My Sovereign Gold Bond is maturing. Is the gain exempt, and does it matter that I bought it on the exchange?
It now matters a great deal. Under s.47(viic) of the 1961 Act, redemption of a Sovereign Gold Bond by an individual was simply not a transfer, so no capital gain arose however the bond was acquired. The successor provision, s.70(1)(x) of the Income-tax Act, 2025, has been amended by the Finance Act 2026 to confine that relief to an individual who subscribed at the original issue and held to maturity. A sale on the exchange before maturity was always a transfer and always taxable.
There are three exits from a Sovereign Gold Bond and they are taxed differently.
The first is redemption at maturity. Section 47(viic) of the 1961 Act provides that nothing in s.45 applies to "any transfer of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015, by way of redemption, by an assessee being an individual". Note the shape of it: this is not an exemption of a gain, it is a direction that the event is not to be regarded as a transfer, so the charge in s.45 never engages and there is nothing to compute, index or set off. Note also the two limits on the face of the clause - the holder must be an individual, so a company, firm, HUF or trust holding the bond is outside it, and the wording refers to bonds issued under the Sovereign Gold Bond Scheme, 2015.
The second exit is a sale in the secondary market. The bonds are listed, and a sale on the exchange is an ordinary transfer of a capital asset. Section 47(viic) does not touch it, because it speaks only of redemption. So the gain is computed under s.48 in the normal way and taxed as short-term or long-term according to the holding period, with the rate consequences set out at cost-of-acquisition-and-indexation and the classification rules at period-of-holding-after-the-finance-no-2-act-2024.
The third exit is premature redemption to the Reserve Bank on one of the scheduled early-redemption dates. That is redemption, not a sale, and on the words of the clause it should fall inside s.47(viic) for an individual holder. I have not found a source that addresses premature redemption specifically, so treat that as the reading of the words rather than a sourced position.
The interest is a separate matter and is not affected by any of this. The clause deals only with the capital gains charge on redemption; the periodic interest on the bond is income in the ordinary way.
Now the change, and it is recent enough that it has not reached most checklists. The Income-tax Act, 2025 came into force on 1 April 2026 and carries the provision forward as s.70(1)(x). The text served by commentary sites still reads in the old form - "of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015, by way of redemption, by an individual" - but that text is out of date. Clause 35 of the Finance Bill 2026 amended it. On the February 2026 reporting the amended clause confines the relief to "redemption, of Sovereign Gold Bond issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015 or any subsequent Sovereign Gold Bond Scheme, if held by an individual from the date of original issue till maturity"; that page gives the Bill clause and the amended wording and states no commencement date. The commencement comes from the second report, of July 2026, which records that "Section 70(1)(x) of the Income-tax Act, 2025 has now been substituted so as to restrict the exemption only to Sovereign Gold Bonds that are subscribed by an individual at the time of the original issue and held continuously till redemption on maturity", by the Finance Act, 2026, with effect from 1 April 2026. The itatonline analysis of the 2026-27 direct tax proposals states the same thing in its own words: "Exemption from Capital Gains on redemption of Sovereign Gold Bonds ('SGB') to be granted only to original individual subscribers if the SGB are subscribed and held continuously till redemption. Also, it is clarified that the aforesaid exemption would apply to all series of SGB schemes."
So the amendment does two things at once, and one of them is helpful. It removes the relief from anyone who bought the bond on the exchange rather than at issue, which is a real loss for a large body of holders who bought at a discount in the secondary market with maturity in view. But it also cures the drafting problem in the old clause, which named only the 2015 Scheme, by extending the relief to any subsequent Sovereign Gold Bond Scheme.
One honest limitation. I could not obtain the amended statutory text itself - the commentary site that carries the 2025 Act still serves the pre-amendment wording of s.70(1)(x). The amendment is reported consistently on two independent hosts, but the exact words above are the reporting's and the commencement date rests on the single July 2026 report. Verify the enacted clause before you advise on a maturity that falls after 1 April 2026.
The 2015 and 2016 tranches are maturing now, and the difference between an original subscriber and a secondary-market buyer is the difference between nothing to declare and a capital gain on eight years of gold appreciation. It also changes what to advise a client holding bonds bought on the exchange: the tax reason for holding to maturity has gone, so the choice between selling on the exchange and waiting for redemption is now a pricing question rather than a tax one.
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