Reserve Bank of India (RBI) has stopped issuing new Sovereign Gold Bonds, a popular digital gold investment scheme. But investors interested in this scheme have the option to purchase the bonds from the secondary market.
Launched in 2016, SGBs came with an 8-year maturity period and a 5th year premature redemption facility. One of the most attractive features of the gold bond was an additional 2.5% interest on top of the gold appreciation during the holding period. The scheme also came with tax benefits.
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How Were SGBs Issued?
These were issued by the RBI in different tranches in a financial year. These bonds were made available through a distribution channel including certain commercial banks, post offices, online platforms and stock exchanges. RBI also offers a discount of Rs 50 per gram to investors who purchased the SGBs
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How To Get Them Now?
Since the RBI has discontinued new bonds, investors can still get them from the secondary market using their demat and trading accounts. Secondary market buyers continue to receive the fixed 2.5% annual interest (paid semi-annually), though it is calculated on the original issue price rather than your secondary purchase price.
Tax Implications
Before Budget 2026, Sovereign Gold Bonds (SGBs) were completely exempt from capital gains tax when redeemed after 8 years or through the RBI's early redemption option after 5 years. This tax benefit was available to both original investors and those who bought SGBs from the secondary market. However, this year, the government has announced some changes for SGBs tax liabilities for those who purchased from secondary markets.
As per the new rules, if you purchased the SGB on the stock exchange, any capital gains upon holding to maturity are taxable at 12.5% (Long-Term Capital Gains without indexation). The change takes effect from April 2026 and applies to tax year 2026-27 onwards. This means that Secondary market buyers face capital gains tax on any sale or maturity redemption after April 1, 2026.
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The move was introduced after traders began buying discounted SGBs from the secondary market to benefit from both price gains and tax-free returns at maturity. As a result, the RBI introduced the curbs to ensure that only long term holders got the tax benefits.
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