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Feb 02, 2026
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Up to 39% tax on SGB gains? Investors face up tough tax trap after Budget 2026 clarifies exemption rules
Investors who have enjoyed sharp gains on Sovereign Gold Bonds (SGBs) were caught off guard after Finance Minister Nirmala Sitharaman clarified changes to the capital gains tax exemption framework in the Union Budget 2026. The clarification relates to the tax treatment of SGBs purchased from the secondary market and has triggered confusion among investors amid a rally in gold prices.
Under the existing law, Section 70(1)(x) of the Income-tax Act provides an exemption from capital gains tax on income arising from the redemption of SGBs issued under the Sovereign Gold Bond Scheme, 2015. These bonds have been issued by the Reserve Bank of India (RBI) in multiple tranches over the years, with each series treated as a separate issuance.
According to tax advisory firm Tax Buddy, Sovereign Gold Bonds (SGBs) will no longer enjoy a blanket tax-free status after the Union Budget 2026, with the capital gains exemption now being tightly restricted.
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