📊 Bonds, NCDs & Secondary Debt

Go beyond FDs.
Higher yields, fixed income, zero equity risk.

Invest in government bonds, corporate bonds, NCDs, Sovereign Gold Bonds, and secondary market debt instruments — earning 7% to 12%+ p.a. Expert guidance on credit ratings, yield to maturity, and building a diversified fixed-income portfolio. Free advisory.

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7%–12%+
Indicative yield p.a.
5 types
Debt instruments covered
Sovereign
to AAA-rated options
₹0
Advisory fee

Types of debt instruments

5 types of bonds & NCDs — which is right for you?

Each bond type occupies a different position on the safety-return spectrum. The right choice depends on your tax bracket, investment horizon, and risk appetite.

Safest

Government Bonds (G-Secs & RBI Bonds)

Sovereign guarantee. Zero default risk.

Government Securities (G-Secs) and RBI Floating Rate Savings Bonds are issued by the Government of India and carry sovereign guarantee — the highest level of safety possible. G-Secs can be purchased directly via RBI Retail Direct or through brokers. The 7.75% RBI Floating Rate Bond is available at all times.

Indicative yield7.00% – 8.00% p.a.
Credit risk✅ Zero — Sovereign guarantee
Minimum investment₹1,000 (face value)
Tenure1 year to 40 years
LiquidityListed on NSE/BSE (secondary)

✅ Best for: Ultra-conservative investors, retirees, and anyone seeking guaranteed sovereign-backed income

💬 Enquire about G-Secs ↗
Tax-Free at Maturity

Sovereign Gold Bond (SGB)

Gold returns + 2.5% interest + zero capital gains tax.

SGBs are RBI-issued bonds denominated in grams of gold. You earn 2.5% p.a. interest on the issue price, paid semi-annually, plus the full gold price appreciation at maturity. Capital gains on redemption at maturity are completely tax-free — making SGBs significantly more tax-efficient than physical gold or gold ETFs for long-term investors.

Fixed interest2.50% p.a. (semi-annual)
Return potentialGold appreciation + 2.5%
Maturity capital gains✅ 100% tax-free
Tenure8 years (exit from year 5)
Minimum investment1 gram of gold

✅ Best for: Long-term gold investors seeking tax-free capital gains + regular income

💬 Enquire about SGBs ↗
High Yield

NCDs (Non-Convertible Debentures)

NBFC-issued. Higher coupon, listed on exchanges.

NCDs are debt instruments issued by NBFCs and corporates, listed on NSE/BSE, offering higher interest rates than bank FDs and government bonds. They cannot be converted to equity. NCDs offer flexible payout options — monthly, quarterly, annual, or cumulative. Always invest in investment-grade (AA or above) rated NCDs for safety.

Indicative yield8.50% – 12.00% p.a.
Credit ratingAAA to AA (recommended)
Payout optionsMonthly / Quarterly / Annual / Cumulative
Minimum investment₹10,000
Exit optionSell on NSE/BSE (secondary)

✅ Best for: Investors seeking higher coupon than bank FDs with the option of early exit via exchange

💬 Enquire about NCDs ↗
Tax-Free Interest

Tax-Free Bonds

Interest fully exempt from income tax — best for 30% bracket.

Tax-free bonds are issued by government-backed entities like NHAI, REC, PFC, IRFC, and HUDCO. The interest earned is 100% exempt from income tax under Section 10 of the IT Act. Though coupon rates are moderate (5–6%), the post-tax effective yield for investors in the 30% bracket can match or exceed taxable bonds at 8–9%.

Coupon rate5.00% – 6.50% p.a.
Effective post-tax yield (30%)~7.50% – 9.00% p.a.
Interest taxability✅ 100% exempt — Sec 10
Issuer typeGovt-backed PSUs (NHAI, REC, PFC)
Available viaSecondary market (NSE/BSE)

✅ Best for: Investors in the 20–30% tax bracket seeking tax-free, government-backed income

💬 Enquire about tax-free bonds ↗

Indicative yields — May 2026

Bond & NCD issuers — indicative yield ranges

Yields below are indicative ranges and vary with market conditions, tenure, and payout option. Secondary market bonds trade at prices that shift daily — actual YTM at time of purchase may differ. We provide current live yields before every investment.

Issuer / Instrument Category Credit Rating Tenure Indicative Yield (p.a.) Interest Taxability
🏛️ Government Securities & RBI Instruments
RBI Floating Rate Savings Bond Govt. Bond Sovereign 7 years 7.35% – 8.00% Taxable at slab
G-Sec (10-year benchmark) Govt. Bond Sovereign 5–40 years 6.90% – 7.50% Taxable at slab
Sovereign Gold Bond (SGB) Gold Bond Sovereign 8 years 2.50% fixed + gold appreciation Interest taxable; maturity gains tax-free
🔖 Tax-Free Bonds (Secondary Market — PSU Issuers)
NHAI Tax-Free Bonds Tax-Free Bond CRISIL AAA Residual 5–15 yrs 5.00% – 6.25% (tax-free) ✅ 100% tax-free (Sec 10)
REC / PFC Tax-Free Bonds Tax-Free Bond CRISIL AAA Residual 5–15 yrs 5.25% – 6.50% (tax-free) ✅ 100% tax-free (Sec 10)
HUDCO / IRFC Tax-Free Bonds Tax-Free Bond CRISIL AA+ Residual 5–12 yrs 5.50% – 6.75% (tax-free) ✅ 100% tax-free (Sec 10)
🏢 Corporate Bonds & NCDs
Bajaj Finance NCD NCD CRISIL AAA 2–5 years 8.75% – 9.25% Taxable at slab
Shriram Finance NCD NCD ICRA AA+ 2–5 years 9.25% – 10.50% Taxable at slab
PSU Bank Bonds (SBI, BOB etc.) Corporate Bond CRISIL AAA 3–10 years 7.50% – 8.50% Taxable at slab
NBFC Bonds (Muthoot, Manappuram) Corporate Bond ICRA AA / AA– 2–4 years 10.00% – 12.00% Taxable at slab
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Our recommendation: For investors in the 30% tax bracket, tax-free bonds from NHAI/REC/PFC can deliver a post-tax equivalent yield of 7.5–9%+ — matching or beating most taxable options. For maximum yield, Shriram Finance NCDs and NBFC bonds in the AA/AA+ category offer 9–12% p.a. — always balanced with credit quality. SGBs are uniquely attractive for anyone wanting gold exposure with tax-free returns at maturity.
⚠️
Yields are indicative and reflect approximate secondary market levels. Actual yields depend on purchase price and change daily with market conditions. Always confirm live YTM at time of investment.

Secondary market bonds

Secondary market bonds — access higher yields from existing issuances

You don't have to wait for a new bond issue. The secondary market — trading of already-listed bonds and NCDs on NSE/BSE — lets you invest in high-quality instruments that are no longer available in primary subscription, often at compelling yields.

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Key benefit: Secondary market bonds can trade at a discount (price below face value), which means the effective yield to maturity (YTM) is higher than the original coupon rate. Conversely, premium bonds trade above face value. We identify secondary market bonds with attractive YTM for our clients at current market prices.
📉 Discount Bonds

Bonds trading at a discount — higher YTM

When interest rates rise after a bond is issued, the bond's market price falls below face value. Buying a discounted bond locks in a higher yield to maturity than the face coupon. This is especially attractive in a falling-rate environment where you can also benefit from capital appreciation.

  • ✅ Purchase price below face value — capital gain at maturity
  • ✅ YTM higher than stated coupon rate
  • ✅ Capital gain on listed bonds held 12+ months taxed at 12.5% LTCG
  • ✅ Ideal when interest rates are expected to fall
  • ⚠️ Requires identifying the right bond at the right price — we help you here
📈 Premium Bonds

Bonds trading at a premium — lower YTM but safer coupon

Bonds with high coupons issued in a past high-rate environment trade at a premium (above face value) because they promise higher income. The YTM is lower than the coupon, but you lock in a high coupon payment for the remaining tenure — useful for income-seeking investors.

  • ✅ High coupon payment locked for remaining tenure
  • ✅ Predictable income stream — ideal for retirees
  • ⚠️ Capital loss at maturity (price paid > face value returned)
  • ⚠️ YTM lower than stated coupon — evaluate on YTM, not coupon
  • ✅ Liquidity available — can sell before maturity on exchange
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Sindhu's tip: Always evaluate a secondary market bond by its Yield to Maturity (YTM), not its coupon rate. Two bonds with the same coupon can have very different YTMs depending on their market price. We calculate YTM for every secondary market bond we recommend so you know exactly what return to expect.

Plan your returns

Bond yield & maturity calculator

Calculate your total interest income, maturity value, and post-tax return from any bond or NCD investment. Compare coupon payout options to find the right structure for your income needs.

🧮 Bond & NCD Yield Calculator

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Total value at maturity
Principal invested ₹5,00,000
Total interest / coupon earned —
Periodic coupon payout —
Tax on interest (est.) —
Post-tax interest earned —
Effective post-tax yield —
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Tax implications

How bonds & NCDs are taxed — a clear breakdown

Tax treatment differs significantly across bond types. Understanding this helps you choose the most efficient instrument for your tax bracket.

Slab rate
Coupon / interest income
Interest (coupon) from corporate bonds, NCDs, G-Secs, and RBI bonds is added to your total income and taxed at your applicable income tax slab rate (0%, 5%, 20%, or 30%). TDS at 10% is deducted if interest exceeds ₹5,000 p.a. from a listed bond.
0%
Tax-free bond interest
Interest from bonds issued by government entities (NHAI, REC, PFC, IRFC, HUDCO) under Section 10(15) of the Income Tax Act is fully exempt from tax — at all slabs. No TDS is deducted on tax-free bond interest.
0%
SGB maturity capital gains
Capital gains arising from Sovereign Gold Bond redemption at maturity (8 years) are entirely exempt from capital gains tax — one of the most unique and valuable tax benefits in Indian fixed income investing.
12.5%
LTCG — listed bonds (12+ months)
Long-term capital gains on listed bonds and NCDs sold or redeemed after holding 12 months are taxed at 12.5% without indexation benefit. This applies to gains from bond price appreciation in the secondary market.
Slab rate
STCG — listed bonds (under 12 months)
Short-term capital gains on listed bonds sold within 12 months of purchase are taxed at your applicable income tax slab rate — same as interest income. Holding bonds longer than 12 months converts STCG to the more favourable 12.5% LTCG rate.
10%
TDS on listed NCD interest
TDS is deducted at 10% on listed NCD interest if it exceeds ₹5,000 in a financial year. Unlike bank FDs (₹40,000 threshold), the threshold for listed bonds is lower. Submit Form 15G/15H if your total income is below the exemption limit.
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Tax efficiency tip: If you are in the 30% bracket, a tax-free bond at 6% yields the same post-tax return as a taxable bond at ~8.57%. Always compare instruments on a post-tax yield basis — we do this comparison for you before every recommendation.

Maximise your bond returns

6 smart strategies for fixed-income investing with bonds

A few smart moves can significantly improve your risk-adjusted, post-tax returns from bonds and NCDs.

Bond laddering — stagger maturities

Spread your bond investments across 2-year, 5-year, and 10-year tenures. This gives you regular maturity proceeds to reinvest at prevailing rates, reduces interest rate risk, and ensures liquidity at multiple points — without locking all your money in one tenure.

Prioritise tax-free bonds if you're in 30% bracket

For investors in the 30% tax bracket, a 6% tax-free bond delivers the same effective return as a taxable bond at 8.57%. Tax-free bonds from NHAI, REC, and PFC (all AAA-rated) are one of the highest-efficiency instruments available — and available at compelling yields in the secondary market.

Use SGBs as your gold allocation — not physical gold

If you want gold in your portfolio, SGBs are strictly superior to physical gold, gold ETFs, or gold funds for a buy-and-hold investor. You get the same gold price returns plus 2.5% annual interest, and capital gains at maturity are completely tax-free. The only compromise is the 8-year lock-in (with exit option from year 5).

Always evaluate bonds by YTM, not coupon rate

The coupon rate tells you what the bond pays on face value. The Yield to Maturity (YTM) tells you what you actually earn based on the price you pay. A secondary market bond at ₹900 face value with an 8% coupon has a much higher YTM than the same bond bought at ₹1,050. We always calculate YTM for you before any recommendation.

Don't ignore credit ratings — yield alone is not enough

A bond offering 14–15% yield may look attractive until you notice it is rated BBB or below. Higher yields always reflect higher credit risk. We recommend sticking to AA and above for NCDs, and AAA for larger allocations. The extra 1–2% yield on a lower-rated bond rarely compensates for the risk of default or credit downgrade.

Combine bonds with FDs for a complete fixed-income portfolio

Bonds and FDs complement each other. FDs (especially small finance bank FDs) offer DICGC-insured safety; bonds offer better tax efficiency and exchange liquidity. A well-structured portfolio typically holds 40–60% in FDs for safety anchor and 40–60% in bonds/NCDs for yield optimisation and tax efficiency.

Getting started

How to invest in bonds and NCDs with us — 5 simple steps

We handle issuer research, credit rating review, YTM calculation, and application — at zero cost to you.

Share your goal & tax bracket

Tell us whether you need regular income or growth, your investment amount, horizon, and tax bracket. We match this to the right bond type — tax-free, NCD, G-Sec, SGB, or corporate bond.

We shortlist bonds by YTM & rating

We compare current live yields (primary & secondary market), credit ratings, and payout options across all available instruments — and present you a clear comparison with post-tax effective yields.

Documents & demat check

Most bond investments require a demat account. We verify whether your existing demat is set up for bond trading or guide you through a quick setup. KYC is typically already complete if you hold mutual funds or stocks.

Place the order

We guide you through placing the order — either on the exchange (secondary market) or via the primary application platform. We double-check settlement date, accrued interest (if buying mid-coupon), and lot sizes.

Track coupons & reinvest

We set up reminders for your coupon dates and maturity dates. At maturity, we proactively compare reinvestment options so your money is never sitting idle in a savings account.

Zero advisory fee

Our advisory on bonds and NCDs is completely free for you. We are compensated by the issuer on primary market applications. Secondary market transactions are settled through your demat account at standard brokerage.

Common questions

Frequently asked questions about bonds and NCDs

Clear answers to the questions we hear most often from first-time bond investors.

A bond is a tradeable debt instrument where you lend money to a government or company for a fixed period at a predetermined interest rate (coupon). Unlike a fixed deposit, bonds are listed on exchanges (NSE/BSE) — you can sell them before maturity. Bond prices fluctuate with interest rates; if you sell before maturity, you may get more or less than your invested amount. If you hold to maturity, you get back the full face value regardless of price movements. FDs offer more simplicity and DICGC insurance (for bank FDs); bonds offer better yields, exchange liquidity, and in some cases significant tax advantages.
Both bonds and NCDs (Non-Convertible Debentures) are debt instruments — you lend money and receive interest. The key differences: bonds are typically issued by governments or PSUs; NCDs are issued by private companies and NBFCs. NCDs are specifically "non-convertible" — they cannot be converted into equity shares. Both can be listed and traded on exchanges. NCDs typically offer higher interest rates than government bonds, reflecting their higher credit risk. Always check the CRISIL/ICRA/CARE rating — we recommend only AA and above rated NCDs.
The Government of India periodically issues SGB tranches through the RBI. When a new tranche is not active, older SGB series are available in the secondary market on NSE/BSE — often at a discount, which can increase your effective yield. We track active SGB tranches and secondary market availability for our clients. SGBs remain one of the best investments for long-term gold exposure: you earn 2.5% annual interest plus full gold price appreciation, and capital gains at maturity are completely tax-free. Connect with us on WhatsApp for current SGB availability.
Yes, most bond and NCD investments in India require a demat account because the securities are held in electronic form. If you already invest in mutual funds through a demat account or hold any listed stocks, your demat is likely already enabled for bond trading. For G-Secs and RBI bonds, you can also invest via the RBI Retail Direct portal without a standard demat account. We check your existing setup and guide you through any configuration needed — it usually takes less than a day.
Yield to Maturity (YTM) is the total annualised return you will earn on a bond if you purchase it at today's market price and hold it until maturity — receiving all coupon payments and the face value at redemption. It is the correct metric to compare bonds, not the coupon rate. For example, a bond with a 7% coupon bought at ₹900 (below face value of ₹1,000) will have a YTM significantly higher than 7% because you also gain ₹100 at maturity. We calculate YTM for every bond we recommend so you always know the true return.
Coupon (interest) income from regular bonds and NCDs is taxed at your income tax slab rate. Capital gains on bonds sold in the secondary market are taxed as STCG (slab rate, if held under 12 months) or LTCG at 12.5% (if held 12+ months). Exception 1: Interest from tax-free bonds (NHAI, REC, PFC, IRFC, HUDCO) is 100% exempt from tax at all slabs. Exception 2: Capital gains on Sovereign Gold Bond redemption at maturity (8 years) are fully tax-free. These two exceptions make tax-free bonds and SGBs especially powerful for investors in the 20–30% bracket.
Yes, if the bond or NCD is listed on NSE or BSE, you can sell it in the secondary market before maturity at the prevailing market price — which may be above or below your purchase price depending on interest rate movements and the issuer's credit standing. Government bonds typically have good liquidity. Some corporate NCDs can have thin secondary market liquidity. For unlisted NCDs and RBI bonds, early exit is either not available or available only through issuer buyback. We always inform you about the liquidity profile of a bond before you invest.

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© 2026 Sid Financial Services | M. Sindhugandhimathi | AMFI Registered Mutual Fund Distributor — ARN-163820 | IRDAI Certified Point of Salesperson (PoSP) — Cert. No. DP508174 | Bond, NCD, and debt instruments mentioned on this page are issued by respective governments, public sector entities, and private companies — not by Sid Financial Services. Sid Financial Services acts as a referral and advisory intermediary. Indicative yields shown are based on publicly available market information and are subject to change without notice. Actual yield to maturity will depend on the purchase price at the time of investment. Credit ratings are assigned by independent agencies (CRISIL, ICRA, CARE) and are subject to revision. Past ratings are not a guarantee of future performance. Bonds and NCDs (except government securities) are not covered by DICGC insurance. Investment in any debt instrument involves credit risk and interest rate risk. Please read the offer document or information memorandum carefully before investing. Tax treatment of bond income and capital gains is as per the Income Tax Act, 1961, and subject to change. Investors are advised to consult a qualified tax advisor for their specific situation. | Regulatory disclosures | Disclaimers | Privacy policy