Invest In Bonds

Unlock stable returns with access to a wide range of bonds, including government bonds, corporate bonds, sovereign gold bonds, and municipal bonds. Bonds offer a reliable source of income with predetermined interest payments and maturity dates, making them an essential component of any well-rounded investment strategy. Whether you're seeking steady income or capital preservation, bonds provide a low-risk option to achieve your financial objectives.

Banner Image
Banner Image

Invest In A Range Of Bonds

Bonds are fixed-income securities issued by Government, private or public sector companies, banks, or NBFCs.

Offers superior returns than FDs with similar or lesser risk exposure.

Generates a steady stream of income via coupon/interest payouts.

Start Investing in Bonds

    Expect a call within 30 mins (Mon-Fri, 9:30 AM - 6:30 PM)

    Categories Of Bonds In India

    1. Government Bond

    The state and central government, or municipalities issue government bonds. These are the safest bonds due to RBI regulations with almost zero credit and default risk.

    Government-issued securities with less than a year of maturity are called T-bills. Bonds are securities with a maturity period of more than a year.

    2. Corporate Bond

    Companies and corporations of different sizes issue bonds to raise funds. By doing so, these companies can borrow money at a lower interest rate compared to bank loans.

    Corporate bonds often deliver superior yields than government bonds. However, they are prone to credit or default risk.

    3. Sovereign Gold Bond

    Sovereign gold bonds are the safest way to invest in digital gold. Backed by the government, these bonds were introduced in Nov’15 to buy gold in a certificate format. Investing in SVBs is easier than buying physical gold. You can buy SVBs in grams. The minimum investment is one gram and the maximum is 4kg for an individual investor.

    You can earn returns on SVBs in the form of interest rate and capital appreciation. SVBs typically offer a fixed 2.5% p.a. interest rate. Though the bond tenure is 8 years, you can exit after 5 years.

    4. Convertible Bond

    Convertible bonds allow investors to convert the bond amount into equity investments. The conversion is subject to pre-defined terms.

    5. Zero-Coupon Bond

    As the name suggests, zero-coupon bonds do not offer any coupon rate. However, these bonds are made available for investors at a discounted face value. Upon maturity, investors receive the principal amount at the actual face value.

    Both government and corporations issue zero-coupon bonds with a longer tenure of 10 to 12 years.

    6. Zero-Tax Bond

    Zero-tax bonds deliver semi-yearly or yearly tax-free interest to the investors. As these bonds offer tax-free interest, the interest rate is often lower than other fixed-income investments. The maturity of these bonds can be between 10 and 20 years.

    7. 54EC Capital Gain Bonds

    54EC Capital Gain Bond is a financial instrument that offers a tax-saving option on long-term capital gains incurred from the sale/transfer of property, land, or building. The bond is backed by the government and has AAA credit rating with 5.25% annual interest rate.

    To unlock the tax-saving option, you must invest the capital gains in 54EC bonds within 6 months of the property sale/transfer. The bond has a 5-year lock-in period with a maximum of 50 lakhs of investment in a financial year.


    Low Initial Investment

    You can buy bonds of face value as low as INR. 1,000 and can increase the investment amount by the multiples of the face value.

    High Liquidity

    After the initial offering, most bonds are traded in the market and offer high liquidity as you can buy/sell them as per your preferences.

    Stable Income and Capital Gains

    Bonds deliver periodic payouts as per the coupon rate, offering a stable income. You can also earn capital gains by selling the bond at a higher price.

    Superior Returns than FDs

    Bonds may deliver an additional 1-2% return compared to FDs with similar or lesser risk exposure and tenure.

    Factors to Consider Before Investing in Bonds


    Credit Ratings

    Credit rating agencies in India like CRISIL, CARE, and ICRA award credit ratings to all bonds. Ratings range from AAA to C and D. AAA-rated bonds are the safest with low default risk. Check the credit rating of the bond you wish to buy before investing.



    Bond yield is the overall annual return an investor makes on a bond. The yield will be the same as the coupon rate if bought during the fresh issue. If bought post fresh issue from the secondary market, the yield will be the bond’s coupon rate divided by its market price. So if you’re buying a bond from the secondary market, checking the yield is more important than the coupon rate.



    Bonds come with a predefined maturity period. If you plan to hold the bond until maturity, make sure to match your investment horizon with the bond’s maturity period.

    Who Should Invest in Bonds?

    Bonds are ideal for investors seeking a steady source of income from their investments.

    As bonds are less riskier than stocks, investors can consider bonds to introduce stability and diversification in their portfolios.

    Investors looking to lock-in a high-interest rate on their investment for 10 years can buy bonds.

    Investors seeking tax benefits can look into zero-tax bonds and 54EC bonds.


    Interest Income: The interest you earn on bonds will be taxed according to your income tax slab. (Except for tax-free bonds, where the interest you earn is exempt from tax.)

    Capital Gains: If you sell a bond before it matures, you will be subject to capital gains tax.

    • Listed Bonds: Short-Term Capital Gains: Bonds sold within 12 months of purchase will be taxed at your income tax slab rate. Long-Term Capital Gains: Bonds held for more than 12 months before selling will attract a tax rate of 10% without indexation.
    • Unlisted Bonds: Short-Term Capital Gains: Unlisted bonds sold within 36 months of purchase will be taxed as per your income tax slab. Long-Term Capital Gains: Unlisted bonds held for more than 36 months will attract 20% tax without indexation.


    Do I need a Demat account to buy bonds?

    Yes, you need a Demat account to buy bonds. You can use your existing demat account. If you don’t have a Demat account, experts at VNN Wealth can help you create one and plan your investments.

    Is the interest from a bond taxable?
    Is there a lock-in period for a bond?
    Are there any interest payouts during the lock-in period (if any)?
    Can NRIs invest in bonds?