Sovereign Gold Bonds Are Gone: How to Invest in Gold in India Now (2026)

The government has quietly stopped issuing new Sovereign Gold Bonds – and Budget 2026 just rewrote the tax rules on the ones you already hold. Here is where a fee-only adviser now points clients who still want gold in their portfolio.

Why did the government stop issuing new SGBs?

Because the scheme became too expensive for the exchequer. No new SGB tranche has been floated since the 2023–24 Series IV in February 2024, and the finance minister confirmed at the February 2025 post-Budget briefing that the scheme has been discontinued for fresh issues. The reason isn't investor demand – it's cost.

SGBs promised 2.5% annual interest on top of gold's price appreciation, with the government on the hook to redeem every bond at gold's market price at maturity. As gold rallied hard through 2023–2025, that redemption liability plus the interest outgo made SGBs a far more expensive way for the government to borrow than plain bonds – the economic affairs secretary called it exactly that, a high-cost borrowing. And the scheme never meaningfully dented India's physical gold imports, which was its original goal.

What happens to the SGBs you already own?

Your bonds themselves are untouched: they keep paying 2.5% p.a. interest (taxable at your slab rate, paid half-yearly) until they mature at 8 years, and RBI's premature-redemption window still opens from year 5 onward on interest-payment dates via your bank, post office or SHCIL. What has changed – sharply – is the tax treatment.

From 1 April 2026, under the Budget 2026 amendment to Section 70(1)(x) of the Income-tax Act, 2025, the capital-gains exemption on SGBs applies only to the original subscriber who holds the bond continuously until its full 8-year maturity. Two groups lose the tax-free exit: buyers who picked up SGBs on the secondary market (even if they hold to maturity), and anyone – original allottee included – who redeems early through RBI's year-5 window. Taxable gains are charged at 12.5% LTCG beyond a 12-month holding, or at your slab rate below it.

What are the best alternatives now that SGBs are off the table?

Four realistic options remain, and none replicates the SGB's combination of a guaranteed 2.5% payout plus a tax-free maturity – but each suits a different investor.

How do SGBs, ETFs, digital gold and physical gold actually compare?

How is each gold option taxed?

So what should you actually do about gold now?

If you were allotted SGBs at issue, hold them to the full 8-year maturity – that tax-free redemption is the last of its kind, and exiting even a year early now forfeits it. For fresh gold exposure, a gold ETF (if you already have a demat account) or a gold mutual fund/FoF via SIP is the closest regulated, liquid, cost-efficient substitute, best kept to 5–10% of your portfolio as a diversifier, not a core holding. Keep digital gold to small, occasional amounts – SEBI's November 2025 advisory explicitly warns it sits outside all regulatory protection – and buy physical gold for weddings and consumption, not returns.

Before committing to a monthly gold SIP alongside your equity plan, run the numbers through NYVO's SIP calculator to see how a modest gold allocation actually affects your long-term portfolio math.

Sources: Reserve Bank of India Sovereign Gold Bond scheme notifications and premature-redemption calendars; Union Budget 2026 amendment to Section 70(1)(x) of the Income-tax Act, 2025 (effective 1 April 2026); SEBI Press Release No. 70/2025, "Caution to public regarding dealing in 'Digital Gold'" (8 November 2025); finance ministry statements on SGB discontinuation (February 2025); Business Standard and Business Today reporting on the SGB pause and Budget 2026 tax change; ClearTax and NISM explainers on gold and SGB capital-gains taxation.
Key source links: RBI SGB FAQ; Income-tax Act Section 70(1)(x); Finance Bill 2026 PDF; SEBI digital-gold caution.