These 4 SGBs are eligible for tax-free redemption: Check details

The Budget 2026 amendment has impacted investors who bought SGBs in the secondary market and redeemed them at maturity

• Tax-free gains on SGBs for primary investors start April 2026.
• SGB secondary market buyers taxed on maturity proceeds after April 1, 2026
• Only four SGB series qualify for exemption if redeemed before March 31, 2026

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From April 1, 2026, unit holders, especially primary investors who purchased Sovereign Gold Bonds (SGBs) from the Reserve Bank of India (RBI) or scheduled commercial banks at issuance and held them until maturity, will benefit from tax-free gains.

However, this exemption excludes unit holders who bought the bonds on stock exchanges, even if they hold them until maturity or exit early after five years after April 1. The Budget 2026 has revoked a significant exemption affecting secondary market buyers.

Investors who subscribed to the 2019–20 Series IV (issue date: September 17, 2019), the 2019–20 Series X (issued on March 11, 2020), the 2020–21 Series VI (issued on September 8, 2020), and the 2020–21 Series XII (issued on March 9, 2021) have been informed that the RBI has intimated the details of SGBs falling due for premature redemption during the second half of 2025–26, up to March 2026, along with the timelines for submitting premature redemption requests. Investors must give notice to their bank at least 30 days in advance.

Sriram BKR, Senior Investment Strategist, Geojit Financial Servies, said, "It should be noted that in any of the scenarios, SGB holders will get 2.5% interest p.a, and this is an inflow. This is important especially for those who purchased SGBs in the secondary market, as this will likely cushion the possible capital gains tax impact (as applicable and if any)."

"We would like to mention that gold prices have rallied at a higher magnitude since 2025 and till just before the end of January 2026. It is ideal for someone holding gold as part of asset allocation to rebalance the same," said BKR.

Investors holding bonds of these specific series should notify their bank or depository at least one month prior to the maturity date.

Harsh Roongta, Founder of Fee Only Investment Advisers LLP, said, "Unfortunately, the virtual retrospective amendment to the SGB exemption rules means that only 4 out of the 28 SGB series qualify for the exemption, as only these four have early redemption windows falling between now and March 31. Investors who purchased these four series from the secondary market, therefore, still have a chance to claim the tax exemption."

The Budget 2026 amendment has impacted investors who bought SGBs in the secondary market and redeemed them at maturity. The maturity proceeds will now be taxed starting April 1, even though they were previously largely exempt. Therefore, if someone wants to redeem them now, they can do so to lower their tax liability. The core purpose of the budget amendment is to tax redemptions made after April 1, 2026, for purchases made in the secondary market.

Echoing similar views, Harshvardhan Roongta, CFP, CTEP, Roongta Securities, says, “Only those SGB tranches that are completing five years and have a premature redemption window open before March 31 are eligible to redeem."

Roongta said that investors can submit their applications during the specified window for each series. As of now, capital gains on these redemptions remain tax-free, since the revised taxation rules apply only from April 1. This eligibility also extends to investors who bought SGBs from the secondary market, as long as the bonds have completed five years and are due for premature redemption.

"No separate intimation is required in such cases, as the investor is already reflected as the unit holder in RBI records. At present, only four SGB series are eligible under the February–March redemption window,” he added.