue and sold to someone else midway, capital gains will be taxable.

If you purchased SGBs from another investor in the secondary market and held them until maturity, capital gains tax will still be applicable.

What does the old rule say about SGBs?

Sovereign Gold Bonds have a maturity period of 8 years.

If you hold them until maturity, capital gains are tax-free.

If redeemed before maturity, capital gains tax is applicable.

After 5 years, investors can also redeem SGBs with the Reserve Bank. If sold to the Reserve Bank, LTCG tax is applicable. If sold in the secondary market, STCG tax is applicable if sold before 2 years, and LTCG tax is applicable after 2 years.

The last SGB was issued in February 2024.

The Reserve Bank last issued Sovereign Gold Bonds in February 2024. At that time, the issue price for SGBs was set at ₹6,263 per gram. Those applying online were given a discount of ₹50 per gram. The price for these bonds was set at ₹6,213 per gram.

125% Capital Appreciation in Two Years
According to information available on the website of the IBJA (Indian Bullion Jewelers Association), the price of 24-carat gold as of February 1st is ₹15,301 per ten grams. This means that the price of gold has increased by 125% compared to the SGB price in the last two years. This is purely a capital gain. The government has changed the taxation on this capital gain upon redemption.

What is the specialty of SGBs?

The Sovereign Gold Bond is issued by the Government of India and managed by the Reserve Bank of India (RBI).

It is fully linked to the price of 24-carat gold. This means that the value of your bond will increase proportionately with the market price of gold.

Investors receive 2.5% annual interest on this bond. Interest is paid directly into the investor's bank account every six months.

8-Year Maturity
This bond has a term of eight years, but investors can make partial or full withdrawals after five years. These bonds are tradable on stock exchanges, meaning they can be sold if needed. The central government launched the Sovereign Gold Bond Scheme in 2015. Its purpose was to reduce gold imports into the country and provide investors with a safe investment option instead of buying gold. Through this scheme, investors can invest in gold and also receive interest.