Bonds on FYERS—Government Securities (G-Secs), Treasury Bills (T-Bills), State Development Loans (SDLs), Corporate Bonds, and Sovereign Gold Bonds (SGBs)—offer different forms of interest, returns, and taxation treatment. Here’s a complete overview.
Interest and Returns
- Government Securities (G-Secs): Provide fixed coupon interest, usually paid semi-annually, until maturity.
- Treasury Bills (T-Bills): Zero-coupon instruments issued at a discount and redeemed at face value. Returns are the difference between issue and redemption price.
- State Development Loans (SDLs): Fixed coupon bonds issued by state governments via RBI auctions. Yields are slightly higher than G-Secs to reflect state-level credit risk.
- Corporate Bonds: Pay fixed or floating interest depending on the issuer. Yields vary by credit rating, with higher-rated issuers carrying lower risk.
- Sovereign Gold Bonds (SGBs): Offer 2.5% annual interest (paid semi-annually) in addition to returns linked to gold prices. To understand eligibility, see who can invest in SGBs in this article.
SGB Sell Price / Redemption Value
SGB redemption depends on whether you sell in the secondary market or redeem via RBI:
- Secondary market (via FYERS Web/App/Trader): The sell price is based on the live market value of your SGB on NSE/BSE. For details, see redeeming SGBs on FYERS in this article.
- Primary market redemption (via RBI): Allowed from the 5th year onwards (on interest dates). Redemption is based on the average gold price (999 purity) over the last three working days before redemption.
- Maturity (8 years): Automatic redemption by RBI; proceeds credited to your linked bank account.
Taxation Rules
G-Secs and SDLs:
- Interest is taxable as “Income from Other Sources” under your income tax slab.
- STCG (held < 12 months): Taxed as per slab.
- LTCG (held > 12 months): Taxed at 10% without indexation.
- T-Bills: No interest payout. Discount income at maturity is treated as STCG and taxed as per slab.
- Corporate Bonds: Interest is taxable as income. Capital gains taxation depends on holding period (STCG/LTCG rules apply).
SGBs:
- Interest (2.5% p.a.) is taxable as income.
- Capital gains on maturity redemption are exempt from tax.
- Secondary market sale gains are taxable (STCG/LTCG).
Are SGBs Secure?
Yes, SGBs are considered highly secure as they are sovereign-backed by the Government of India. They carry no credit risk, offer transparent pricing, and avoid the costs of storing physical gold.
What if...
| Scenario | Resolution |
|---|
| You sell SGBs below your purchase price | You’ll receive the prevailing market price. Holding till maturity ensures redemption at RBI-linked gold rates. |
| You want regular income | Opt for G-Secs, SDLs, or SGBs, which provide periodic interest. T-Bills and some corporate bonds may not offer regular payouts. |
| You are unsure how to report bond income | Interest goes under “Income from Other Sources.” Capital gains follow STCG/LTCG rules depending on holding period. |
| You want safe exposure to gold | SGBs are sovereign-backed and eliminate risks of physical storage. |
Bond taxation and redemption rules differ by type. Review your investment goals and tax profile before choosing G-Secs, T-Bills, SDLs, Corporate Bonds, or SGBs.
Last updated: 26 Sep 2025
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