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Personal Finance and Tax | June 2026
You want gold exposure. Three options sit in front of you. Physical gold has a 3% GST entry cost and needs 24 months to qualify for LTCG. A Gold ETF has no GST, reaches LTCG status in just 12 months, and trades live on the exchange. A Sovereign Gold Bond pays you 2.5% interest per year on top of gold price gains and delivers completely tax-free capital gains at 8-year maturity. The SGB scheme has been discontinued since April 2024, so no new tranches are available. But existing holders and secondary market buyers still need to understand its rules. This article compares all three across every dimension that matters: entry cost, tax treatment, liquidity, and the right choice for your situation.
Table of Contents
- Quick Comparison: All Three at a Glance
- Part I: Physical Gold Entry costs, GST, import duty, making charges, LTCG after 24 months, storage risk
- Part II: Gold ETF No GST, LTCG after 12 months at 12.5%, expense ratio, liquidity, no Rs 1.25 lakh exemption
- Part III: Sovereign Gold Bond (SGB) 2.5% interest taxable at slab, capital gains fully exempt at 8-year maturity, scheme discontinued
- Part IV: The Tax Comparison in Full Side-by-side after-tax return analysis with worked examples
- Part V: Liquidity: When Can You Actually Get Your Money Back Physical: pawnbroker or jeweller. ETF: live on exchange. SGB: secondary market or 5-year lock.
- Part VI: Who Should Choose What Decision framework by investment horizon, tax bracket, and purpose
- Frequently Asked Questions
3% GST
Upfront cost on every physical gold purchase. Not applicable on Gold ETF or SGB.
12 months
Holding period for Gold ETF LTCG (for units bought on or after April 1, 2025). Physical gold needs 24 months.
100% Exempt
Capital gains on SGB held to 8-year maturity. The single biggest tax advantage in gold investing.
2.5% p.a.
Fixed interest on SGB paid semi-annually on the issue price. Taxable at slab rate. No equivalent in ETF or physical gold.
Quick Comparison: All Three at a Glance
| Parameter | Physical Gold | Gold ETF | Sovereign Gold Bond |
|---|---|---|---|
| Entry cost (taxes) | 3% GST on purchase value. 5% GST on making charges if jewellery. | No GST. Brokerage charges apply (typically 0.01% to 0.05%). | No GST. Rs 50/gram discount for online applicants. |
| LTCG holding period | 24 months (for gold purchased on or after July 23, 2024) | 12 months (for units purchased on or after April 1, 2025) | 8 years. Full exemption only for ORIGINAL RBI subscribers holding till 8-year maturity. From April 1, 2026: premature redemption (5-year window) is TAXABLE. Secondary market buyers: gains taxable at all stages. |
| LTCG tax rate | 12.5% without indexation | 12.5% without indexation. No Rs 1.25 lakh exemption. | Capital gains at maturity: NIL (fully exempt). Secondary market sale: 12.5% after 12 months. |
| STCG tax rate | Slab rate | Slab rate (held under 12 months) | Slab rate (secondary market sale within 12 months) |
| Interest income | None | None | 2.5% per annum on issue price, paid semi-annually. Taxable at slab rate. |
| Storage and safety | Physical storage required. Theft/loss risk. Locker costs. | Demat account. No physical storage needed. | Demat or paper certificate. No physical storage needed. |
| Purity risk | Real risk unless BIS hallmarked. Karatage variations exist. | 99.5% purity. SEBI-regulated. Tracks IBJA domestic gold price. | Denominated in grams of 999 purity gold. Government-backed. |
| Expense ratio / carrying cost | Locker rent + insurance (Rs 1,500 to Rs 6,000 per year depending on bank and size) | 0.20% to 0.80% per annum (expense ratio deducted from NAV) | None |
| Liquidity | Low to moderate. Sell to jeweller or use gold loan. | High. Buy and sell any trading day on NSE or BSE. | Low. Secondary market exists but volumes are thin for most tranches. |
| Availability in 2026 | Always available | Always available | No new tranches. Only secondary market purchase or existing holding. |
Part IPhysical Gold
The Entry Cost Nobody Adds Up
Physical gold feels simple. You pay money, you get gold, you own something tangible. But the true entry cost is significantly higher than the gold spot price shown on your phone.
At purchase, you pay 3% GST on the total value of gold. If you buy jewellery, you also pay 5% GST on making charges if they are invoiced separately. Making charges for jewellery range from 8% to 25% of the gold value depending on the design complexity. For coins and bars, making charges are lower, typically 2% to 6%. The import duty stack effective May 13, 2026 has been raised to a total effective rate of 15%, which is embedded in the domestic wholesale price, so it is already reflected in the price you pay.
When you add these up: if gold costs Rs 9,500 per gram today and you buy 10 grams of a coin with 4% making charges, your actual cost is Rs 95,000 for the gold, plus Rs 2,850 GST on gold (3%), plus Rs 3,800 making charges, plus Rs 190 GST on making charges (5%). You have paid Rs 1,01,840 for an asset worth Rs 95,000 in the market. You are already 7.2% underwater at the moment of purchase before the price of gold moves at all.
Tax Treatment on Sale
When you sell physical gold, the gain is treated as capital gain under the Income Tax Act, 1961 (applicable for AY 2026-27).
For gold purchased on or after July 23, 2024: you need to hold it for at least 24 months to qualify for long-term capital gains treatment. The LTCG rate is 12.5% without indexation. If you sell within 24 months, the gain is a short-term capital gain taxed at your income slab rate.
For gold purchased before July 23, 2024: the earlier rule applied a 36-month holding period. From Budget 2024, this was reduced to 24 months, and the tax rate was changed from 20% with indexation to 12.5% without indexation for post-July 23, 2024 purchases. For gold bought before that date, you can opt for either 12.5% without indexation or 20% with indexation, whichever results in a lower tax outgo. This grandfathering provision is worth computing carefully before selling older gold holdings.
The 4% GST on Gold ETFs note: Some sources cite a 4% GST on Gold ETFs. This is incorrect. Gold ETFs are not subject to GST at the time of purchase or redemption. The 3% GST applies to physical gold purchase. Gold ETF transactions attract Securities Transaction Tax (STT) at the exchange level, which is minimal and already embedded in the spread. There is no GST on Gold ETF units.
When Physical Gold Makes Sense
Despite its tax inefficiency, physical gold serves real purposes. It functions as an emergency asset that can be pledged for a loan without any sale transaction or capital gains event. It carries sentimental and cultural value especially for jewellery intended for use at weddings or religious occasions. It is completely offline and requires no technology, no internet, and no financial account. For households with no demat account and limited digital access, physical gold remains the only practical form of gold savings.
Part IIGold ETF
What a Gold ETF Actually Is
A Gold ETF is a mutual fund scheme regulated by SEBI that holds physical gold of 99.5% purity in LBMA-approved vaults. Each ETF unit represents approximately 1 gram of gold, though this varies slightly between fund houses. The units trade live on NSE and BSE like shares. The price tracks the IBJA (India Bullion and Jewellers Association) domestic gold spot price, not the international LBMA price directly, though both move together closely given import flows.
Gold ETFs require a demat account and a trading account. You buy and sell them through your broker exactly like a stock. There are no making charges, no purity concerns, and no GST at the time of purchase.
Tax Treatment
For Gold ETF units purchased on or after April 1, 2025: the holding period for long-term capital gains is 12 months. Gains on units held for more than 12 months are taxed at 12.5% without indexation. Gains on units held for less than 12 months are taxed at your income slab rate as short-term capital gains.
An important point that many investors miss: the Rs 1.25 lakh annual LTCG exemption under Section 112A of the Income Tax Act, 1961 applies only to equity shares, equity-oriented mutual funds, and units of business trusts. Gold ETFs are not equity-oriented instruments and do not qualify for this exemption. Every rupee of Gold ETF LTCG above zero is taxable at 12.5%.
Holding period note for ETF units bought between July 23, 2024 and March 31, 2025: These units required 24 months for LTCG treatment, not 12 months. The 12-month threshold applies only to units purchased on or after April 1, 2025. If you purchased Gold ETF units in, say, September 2024, you need to hold them until at least September 2026 for LTCG treatment. Do not apply the 12-month rule to pre-April 2025 purchases.
Expense Ratio: The Invisible Annual Cost
Gold ETFs have an annual expense ratio ranging from 0.20% to 0.80% depending on the fund house. This is deducted from the NAV automatically and you never see it as a separate charge. It sounds small but it compounds. Over 10 years, a 0.50% annual expense ratio reduces your effective return by approximately 4.9% relative to holding the gold directly with no costs. When choosing between gold ETFs, the expense ratio is the primary differentiator since all of them track the same gold price.
When Gold ETF Makes Sense
Gold ETF is the right choice for an investor who wants pure gold price exposure with the lowest entry friction, the shortest path to LTCG treatment (12 months), high liquidity, and no storage overhead. It suits investors in the accumulation phase who want to build a gold position gradually in small amounts through their demat account, particularly those who already manage an equity portfolio in the same account.
Part IIISovereign Gold Bond (SGB)
The Scheme Is Discontinued: What That Means
The Government of India launched the Sovereign Gold Bond scheme in November 2015. The last tranche of new SGBs was issued in February 2024. No new issuance calendar has been announced for FY 2025-26 or FY 2026-27. The scheme has been effectively discontinued because the government found it was an expensive form of borrowing. With gold prices rising significantly, the redemption obligation at prevailing gold prices became costly.
What this means practically: you cannot buy a new SGB from the government in 2026. You can only buy existing SGBs on the secondary market through NSE or BSE. The secondary market exists but liquidity is thin. Spreads between buy and sell prices can be wide. Most tranches see very low daily trading volumes.
Existing SGB holders are completely unaffected. Their bonds continue to earn interest and will be redeemed at maturity as per original terms.
The Two Tax Advantages That Made SGB Unique
SGB offered two tax advantages that no other gold instrument could match.
The first is the 2.5% annual interest paid on the original issue price. This is real cash income paid semi-annually to your bank account. No other form of gold investment pays you to hold it. This interest is fully taxable at your income slab rate under “Income from Other Sources.” For a taxpayer in the 30% slab, the after-tax interest yield is approximately 1.75% per annum.
The second advantage is the complete exemption of capital gains on 8-year maturity, but only for original subscribers after Budget 2026. When an original subscriber holds an SGB for the full 8-year term and redeems through the RBI, the capital gain is entirely exempt from income tax. There is no tax, regardless of how much gold has appreciated. This is the only remaining tax-free route after Budget 2026 amended Section 70(1)(x) of the Income Tax Act. Premature redemptions after April 1, 2026, even by original subscribers, are now taxable as capital gains.
The maturity exemption in numbers (original subscribers only): If you had purchased an SGB in May 2017 at Rs 2,951 per gram and it matures in May 2025, and you are the original subscriber, the capital gain per gram of approximately Rs 4,437 is fully exempt. On a 10-gram holding, that is a tax saving of approximately Rs 5,546 (12.5% of Rs 44,370). This benefit continues for original subscribers holding to 8-year maturity. It does not apply to secondary market buyers, and the 5-year premature redemption window no longer carries tax exemption after April 1, 2026.
Secondary Market Purchase After Budget 2026: No Exemption at All
Budget 2026, effective April 1, 2026, made a sweeping change. Previously, even secondary market buyers who held SGBs till the original 8-year maturity could claim the capital gains exemption. Budget 2026 removed this. Effective April 1, 2026, secondary market buyers have no capital gains exemption at any stage: not on exchange sales before maturity, not even on RBI redemption at the 8-year maturity date.
This changes the investment case for secondary market SGBs dramatically. Before April 2026, buying an older SGB tranche at a discount on NSE and holding to maturity was a tax arbitrage opportunity. That opportunity no longer exists. A secondary market buyer now pays LTCG at 12.5% on gains held over 12 months, or STCG at slab rate if held under 12 months, regardless of whether they sell on exchange or hold to RBI redemption.
Budget 2026 Change Effective April 1, 2026: The Finance Act 2026 amended Section 70(1)(x) of the Income Tax Act to tighten the SGB capital gains exemption. The exemption now applies ONLY if you (a) subscribed to the SGB during the original RBI primary issue and (b) hold the bond continuously until its 8-year maturity. Both conditions must be met. If either condition fails, gains are taxable.
| SGB Exit Route | Capital Gains Tax (from April 1, 2026) | Condition |
|---|---|---|
| Redemption at 8-year maturity via RBI (original subscriber) | Fully exempt. Zero tax. | You must be the ORIGINAL subscriber from the RBI primary issue. Must have held continuously till maturity. Budget 2026 confirmed this benefit continues for original subscribers. |
| Premature redemption via RBI (5-year window), original subscriber | TAXABLE from April 1, 2026. LTCG at 12.5% if held over 12 months. STCG at slab if under 12 months. | Budget 2026 removed the exemption for premature redemptions. Even original subscribers now pay capital gains tax if they exit before the 8-year maturity via the RBI 5-year window. |
| Redemption at maturity by secondary market buyer | TAXABLE. LTCG at 12.5% (held over 12 months). STCG at slab (held under 12 months). | Budget 2026 explicitly withdrew the maturity exemption for secondary market buyers. This applies even if you hold the bond till its original 8-year maturity date. |
| Sale on stock exchange (NSE/BSE) before maturity | LTCG at 12.5% (over 12 months). STCG at slab (under 12 months). | Normal listed securities capital gains rules apply. No exemption. |
Part IVThe Tax Comparison in Full
Worked Example: Rs 1 Lakh Invested in Each for 8 Years
To make the comparison concrete, consider three investors who each invest Rs 1 lakh in gold in 2018, when gold was approximately Rs 3,100 per gram. Assume gold reaches Rs 9,500 per gram by 2026, an appreciation of approximately 206%. Each investor is in the 30% income tax bracket.
| Item | Physical Gold | Gold ETF | SGB (Held to Maturity) |
|---|---|---|---|
| Amount invested | Rs 1,00,000 | Rs 1,00,000 | Rs 1,00,000 |
| Entry cost (GST + making charges on coins at 3%) | Rs 3,000 (GST) + Rs 2,000 (making) = Rs 5,000 | Zero | Zero (Rs 50/gram discount for online) |
| Effective gold bought | 32.26 grams (Rs 95,000 worth after entry costs) | 32.26 grams | 32.26 grams |
| Value at maturity (8 years, gold at Rs 9,500/gram) | Rs 3,06,400 | Rs 3,06,400 approx (minus expense ratio impact) | Rs 3,06,400 (plus interest income) |
| Annual expense ratio impact (0.50% p.a., 8 years) | Nil (but locker cost Rs 3,000 to Rs 6,000 total over 8 years) | Approx Rs 12,000 total (compounded drag) | Nil |
| Interest income (SGB only, 2.5% p.a. on issue price) | Nil | Nil | Rs 2,500 per year, Rs 20,000 total over 8 years. Tax at 30% = Rs 6,000. Net: Rs 14,000. |
| Capital gain on sale/redemption | Rs 2,06,400 (approx, using effective gold purchase cost) | Rs 2,06,400 (approx) | Rs 2,06,400 |
| Capital gains tax | Rs 25,800 (12.5% of Rs 2,06,400) | Rs 25,800 (12.5%, no Rs 1.25 lakh exemption for gold ETF) | Zero (fully exempt at maturity) |
| Net proceeds after all costs and taxes | Approx Rs 2,75,600 | Approx Rs 2,68,600 | Approx Rs 3,20,400 (including net interest) |
The SGB advantage in this example is approximately Rs 45,000 to Rs 50,000 over 8 years on an initial Rs 1 lakh investment. That is the combination of zero entry cost, zero capital gains tax, and the additional interest income after tax. The magnitude of the SGB advantage grows with the size of investment and the degree of gold price appreciation.
Short Horizon Example: 2 Years, Rs 50,000
Now consider an investor who wants gold exposure for only 2 years with Rs 50,000.
Physical gold: after 3% GST (Rs 1,500), effective investment is Rs 48,500. After 2 years, if gold rises 20%, sale value is Rs 58,200. Gain of Rs 9,700. Taxed at 12.5% LTCG (held over 24 months): tax of Rs 1,213. Net: Rs 56,987.
Gold ETF: No GST. Rs 50,000 fully invested. After 2 years, 20% rise: sale value Rs 60,000. Gain Rs 10,000. Held over 12 months, so LTCG at 12.5%: tax Rs 1,250. Net after expense ratio drag of roughly Rs 500: Rs 58,250.
SGB (secondary market): Not recommended for a 2-year horizon. SGB secondary market liquidity is poor. If you buy on NSE and sell before 8-year maturity, the capital gains exemption does not apply. You pay LTCG at 12.5% like the Gold ETF. And the bid-ask spread on the secondary market could cost you 1% to 2% more than the Gold ETF spread.
For a 2-year horizon: Gold ETF wins clearly. Lower entry cost than physical gold and better liquidity than secondary market SGB.
Part VLiquidity: When Can You Actually Get Your Money Back
Liquidity is often the most underrated factor in gold investment decisions. All three instruments are liquid in theory but very differently liquid in practice.
| Instrument | Liquidity Speed | Price You Get | Practical Constraint |
|---|---|---|---|
| Physical gold (jewellery) | Same day but at a discount | Jewellers typically pay 85% to 92% of gold value. Making charges are never recovered. | Hallmarked gold fetches better prices. Older jewellery with unclear karatage may get lower rates. |
| Physical gold (coins/bars) | Same day, better rate than jewellery | Closer to market rate. 95% to 98% of spot price from authorised dealers. | Requires visiting a reputed dealer. Online sale options limited. |
| Physical gold (as loan pledge) | Gold loan disbursed within hours | Loan against 75% to 85% of gold value (RBI LTV cap). Not a sale, gold returned after repayment. | Interest cost on loan. Gold reclaimed only on full repayment. |
| Gold ETF | Instant during market hours | Market price. Typical bid-ask spread of 0.05% to 0.20%. | Settlement is T+1. Funds in account next trading day. |
| SGB (secondary market) | Market hours but low volume | Market price but wide spread possible. May be at discount to gold NAV in illiquid tranches. | Many tranches have zero or very low daily volume. Large quantities may move price against you. |
| SGB (premature redemption via RBI) | Only on interest payment dates from year 5 | RBI redemption price: simple average of closing gold price for last 3 working days before redemption date. Full capital gains exempt. | Request must be submitted 30 days before the interest payment date. Cannot be done on any random day. |
For emergency liquidity, physical gold wins: If you need money in a genuine emergency and financial markets are closed or you have no demat account access, physical gold can be pledged at any gold loan company within an hour. Gold ETFs and SGBs require a working demat account, internet access, and settlement time. For households that hold gold as genuine emergency reserves rather than as investments, physical gold’s tangible convertibility to loans is a real and practical advantage.
Part VIWho Should Choose What
- You want gold for the long term (8 years or more) and have an existing SGB in your demat account: Hold it to maturity. Do not sell on the secondary market. The full capital gains exemption at maturity is the most tax-efficient outcome available in gold investing in India. The 2.5% annual interest is a bonus. No other instrument beats the SGB held to maturity.
- You want to add gold exposure today with a 2 to 7 year horizon: Gold ETF is the right choice. No GST, LTCG status in 12 months, live exchange liquidity, and SEBI-regulated. SGB new issuance is unavailable and secondary market purchases lose the maturity exemption advantage. Physical gold’s 3% GST entry cost and higher effective cost base reduce your returns.
- You want gold for fewer than 12 months: All three will attract STCG at your slab rate. Given that, Gold ETF’s zero entry cost and instant liquidity make it the pragmatic choice even for short periods. Physical gold’s 3% GST entry cost makes it deeply inefficient for any holding period under 2 years.
- You are in the 30% tax bracket and thinking about after-tax returns specifically: Gold ETF for medium term is still better than physical gold due to lower entry cost and faster LTCG access. If you can find an existing SGB tranche on NSE with reasonable liquidity near its maturity date (where the remaining capital gains exemption benefit is still meaningful), secondary market SGB could work, but model the numbers carefully including the bid-ask spread.
- You are buying gold for a wedding, cultural use, or physical gifting: Physical gold is unavoidable for these purposes. Accept the entry costs as the cost of the intended use. Do not frame jewellery purchases primarily as investment decisions.
- You want to add gold exposure gradually through SIP-like monthly investments: Gold ETF. Many brokerages allow regular investment plans in Gold ETFs. Gold Mutual Fund (Fund of Funds investing in Gold ETF) is an alternative if you do not have a demat account, but note that gold mutual funds require a 24-month holding period for LTCG, not 12 months, because they are unlisted. Gold ETF is preferable if you have a demat account.
Frequently Asked Questions
No new SGB tranches are available in 2026. The Government of India issued the last tranche of new SGBs in February 2024. No issuance calendar has been announced for FY 2025-26 or FY 2026-27. The scheme has been effectively paused because the government found it expensive to honour gold-price-linked redemptions as gold prices rose significantly. You can buy existing SGB units from other investors on the secondary market through NSE or BSE. However, secondary market SGBs have low liquidity and wide spreads in most tranches. More importantly, if you buy on the secondary market and sell before the bond’s original 8-year maturity date, the capital gains exemption does not apply. You pay LTCG at 12.5% on exchange sales, making the secondary market SGB less tax-efficient than a primary market SGB held to maturity.
No. The Rs 1.25 lakh annual LTCG exemption under Section 112A of the Income Tax Act, 1961 (applicable for AY 2026-27) applies specifically to long-term capital gains from the sale of listed equity shares, equity-oriented mutual fund units, and units of business trusts. Gold ETFs are not equity-oriented instruments. They are classified separately for tax purposes. Every rupee of LTCG from a Gold ETF is taxable at 12.5% without any exemption threshold. This is different from equity mutual funds where the first Rs 1.25 lakh of LTCG in a financial year is exempt. Keep this distinction clearly in mind when computing your tax on Gold ETF redemptions.
The holding period depends on when you purchased the units. For Gold ETF units purchased on or after April 1, 2025: the holding period for LTCG is 12 months. Gains on units held for more than 12 months attract LTCG at 12.5%. Gains on units held for less than 12 months are STCG taxed at your slab rate. For Gold ETF units purchased between July 23, 2024 and March 31, 2025: the holding period for LTCG was 24 months at the time of purchase. These units need to be held until at least 24 months from their purchase date to qualify for LTCG treatment. Do not apply the 12-month rule to units bought in this window. Check your demat statement for purchase dates before computing gains.
Yes. The 2.5% annual interest paid semi-annually on the original issue price of your SGB is taxable every year as “Income from Other Sources” at your applicable income slab rate. This is separate from the capital gains treatment. The capital gains at maturity are fully exempt. But the interest income is never exempt. For a taxpayer in the 30% slab, the effective after-tax interest yield on SGB is approximately 1.75% per annum (2.5% minus 30% tax, before cess). TDS is not deducted on SGB interest payments by the RBI. The interest must be declared in your ITR each year under “Income from Other Sources.” You will find it in your AIS under “Interest from Others” or “Interest from Government Securities.”
If you sell your SGB on NSE or BSE before the bond’s 8-year maturity date, the capital gains are not exempt. They are treated as regular capital gains on listed securities. If you have held the SGB for more than 12 months from your purchase date, the gain is a long-term capital gain taxed at 12.5% without indexation. If you have held it for less than 12 months, it is a short-term capital gain taxed at your income slab rate. The full capital gains exemption applies only when the RBI actually redeems the bond at maturity (after 8 years) or when you use the premature redemption window through the RBI (available from the 5th year on interest payment dates). Selling on the stock exchange bypasses the RBI redemption and therefore forfeits the tax exemption.
Gold ETF is cheaper to hold for 5 years in most scenarios. Physical gold’s 3% GST at purchase means you start 3% behind. If you store it in a bank locker, you pay Rs 1,500 to Rs 6,000 per year in locker rent plus insurance if taken. Over 5 years, that adds another Rs 7,500 to Rs 30,000 in carrying costs. A Gold ETF with a 0.50% annual expense ratio over 5 years costs approximately 2.5% of your investment in expense ratio drag. On Rs 1 lakh, that is Rs 2,500. The Gold ETF also reaches LTCG status in 12 months while physical gold requires 24 months, which matters if you need to exit between 12 and 24 months. The only scenario where physical gold wins on cost is if you already have a bank locker for other purposes and are buying gold bars or coins with minimal making charges where the total entry cost is limited to the 3% GST.
One Asset, Three Very Different Outcomes Depending on How You Hold It
The same gold price movement produces three very different outcomes depending on which instrument you use. In the worked example, an investor who held SGB to maturity ended up with approximately Rs 45,000 more than the Gold ETF investor on a Rs 1 lakh initial position over 8 years, even though both owned the same underlying asset. That gap is entirely created by the tax and cost structure, not by any difference in gold’s price.
The practical summary for 2026 is straightforward. If you are an original SGB subscriber, do not sell on the secondary market. Hold to the full 8-year maturity. That is the only remaining route to tax-free capital gains after Budget 2026. The 5-year premature redemption window, once also exempt, is now taxable from April 1, 2026. The distinction between maturity redemption and premature redemption matters significantly now. If you are adding gold exposure today, use Gold ETF for investment purposes. It is the most accessible, the most liquid, and the most cost-efficient instrument now that new SGB issuance has stopped. Physical gold should be bought for physical purposes, specifically jewellery for use, gifts, and cultural occasions, not as a financial investment vehicle.
The SGB scheme’s discontinuation is a genuine loss for long-term investors. There was simply no other product in the Indian market that paid you interest on gold, gave you government-backed security, and exempted your capital gains entirely at maturity. Watch for any future announcements of a revised scheme. If the government ever relaunches SGBs at a different structure or with a different tenor, it is worth re-evaluating at that point.
Disclaimer: This article is for informational and educational purposes only and is current as of June 2026 for Assessment Year 2026-27. All tax treatments referenced are under the Income Tax Act, 1961 as applicable for AY 2026-27. The Income Tax Act, 2025 with new section numbering applies from Tax Year 2026-27 onward. Nothing in this article constitutes investment advice. Consult a SEBI-registered investment adviser or your financial advisor before making gold investment decisions. Last updated: June 2026.
