‘Holy moly!’: Bengaluru-Based Founder Flags Budget 2026 Tax Change On Sovereign Gold Bonds

Budget 2026: A Budget 2026 proposal on Sovereign Gold Bonds (SGBs) has sparked strong reactions from market participants, especially after changes were announced to capital gains tax exemptions. Deepak Shenoy, founder and chief executive officer of Capitalmind, warned that investors who bought SGBs from the secondary market could be negatively impacted.

In a post on X, Shenoy said those who did not purchase SGBs at the time of original issuance would have to pay full capital gains tax at redemption. He described the move as unfavourable for investors who acquired bonds through exchanges rather than directly from the issuer.

What the Budget Proposal Says

Clarifying the change, Union Finance Minister Nirmala Sitharaman said the tax benefit would now be limited.

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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. pic.twitter.com/9KDjpCg646

— Deepak Shenoy (@deepakshenoy) February 1, 2026

“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,” Sitharaman said while presenting the Union Budget 2026.

This means SGBs purchased later through stock exchanges or from other investors will no longer qualify for tax-free redemption.

Uniform Rule Across All Issuances

The Finance Minister added that the revised tax rule will apply uniformly to all Sovereign Gold Bonds issued by the Reserve Bank of India. The change will come into force from April 1, 2026.

Until now, investors enjoyed capital gains tax exemption on SGBs at maturity, regardless of how or when the bonds were purchased.

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What Are Sovereign Gold Bonds?

Sovereign Gold Bonds are issued by the RBI as a paper-based alternative to physical gold. Each bond is denominated in grams, with one unit equal to one gram of gold. The bond value moves in line with gold prices.

Sitharaman’s Ninth Budget

This was Sitharaman’s ninth Union Budget and the third Budget of the BJP-led NDA government in its third term, with announcements spanning finance, agriculture, health, employment, industry and tourism.