I am planning to invest in sovereign gold bond (SGB) and my query is below.
Lets say I buy SGB from stock exchange, for example If I buy a SGB (issued in 2020) from the stock exchange then it is already in its 4th year.
If I hold this till its maturity and then redeem, will I still be eligible for capital gains tax exemption?
In short will i receive capital gains tax exemption on redemption of an SGB if the same has been bought from stock exchange?
As per my view, Selling SGBs in the secondary market before maturity attracts tax on capital gains. If you redeem SGB units before a holding of 3 years, it qualifies as short-term capital gains. However, SGB unit redemption exceeding 3 years is referred to as long-term capital gains.
While short-term gains are taxed based on your tax slab, long-term gains are taxed at approximately 20%, coupled with indexation benefits. So, understanding these key factors on tax implications is crucial before purchasing SGBs from the secondary market.
Thanks but my question was regarding tax implications when I am buying soverign gold bonds (SGB) not selling.
In particular i am not buying during the bond issue rather I am buying from exchange.
In that case will I still qualify for tax exemption on redeeming on maturity.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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