When you sell Sovereign Gold Bonds (SGBs) before maturity, the tax implications depend on how and when you sell them: *1. Selling on Stock Exchange (Secondary Market)* Holding Period ≤ 12 Months: Classified as Short-Term Capital Gains (STCG) and taxed at your applicable income tax slab rate. Holding Period > 12 Months: Classified as Long-Term Capital Gains (LTCG) and taxed at 12.5% without indexation benefits. *2. Premature Redemption to RBI (After 5 Years)* If you opt for premature redemption through RBI's buyback window (available after 5 years), the capital gains are tax-exempt for individual investors. *3. Redemption at Maturity (8 Years)* Holding SGBs until maturity results in tax-free capital gains for individual investors. Note: The 2.5% annual interest earned on SGBs is taxable as per your income tax slab, regardless of how or when you sell the bonds.