Government Securities Issuance Calendar Oct 2026-Mar 2027 | Tax Impact

What Happened?

On 25 September 2026, the Reserve Bank of India (RBI), in consultation with the Government of India, released the indicative issuance calendar for Government of India dated securities, including Sovereign Green Bonds (SGrBs), for the second half of fiscal year 2026-27 (October 1, 2026 to March 31, 2027). The total issuance amount is ₹7,86,000 crore spread across 23 weekly auction cycles, featuring various maturity periods ranging from 3 years to 50 years. This calendar provides transparency to the Government Securities Market and enables institutional and retail investors to plan their investment strategy efficiently.

Background & Legal Context

Government securities are one of the safest investment instruments in India and are governed by various provisions under the Income Tax Act 2025. Understanding the tax treatment of these securities is essential for all categories of investors—individuals, Hindu Undivided Families (HUFs), companies, and non-resident Indians (NRIs).

Key Tax Provisions Under Income Tax Act 2025:

• Interest Income Classification: Interest earned on Government Securities is classified as "Income from Other Sources" under Chapter VIA of the Income Tax Act 2025. This income is fully taxable at the applicable slab rates for individuals.
• Capital Gains Treatment: Any profit from the sale of Government Securities before maturity is treated as capital gains. If held for more than 12 months, it qualifies as long-term capital gains (LTCG), which currently enjoys concessional tax treatment at 20% with indexation benefit. Short-term capital gains (STCG) are taxed as per the individual's slab rate.
• TDS Provisions: Under Section 193 of the Income Tax Act 2025, TDS at 10% is deducted on interest payments from Government Securities by the RBI. However, individuals with no tax liability can file Form 15G/15H to avoid TDS.
• Sovereign Green Bonds (SGrBs) Specific Treatment: SGrBs issued by the Government of India are treated identically to regular Government Securities for tax purposes. Interest earned is taxable, and capital gains follow the same classification rules as mentioned above.

For Assessment Year 2026-27 (covering financial year 2025-26 and onwards), taxpayers must ensure proper documentation and reporting of Government Securities holdings and related income in their Income Tax Returns (ITRs).

What Does This Mean for You?

This issuance calendar has significant implications for different categories of investors:

1. For Individual Investors:

Individual investors, both salaried and non-salaried, can now plan their Government Securities investments strategically. Since interest income is fully taxable, individuals in lower tax brackets may benefit from investing through this schedule. Those in the highest bracket (30% slab) should carefully evaluate the after-tax returns. The LTCG benefit of 20% on capital gains makes these securities attractive for long-term holding beyond 12 months.

2. For Institutional Investors:

Banks, insurance companies, mutual funds, and pension funds have structured investment mandates. This calendar aids in portfolio planning, ensuring liquidity management, and compliance with regulatory requirements under the Banking Regulation Act and Insurance Act.

3. For HUF (Hindu Undivided Family) Investors:

HUFs are separate taxable entities under the Income Tax Act 2025. Interest earned on Government Securities held in HUF's name is taxable separately in the HUF's hands. This offers an opportunity for tax planning if HUF members are in lower brackets and the HUF generates income from a lower tax bracket.

4. For NRI/Overseas Citizens of India (OCI):

NRIs investing in Government Securities must be aware of the Non-Resident taxation framework. Interest income is taxable in India, but NRIs cannot claim Foreign Tax Credit in India. Double Taxation Avoidance Agreements (DTAAs) may provide relief, depending on the NRI's country of residence.

5. For Sovereign Green Bond (SGrB) Investors:

SGrBs are issued with the specific objective of financing green projects. From a tax perspective, they are identical to regular Government Securities. However, environmentally conscious investors can achieve both financial returns and contribute to environmental sustainability. The allocation shows ₹12,000 crore of SGrBs across the period.

Retail Investor Facility:

The RBI has reserved 5% of the notified amount for retail investors through non-competitive bidding. This means retail investors can purchase Government Securities at the weighted average price determined by competitive bidding, without the complexity of competitive bidding themselves. This is advantageous for small investors.

What Should You Do Now?

Immediate Action Items:

• Evaluate Your Tax Bracket: Calculate your current income and applicable tax slab for AY 2026-27. This determines the after-tax return from Government Securities interest income.
• Plan Long-Term vs Short-Term Strategy: If you intend to hold securities beyond 12 months, plan accordingly to benefit from LTCG treatment at 20%. Document your purchase date and cost basis meticulously.
• File Form 15G/15H if Eligible: If you have no tax liability for AY 2026-27, file Form 15G (for individuals) or 15H (for senior citizens above 60) with the RBI before interest is credited to avoid TDS deduction.
• Maintain Investment Records: Keep all auction receipts, interest statements, and transaction confirmations from RBI. These are essential for filing your ITR and substantiating your investment.
• Report Correctly in ITR: Under Schedule OS (Other Sources) of your ITR form, report the interest income from Government Securities. If you sold securities before maturity, report capital gains under Schedule CG (Capital Gains).
• Consider Portfolio Diversification: Review your overall investment portfolio. While Government Securities offer safety, they may not provide inflation-beating returns. Balance them with equities or other growth instruments suitable to your risk profile and tax situation.
• Consult a Tax Professional: Given the complexity of tax treatment for different investor categories, consulting a chartered accountant is advisable, especially if you have multiple income sources or are a NRI/HUF.

For Businesses and Corporates:

Companies investing in Government Securities must account for them under the applicable Accounting Standards (AS/Ind-AS). Interest income is taxable under Section 28 read with Schedule OS of the Income Tax Act 2025. Ensure proper classification and disclosure in financial statements and tax returns.

Key Takeaways

• Total Issuance: ₹7,86,000 crore of Government Securities (including SGrBs) scheduled across 23 auctions from October 2026 to March 2027.
• Tax Treatment: Interest is fully taxable as per your slab rate; capital gains on securities held beyond 12 months enjoy LTCG treatment at 20% under Income Tax Act 2025.
• TDS Relief: File Form 15G/15H if you have no tax liability to avoid 10% TDS deduction on interest.
• Retail Investor Benefits: 5% of notified amount reserved for retail investors through non-competitive bidding, offering simpler investment access.
• Green Bonds Inclusion: SGrBs totaling ₹12,000 crore provide tax-efficient investment options for environmentally conscious investors with identical tax treatment to regular Government Securities.

Important Note: This calendar is indicative and subject to modifications by the RBI and Government of India based on market conditions, government requirements, and intervening holidays. Always check official RBI communications before finalizing your investment decisions.

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