The Union Budget has changed how Sovereign Gold Bonds (SGBs) are taxed. Earlier, all investors enjoyed zero tax on capital gains when redeeming SGBs at maturity. Now, most gains will be taxed at 12.5%, similar to debt mutual funds.
Example:
Suppose you invest ₹10 lakh in SGBs. After 8 years, the value grows to ₹16 lakh. That’s a ₹6 lakh capital gain.
– Earlier Rule: No tax. You kept the full ₹6 lakh profit.
– New Rule (12.5% tax):
– Tax on ₹6 lakh = ₹75,000
– Net gain after tax = ₹5.25 lakh
Important Exception: If you bought your SGBs directly from the RBI at issuance, the old rule still applies capital gains remain tax-free on redemption. This means only secondary market purchases or transfers will face the new 12.5% tax.
So, while SGBs remain safer than physical gold and still pay annual interest, the loss of blanket tax exemption reduces their appeal. Investors must now calculate post-tax returns carefully.
In short, SGBs bought from RBI continue to be a golden tax-free haven, but others have become a taxable investment, reshaping their charm for Indian households.
