SGB tax treatment on Zerodha
SGB taxation in India has favourable treatment:
| Event | Tax |
|---|---|
| Coupon (2.5% pa, semi-annual) | Taxed as interest income at slab rate |
| Capital gain at maturity (year 8) | Exempt for an individual who held from original issue to maturity (section 70(1)(x), Income-tax Act 2025); taxable for a secondary-market buyer from tax year 2026-27 |
| Premature redemption (year 5-8) | LTCG; rate per FY |
| Sale on secondary market | STCG / LTCG; rate per FY and holding |
Why maturity is special
Section 47(viic) of the Income Tax Act 1961 exempted capital gains on redemption of SGBs by an individual, and governs redemptions up to 31 March 2026. From tax year 2026-27, section 70(1)(x) of the Income-tax Act 2025, as substituted by section 43 of the Finance Act 2026, exempts the redemption only where the bond was “held by an individual from the date of original issue till maturity”. A bond bought on NSE or BSE and held to maturity now produces a taxable gain equal to the redemption value less the purchase price; the capital gains tax in India page sets out the rates.
Secondary market sale
If you sell on NSE/BSE secondary market (rather than redeem), normal capital gains apply:
- Held less than 12 months: STCG at slab rate.
- Held 12+ months: LTCG; current rate ~12.5% post FY 2024-25.
CA caveat
Tax rules change with each Finance Act. For large SGB holdings or NRI cases, consult a Chartered Accountant. This summary reflects FY 2025-26 framework.
See also
- Bid for SGBs at primary issuance
- SGB secondary market on Zerodha
- SGB redemption on Zerodha
- Redeem SGB pre-maturity on Console
- SGB premature redemption window
- SGB certificate of holding
- SGB maturity credit destination
- How funds are debited for SGB orders
- Sovereign Gold Bond
- G-Sec taxes on Zerodha
- Government Securities (G-Secs) on Zerodha
- Buy G-Sec on Zerodha
- Buy T-Bills on Zerodha
- Buy SDL on Zerodha
- SDL vs T-Bills vs G-Secs comparison
- Calculate G-Sec returns
- Maturity event for G-Secs
- Interest payment schedule for G-Secs
- Interest credit for G-Secs
- Charges for G-Sec on Zerodha
- Indicative yield on G-Secs
- Allotment time for SDL/T-bills/G-secs
- G-Sec bid cut-off times
- Zerodha bonds platform
- Tax-free bonds on Zerodha
- Reserve Bank of India
- Zerodha
- Capital gains tax in India
External references
References
- Income Tax Act 1961, Section 47(viic) (SGB redemption exemption, redemptions up to 31 March 2026); Income-tax Act 2025, section 70(1)(x) as substituted by section 43 of the Finance Act 2026 (from tax year 2026-27).
- Income Tax Act 1961, Section 48 and 112 (capital gains).
- RBI, Sovereign Gold Bond Scheme, rbi.org.in.