What changes were made in SGB tax rules in Budget 2026?

Sovereign Gold Bonds (SGBs) were one of the best ways to invest in gold in India - they offered exposure to gold prices, with an additional 2.5% annual interest from the government and tax-free status if held until maturity. With the recent gold rally, this product becamse popular even in the secondary market, when investors purchased SGBs through stock market.

However, in the Union Budget 2026 this advantage was taken away. According to the new tax rules, the capital gains tax exemption for SGBs at maturity will now apply only to investors who bought SGBs at original issuance and held them till maturity. So, if you purchased SGB from the exchange, you will have to pay a long-term capital gains (LTCG) tax  of 12.5% even if you held them until maturity. 

Many investors used to buy SGBs on the stock exchange because they were often trading at a discount. They assumed they’d still get the tax-free maturity benefit. That loophole is now closed.

What should you do? 

• If you are an Original Subscriber: Stay put. Nothing has changed for you. As long as you hold until the 8th year, your profit is yours to keep. 
• If you are a Secondary Market Buyer: Your bonds' "tax-free" benefit is erased. Whether you sell the bonds in near future or at maturity, your gains will be taxed. If your SGB purchase was made mainly for the tax benefit instead of getting the benefit of gold price movements, then it would be a good idea to reassess your holdings.  
• If you need cash soon: Try to process your redemption before the March 31, 2026 deadline to potentially save on the new tax outgo.