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Ace investor and Chief Executive Officer (CEO) of Capitalmind Asset Management, Deepak Shenoy, said that the new taxation rules for the Sovereign Gold Bonds (SGBs) are negative for the new bond market investors who are looking to buy the asset class from the secondary market.

Union Finance Minister Nirmala Sitharaman, in Sunday's Budget 2026 speech, announced that the capital gains tax exemption on SGBs will only be available to investors who subscribed to the original issue from the Reserve Bank of India (RBI) and hold the same till maturity.

In a social media post on X, Shenoy explained how if investors buy SGBs from the secondary bond market then they will have to pay “full tax” on the capital gains earned through the investment.

The new taxation rules will be effective from 1 April 2026, according to the official announcement.

“Holy moly! If you buy SGBs in the market (not from primary issuance), you will pay full tax on capital gains when the bond is redeemed! This is from April 1, 2026. Very negative for SGBs if you have bought in the market,” said Deepak Shenoy in a social media post on X.

Nirmala Sitharaman said that the proposal for capital gains tax exemption in Sovereign Gold Bonds (SGBs) will only be available when the instruments are subscribed to by an investor from a primary issue level and held till the date of maturity.

“It is proposed to provide that the exemption from capital gains tax in respect of Sovereign Gold Bonds shall be available only where such bonds are subscribed to by an individual at the time of original issue and are held continuously until redemption on maturity,” said FM Nirmala Sitharaman in her Union Budget 2026 speech.

Hence, this means that if investors are purchasing SGBs from the secondary bond market, it would automatically subject them to a capital gains tax liability.

Sitharaman also said that the proposed reform will be applicable to all SGBs issued by the Reserve Bank of India (RBI).

“It is also proposed to provide that this exemption applies uniformly to all issuances of Sovereign Gold Bonds by the Reserve Bank of India,” said Sitharaman in her parliament address.

Mint reported earlier that SGBs were designed to be 100% tax-free for individuals who subscribed to the issue and held for a period of five years or more while redeeming them through the RBI.

Read all bond market news here

Read all stories by Anubhav Mukherjee

Disclaimer: This story is for educational purposes only. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.

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