Here are a few important points from Budget 2026 that deserve attention. These are our interpretations based on our understanding as on date.
1. Sovereign Gold Bonds (SGB) – Tax clarity from 1 April 2026. A very important distinction has been introduced.
SGBs bought in the primary issue→ Redemption with RBI at maturity (8 years) will be tax free.
SGBs bought in the primary issue→ Early Redemption with RBI after 5 years, and then every 6 months on interest payment dates will be taxed as capital gains.
SGBs bought from the secondary market (stock exchange) → Capital gains tax will apply on redemption with RBI (whether early or at maturity).
This change applies from 1 April 2026.
This creates a big difference for investors who subscribed to SGBs in the primary issue (looking for early redemption after 5 years) and those who accumulated them later from the exchange and holding them to exit at the RBI window.
Also remember: SGB tenure is 8 years. Early redemption allowed after 5 years, and then every 6 months on interest payment dates. SGB can always be sold in the secondary market with the long-term capital gains tax (holding period greater than one year) being 12.50 %.
Our take: Anyone looking for cash flows or having rebalancing requirements, who has bought SGBs in the primary and the secondary market, should exit the SGBs prior to 31st March 2026 in the earliest available window.
2. Increase in STT on Derivatives (F&O)
Securities Transaction Tax (STT) on derivatives transactions has been increased. This affects Traders and Mutual funds/PMS/SIF/AIF strategies that use derivatives for hedging or arbitrage.
Higher STT = higher transaction cost, which can subtly reduce strategy efficiency, especially in arbitrage and hedging-oriented funds.
Our take: We have never been in favor of doing independent trades in the derivatives market. However, the products recommended by us may have a smaller impact. We will continue to assess the impact.
3. No change in Personal Income Tax slabs
There is no change in personal income tax rates compared to the previous budget. Planning assumptions remain the same.
Our take: No need to take calculators out.
4. Buyback taxation change
Buybacks will now be treated as Capital Gains in the hands of investors instead of being treated as deemed dividend income.
This is a positive move from a tax-efficiency and fairness standpoint for shareholders.
Our take: It is easy to participate in buybacks, as they are tax-efficient.
5. Reduction in TCS on foreign remittances
TCS rates have been reduced for outward remittances towards medical expenses, Education & Overseas tour programs. This reduces temporary cash flow blockage for families making such remittances.
Our take: Less capital is blocked for the above transactions.
Feel free to connect with us for any clarifications.
Happy Financial Planning!
Naveen Julian Rego – CFP®
MD & Principal Officer
Naveen Rego Capital
SEBI Registered Investment Adviser
Reg No: INA000019211
BSE Membership ID: 2178
Date: 03-02-2026
Note: Do connect with a Registered tax practitioner to have more clarity on your taxation issues.
Disclaimers:
1. Investment in the securities market is subject to market risks. Read all the related documents carefully before investing.
2. Registration granted by SEBI, membership of BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
3. Financial products recommended by us which are under the jurisdiction of other regulators are beyond the scope of SEBI’s grievance mechanism.
