The Finance Bill, 2026 proposes to clarify and standardise the capital gains exemption for Sovereign Gold Bonds (SGBs) by tightening eligibility conditions under section 70(1)(x) of the Income-tax Act, 2025. While the law already exempts gains arising on redemption of SGBs issued by the Reserve Bank of India, multiple issuances across different series created scope for interpretational differences. To ensure uniform application and align with the original policy intent, the amendment specifies that the exemption will apply only where the bond is subscribed to at the time of original issue and held continuously until redemption on maturity. This condition will apply uniformly to all SGBs issued from time to time, thereby excluding secondary-market purchasers from claiming the capital gains exemption on redemption. The change seeks to reward long-term investors who subscribe at issuance while preserving consistency across series. The amendment will take effect from 1 April 2026 and apply from tax year 2026–27 onwards.
Exemption for Sovereign Gold Bond
The provisions of section 70(1)(x) of the Act provide an exemption from capital gains tax in respect of income arising from redemption of Sovereign Gold Bonds issued by the Reserve Bank of India under the Sovereign Gold Bond Scheme, 2015. Sovereign Gold Bonds have been issued by the Reserve Bank of India on a recurring basis through multiple series notified from time to time, each constituting a separate issuance.
2. In order to ensure uniform application of the exemption across all such issuances and to align the provision with its intended scope, it is proposed to amend section 70(1)(x) to provide that the exemption shall be available only where the Sovereign Gold Bond is subscribed to by a subscriber at the time of original issue and is held continuously until redemption on maturity, for all Sovereign Gold Bonds issued by the Reserve Bank of India from time to time.
3. These amendments shall take effect from the 1st day of April, 2026, and shall apply in relation to the tax year 2026-27 and subsequent tax years.
[Clause 35]
Extract of Relevant Clauses of Finance Bill, 2026
Clause 35 of the Bill seeks to amend section 70 of the Income-tax Act, 2025 relating to transactions not regarded as transfer.
It is proposed to substitute clause (x) of sub-section (1) of the said section so as to provide that the exemption will be applicable only to those Sovereign Gold Bonds issued by the Reserve Bank of India that are subscribed to by an individual at the time of original issue and are held continuously by such individual until redemption upon maturity, and to provide that this exemption shall apply uniformly to all Sovereign Gold Bonds issued by the Reserve Bank of India.
This amendment will take effect from 1st April, 2026 and will, accordingly, apply in relation to the tax year 2026-2027 and subsequent years.
Extract of Relevant Amendment Proposed by Finance Bill, 2026
35. Amendment of section 70.
In section 70 of the Income-tax Act, in sub-section (1), for clause (x), the following clause shall be substituted, namely:––
“(x) by way of 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 S
