Question: I bought Sovereign Gold Bonds, not from the original RBI issue but from someone else on the stock exchange, and I plan to hold them until the 8-year maturity redemption. Will my capital gains at redemption be fully tax-exempt?
Answer: No - not automatically. Following the Finance Act, 2026 amendment, the capital gains exemption on redemption under Section 70(1)(x) of the Income Tax Act, 2025 is now available only to investors who subscribed to the bond at the original RBI issue and hold it continuously until the 8-year maturity. Secondary-market purchasers remain liable to capital gains tax on redemption even if held until maturity - taxed as long-term capital gains at 12.5% (without indexation) since the holding period exceeds 12 months.

Supporting evidence:
title: incometaxindia.gov.in/daf54d14-aca9-c4ea-b786-598fd2f8d4c4
quote: exemption from capital gains tax shall be available only where the Sovereign Gold
Bond is subscribed to by an individual at the time of original issue and is held
continuously until redemption on maturity No, the exemption shall not apply to Sovereign Gold Bonds acquired through transfer
or purchase in the secondary market. The exemption is restricted to bonds subscribed
to by an individual at the time of original issue
context: The capital gains arising from redemption of Sovereign Gold Bonds issued by the
Reserve Bank of India are exempt under the provisions of section 70(1)(x) of the
Income-tax Act, 2025.

Q.2 What amendment is proposed regarding the exemption for capital gains arising from redemption of Sovereign Gold Bonds? Ans: Section 70(1)(x) of the Income-tax Act, 2025 has been amended to clarify that the

**Ans:**
Section 70(1)(x) of the Income-tax Act, 2025 has been amended to clarify that the
exemption from capital gains tax shall be available only where the Sovereign Gold
Bond is subscribed to by an individual at the time of original issue and is held
continuously until redemption on maturity.
**Q.3 Does the exemption apply uniformly to all series of Sovereign Gold Bonds issued**
**by the Reserve Bank of India?**
Ans: Yes. The amended provision applies uniformly to all Sovereign Gold Bonds issued by
**Ans:**
Yes. The amended provision applies uniformly to all Sovereign Gold Bonds issued by
the Reserve Bank of India from time to time, irrespective of the series in which the
bonds were issued, subject to fulfilment of the specified conditions.

Q.4 Will the exemption under section 70(1)(x) of the Income-tax Act, 2025 apply to Sovereign Gold Bonds acquired through secondary market transactions? Ans: No, the exemption shall not apply to Sovereign Gold Bonds acquired through transfer

**Ans:**
No, the exemption shall not apply to Sovereign Gold Bonds acquired through transfer
or purchase in the secondary market. The exemption is restricted to bonds subscribed
to by an individual at the time of original issue. This was also clarified by the
Department of Economic Affairs in its OM dated 06.12.2022.
**Q.5 Will this exemption be available in cases of premature redemption of Sovereign**
**Gold Bonds?**
**Ans:**
No, the exemption shall apply only where the Sovereign Gold Bond is held continuously
prescribed lock-in period, shall not be eligible for exemption.
**Ans:**
Taxability is as under:

Q.6 From which date shall the amended provisions apply? Ans: The amendment shall take effect from the 1st day of April, 2026 and shall apply in

a), Conditions = If purchased at the time of issue and held till maturity:. a), Taxability = Exempt
**Ans:**
The amendment 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.
c), If not purchased at the time of issue and held till maturity
title: incometaxindia.gov.in/income_tax_act_2025_as_amended_by_fa_act_2026-pdf
quote: income-tax calculated on such long-term capital gains at the rate of 12.5%
context: ses of this section, the expression 'equity oriented fund' shall have the meaning assigned to it in section 198.

Tax on long-term capital gains.

197. (1) Where the total income of an assessee includes any income arising from the transfer of a long-term capital asset which is chargeable under the head 'Capital gains', the tax payable by the assessee on the total income, subject to sub-sections (2), (3) and (4), shall be the aggregate of-
- ( a ) income-tax payable on the total income as reduced by such long-term capital gains, had the total income, as so reduced, been his total income; and
- ( b ) income-tax calculated on such long-term capital gains at the rate of 12.5%.
(2) In the case of an individual or a Hindu undivided family, being a resident, where the total income as reduced by long-term capital gains computed under sub-section (1) is below the maximum amount which is not chargeable to income-tax, then,-
- ( a ) such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax; and
- ( b ) the tax on the balance of such long-term capital gains shall be computed at the rate as referred in sub-section (1).
(3) In the case of an individual or a Hindu undivided family, being a resident, in the case of transfer of a long-term capital asset, being land or building, or both, which was acquired before the 23rd July, 2024, the excess income-tax computed as per the following formula shall be ignored:- E = A - B
where-
E = excess income-tax to be ignored;
- A = income-tax computed under sub-section (1)( b );
- B = income-tax computed under sub-section (1)( b ) taking the rate as 20% and the capital gains is computed by taking the cost of acquisition as 'indexed cost of acquisition' and the cost of improvement as 'indexed cost of improvement'.

Tax on long-term capital gains.

(4) In the case of an assessee being a non-resident (not being a company) or a foreign company, the long-term capital gains arising from the transfer of a capital asset, being unlisted securities or shares of a company not being a company in which the public are substantially interested, shall be computed without giving effect to the provisions under section 72(6).
(5) Where the gross total income of an assessee includes any income arising from the transfer of a long-term capital asset, the gross total income shall be reduced by such income and the deduction under Chapter VIII shal