Tax Implications on Government Securities (G-Secs)

What are the tax implications on G-Secs?

The tax implications on Government Securities (G-Secs) vary based on the type of G-Sec and the duration of the holding period.
  • Short-term Capital Gains (STCG): If the G-Sec is sold within a short duration, the gains are classified as STCG and taxed at your applicable income tax slab rate.
  • Long-term Capital Gains (LTCG): If the G-Sec is held for a longer duration before selling, the gains are classified as LTCG and taxed at a lower rate of 10%.
For example, consider you purchased a G-Sec for ₹100 and sold it for ₹110 after a year, resulting in an LTCG of ₹10. This gain will be taxed at 10%, amounting to ₹1. In contrast, if the G-Sec was sold within six months, the STCG of ₹10 would be taxed at your income tax slab rate, which might be higher than 10%.

Moreover, the interest earned on the G-Sec is classified under 'Income from Other Sources' and taxed according to your applicable slab rate.

    • Related Articles

    • What are the tax implications of gifting stocks?

      Gifting stocks carries unique tax implications for both the person giving the gift (the Gifter) and the one receiving it (the Giftee). For the Gifter: Capital Gains: As outlined in the Income Tax Act, the transfer of a capital asset would typically ...

    • What are G-Secs or Government Securities?

      G-Secs, or Government Securities, are debt instruments issued by the Reserve Bank of India (RBI) on behalf of the Government of India. The primary objective of these securities is to raise funds for governmental projects and activities. Given that ...

    • Will my investment value increase on investing in G-Secs?

      When you invest in Government Securities (G-Secs), the return on your investment depends on various factors including the interest rate, maturity period, and prevailing market conditions. While the general trend is for the value of your investment to ...

    • What is the interest rate on investing in G-Secs?

      The interest rate for Government Securities (G-Secs) is influenced by various factors, including prevailing market conditions, fund demand and supply, inflation expectations, and the government's credit quality. This rate is decided during the ...

    • Can I invest in G-Secs, T-Bills, and SDLs through FYERS?

      Absolutely! You can invest in G-Secs, T-Bills, and SDLs via FYERS on both primary and secondary markets: Primary Market: Use our Debt Market portal to apply for G-Secs, T-Bills, or SDLs. For a step-by-step guide, refer to this article. Secondary ...