Budget 2026: Finance Minister Nirmala Sitharaman unveiled Modi 3.0 government's third Union Budget on Sunday, Feb. 1, 2026, with key focus areas being on infrastructure growth and sector-specific boost. Among one of the many changes that will impact D-Street investors is the capital gains tax change on sovereign gold bonds (SGBs). According to Budget's Memorandum on Finance Bill, the capital gains tax on SGBs is exempted if an investor has subscribed at the original issue price.
Capital gains on SGBs were tax-free for individual investors only if held until the eight-year maturity, regardless of whether they were purchased in the primary or secondary market. Selling before maturity, including through the stock exchange, makes gains taxable (short-term at slab rate, long-term at 12.5% or 20% with indexation). However, after the latest change with Budget 2026, capital gains tax is exempted on SBGs only if subscribed at the issue price.
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''The provisions of section 70(1)(x) of the Act provide an exemption from capital gains tax in respect of income arising from redemption of Sovereign Gold Bonds issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015. Sovereign Gold Bonds have been issued by the Reserve Bank of India on a recurring basis through multiple series notified from time to time, each constituting a separate issuance,'' said the memorandum of finance bill of Budget 2026.
''In order to ensure uniform application of the exemption across all such issuances and to align the provision with its intended scope, it is proposed to amend section 70(1)(x) to provide that the exemption shall be available only where the Sovereign Gold Bond is subscribed to by a subscriber at the time of original issue and is held continuously until redemption on maturity, for all Sovereign Gold Bonds issued by the Reserve Bank of India from time to time,'' it added.
These amendments will take effect from the first day of April, 2026, and will apply in relation to the tax year 2026-27 and subsequent tax years.
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