Sovereign Gold Bonds in 2026: What Holders Should Know After Budget 2026, and How to Own Gold Now
The government has stopped issuing Sovereign Gold Bonds, and from April 2026 their famous tax-free redemption applies only if you bought at issue and hold for the full eight years. Here is what that means for your bonds, and the best ways to hold gold today.
By Pradeep RawalNISM-certified (Series XV & VIII) · Updated · First published 6 Sep 2026 · 6 min read
Update 8 Oct 2026: Substantially revised: no new SGB tranche has been issued since February 2024, and Budget 2026 limited the capital gains exemption to original subscribers who hold until maturity. Premature redemption and secondary-market purchases are now taxable.
Key takeaways
- The last SGB tranche was issued in February 2024 (Series IV of 2023-24). There is no issuance calendar for 2026-27; you can only buy existing bonds on the stock exchange.
- Existing bonds keep paying 2.5% a year on the issue price, half-yearly, and are redeemed at the prevailing gold price.
- From 1 April 2026, redemption gains are tax-free only if you subscribed at the original issue and hold until the 8-year maturity. Premature redemption in RBI windows and bonds bought on the exchange are taxed as capital gains.
- SGB interest is taxable at your slab rate every year.
- For new gold exposure, gold ETFs (taxed at 12.5% after 12 months) and gold mutual funds (12.5% after 24 months) are now the main options. Keep gold to about 5% to 15% of a portfolio.
For a decade, Sovereign Gold Bonds were the most efficient way for Indians to own gold: no making charges, no storage worries, 2.5% interest on top of the gold price, and tax-free gains at redemption. Two things have changed that. The government stopped issuing new bonds after February 2024, and Budget 2026 narrowed the tax exemption. If you hold SGBs, or are considering buying them on the exchange, the rules are now different.
How SGBs work
- Issuer: the Reserve Bank of India, on behalf of the Government of India. Each bond is denominated in grams of 999 gold.
- Tenure: 8 years, with an option to redeem early with RBI from the end of the fifth year, on interest payment dates.
- Interest: 2.5% a year on the issue price, paid every six months to your bank account. The interest is fixed in rupees on the original price, not on the current gold price.
- Redemption value: the average closing price of 999 gold (IBJA) for the three business days before redemption, multiplied by the grams you hold.
- Trading: bonds held in demat form are listed on NSE and BSE and can be bought or sold there, though volumes in many series are thin.
No new issues since February 2024
The last tranche, Series IV of 2023-24, was issued in February 2024. Since then the government has announced no new tranches, and there is no issuance calendar for 2026-27. Several banks now list the scheme as discontinued for fresh subscriptions. The bonds already issued remain valid and continue to pay interest until they mature, with the last ones maturing in 2032.
The Budget 2026 tax change
Until March 2026, any redemption of SGBs with RBI, at maturity or in a premature redemption window, was exempt from capital gains tax for individuals, however the bonds had been acquired. Budget 2026 changed this from 1 April 2026. Now the gain on redemption is tax-free only if both conditions are met:
- You bought the bond at the time of its original issue from RBI (through a bank, post office or broker during the subscription window), and
- You hold it continuously until maturity at 8 years.
In all other cases, the gain is taxable as a capital gain: at 12.5% if held more than 12 months (SGBs are listed securities), and at your slab rate if held for less. That covers:
- Original subscribers who redeem early in an RBI premature redemption window.
- Anyone who bought the bond on the stock exchange, even if they hold it to maturity.
- Anyone who sells on the exchange before maturity (this was always taxable).
| How you got the bond | Exit route | Capital gains tax from April 2026 |
|---|---|---|
| Original issue | Hold to 8-year maturity | Exempt |
| Original issue | Premature redemption with RBI (year 5 to 8) | Taxable: 12.5% (held over 12 months) |
| Original issue | Sell on NSE/BSE | Taxable: 12.5% if held over 12 months, otherwise slab rate |
| Bought on NSE/BSE | Hold to maturity or redeem early | Taxable: 12.5% if held over 12 months |
| Bought on NSE/BSE | Sell on NSE/BSE | Taxable: 12.5% if held over 12 months, otherwise slab rate |
A worked example
Suppose you subscribed to 10 grams in an early tranche at ₹3,100 a gram (₹31,000), and gold is at ₹10,000 a gram when the bond matures or is redeemed. (This is an assumed price for illustration.)
| Amount | |
|---|---|
| Redemption value (10 g × ₹10,000) | ₹1,00,000 |
| Capital gain | ₹69,000 |
| Interest received over 8 years (2.5% a year on ₹31,000), taxable yearly at slab rate | ₹6,200 |
| Tax on the gain if held to maturity by the original subscriber | ₹0 |
| Tax on the gain if redeemed early, or if the bond was bought on the exchange (12.5% + cess) | ₹8,970 |
For an original subscriber, waiting until maturity is now worth a great deal: in this example, the difference is ₹8,970 per 10 grams. If you were planning to use a premature redemption window, check how far your bonds are from maturity before deciding.
What existing holders should do
- Find out how you acquired each holding. Your demat statement or RBI holding certificate shows the series; bonds bought on the exchange appear as purchases in your contract notes.
- Original subscribers: unless you need the money, holding to maturity keeps the gain tax-free. Note the maturity dates of your series.
- Secondary-market buyers: the tax is due whenever you exit. Compare the exchange price with the gold value and decide based on your portfolio's need for gold, not on tax.
- Everyone: declare SGB interest in your return each year. Keep the bank account linked to the bond up to date so interest and redemption proceeds arrive.
How to own gold now
| Option | Costs | Tax on gains | Points to note |
|---|---|---|---|
| Gold ETFs | Expense ratio about 0.3% to 0.8% a year, plus brokerage | 12.5% if held over 12 months; slab rate otherwise | Needs a demat account; check trading volume and price vs NAV |
| Gold mutual funds (fund of funds) | ETF expense plus the fund's own, often 0.5% to 1% in total | 12.5% if held over 24 months; slab rate otherwise | Allows SIPs without a demat account |
| SGBs on the exchange | Brokerage; price may differ from gold value | 12.5% if held over 12 months (no maturity exemption for exchange buyers) | 2.5% interest on issue price; thin trading in many series |
| Physical gold | Making charges, 3% GST, storage | 12.5% if held over 24 months | Purity and resale discounts; best kept for personal use |
For most investors, a gold ETF or gold fund is now the simplest way to add gold, and the tax treatment is similar to an exchange-bought SGB. Physical gold makes sense only for jewellery you will actually use.
Gold is a diversifier, not a growth engine: it produces no income and can go years without rising. A common range is 5% to 15% of a long-term portfolio. See our asset allocation guide.
The bottom line
Sovereign Gold Bonds are no longer being issued, and their tax advantage now belongs only to original subscribers who wait until maturity. If that is you, holding on is usually worthwhile. Anyone else should treat SGBs like any other listed gold investment, taxed at 12.5% after a year, and compare them with gold ETFs and funds on cost, liquidity and convenience.
Frequently asked questions
Will the government issue new SGBs?
No tranche has been issued since February 2024 and no calendar has been announced for 2026-27. Banks and platforms describe the scheme as discontinued for fresh subscriptions. Existing bonds remain valid until maturity.
How is the redemption price set?
It is the simple average of the closing price of 999-purity gold published by the India Bullion and Jewellers Association for the three business days before the redemption date. RBI announces it for each window.
I bought SGBs on the exchange. Should I sell now?
Your gains will be taxable whenever you exit, whether you sell on the exchange or redeem with RBI. Since the tax treatment is now similar, compare the exchange price with the gold value (secondary prices can trade at a discount or premium) and your need for gold in the portfolio. Holding still earns the 2.5% interest on the issue price.
Is SGB interest subject to TDS?
No TDS is deducted on SGB interest, but the interest is taxable at your slab rate and must be declared in your return.
Sources and further reading
About the author
Pradeep Rawal is an NISM-certified market professional (Series XV Research Analyst and Series VIII Equity Derivatives) with more than 15 years in personal finance and stock market education. He founded Financial Nirvana, wrote the book From Cubicles to Wealth Creation, teaches money and investing workshops, builds quantitative tools and backtesting systems, and writes about personal finance with the working shown.
This article is for education only and is not investment, tax or legal advice. Tax rules quoted are for the tax year 2026-27 (FY 2026-27) unless stated, and can change; check the latest position with the Income Tax Department or a qualified professional before acting. Examples use assumed returns that are not guaranteed.
