Bonds and fixed income
Bonds pay a known rate of interest and return your money on a set date, if the issuer pays. They suit money you need at a known time or as regular income, and they steady a portfolio that is mostly equity.
What you can buy
- Government securities and treasury bills: the safest credit; you can also buy them directly through RBI Retail Direct.
- State development loans: issued by state governments, usually yielding a little more.
- Corporate bonds and NCDs: issued by companies and NBFCs, rated by SEBI-registered agencies. Higher yields come with higher credit risk.
- Tax-free bonds, bought on the exchange from earlier issues, for investors in high tax brackets.
Yield, price and duration
The yield to maturity is the return you earn if you hold to maturity and the issuer pays everything on time. When interest rates rise, existing bond prices fall, and the longer the bond, the larger the fall. Matching the bond's maturity to when you need the money removes most of that price risk.
Who it suits
- Retirees and families who want regular, predictable income.
- Money set aside for a known date: a fee, a down payment, a loan repayment.
- Equity-heavy portfolios that need a steadier part.
Tax
- Interest is taxed at your slab rate; TDS applies to interest on listed debentures.
- Listed bonds sold after 12 months: gains taxed at 12.5% without indexation; within 12 months, at your slab rate.
- Unlisted bonds and market-linked debentures: gains taxed at your slab rate, however long you hold them.
- For investors in the 30% slab, a tax-free bond or a debt fund held for the right period can beat a higher-yielding taxable bond after tax.
Risks
- Credit risk: the issuer may delay or default. A rating is an opinion, not a guarantee, and ratings can be cut.
- Interest-rate risk if you sell before maturity.
- Liquidity: many corporate bonds trade thinly, so selling early can mean a lower price.
How we help
We place bonds through SEBI-registered online bond platforms and brokers, choose issuers and maturities to match your cash-flow needs, spread credit risk across issuers and compare after-tax yields with debt funds and deposits.
How we work with you
- Your income and timing needsWhen you need money, and how much each month or year.
- A bond ladder or a single bondIssuers, ratings and maturities chosen to match.
- PurchaseThrough a SEBI-registered bond platform into your demat account.
- TrackingInterest receipts, rating changes and reinvestment at maturity.
Common questions
Are bonds safer than equity?
Usually less volatile, but not risk-free: an issuer can default, and prices fall when interest rates rise if you sell early.
How is bond interest taxed?
At your income-tax slab rate. Listed bonds held over 12 months are taxed at 12.5% on capital gains.
What is a good credit rating?
AAA is the highest. Below AA, yields rise but so does the chance of delays or default.
Bonds or debt mutual funds?
Bonds give a known maturity and yield if held; debt funds give diversification and liquidity. The better choice depends on timing and your tax slab.
Talk to us about bonds
A first conversation is free. We reply within one working day.
Investments are subject to market risks; returns are not guaranteed. Read the offer documents before investing. Tax rules described are those in force for 2025-26 and can change; they are general information, not tax advice for your situation. See our disclosures.
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