Learn About Bonds
Everything you need to know about bond investing in India
Bond Basics
A bond is essentially a loan that you give to a company or government. In return, you receive regular interest payments (called coupons) and get your principal back when the bond matures. Learn about face value, coupon rates, maturity dates, YTM, the difference between G-Secs and corporate NCDs, and why bonds belong in every investment portfolio.
Credit Ratings
Credit ratings assess an issuer's ability to repay the bond. Agencies like CRISIL, ICRA, CARE, and India Ratings assign ratings from AAA (safest) to D (default). Higher ratings mean lower risk but typically lower yields. Understanding ratings is crucial for evaluating the safety of any bond investment.
Bond Investment Risks
While bonds are generally safer than stocks, they carry several risks. Credit risk is the chance an issuer defaults on payments. Interest rate risk means bond prices fall when rates rise. Understanding these risks — and how to mitigate them through diversification and maturity matching — is essential for successful bond investing.
Bond Taxation
Bond interest is taxed as income from other sources at your slab rate. Capital gains on listed bonds held over 12 months attract 12.5% LTCG. Tax-free bonds issued by NHAI, REC, and PFC offer completely tax-exempt interest. For investors in the 30% bracket, a 5.5% tax-free yield equals ~7.85% pre-tax.
How to Invest
Investing in bonds in India is straightforward: open a demat account, choose between platforms like GoldenPi, WintWealth, IndiaBonds or RBI Retail Direct, research bonds by credit rating and YTM, and place your order. Use BondDekho to compare the same bond across platforms and find the best price.