What interest, returns, and taxation rules apply to Bonds on FYERS?

What interest, returns, and taxation rules apply to Bonds on FYERS?

When investing in bonds via FYERS—including Government Securities (G-Secs), Treasury Bills (T-Bills), State Development Loans (SDLs), Corporate Bonds, and Sovereign Gold Bonds (SGBs)—it’s important to understand how interest, returns, taxation, and redemption values are calculated.

Interest and Returns

  • G-Secs: Provide fixed coupon payments, usually semi-annually, until maturity.
  • T-Bills: Issued at a discount and redeemed at face value—returns are the difference (no periodic interest).
  • SDLs: Pay regular interest, similar to G-Secs, with slightly higher yields due to state-level risk.
  • Corporate Bonds: Interest depends on the issuer and bond type—higher yields but linked to credit rating.
  • SGBs: Offer 2.5% annual interest (paid semi-annually) in addition to returns linked to gold price movements. To understand who can invest in SGBs, see SGB eligibility in this article.

SGB Sell Price / Redemption Value

If you sell your SGBs on FYERS trading platforms (Web/App/Trader), the sell price is based on the live market price of the SGB on NSE/BSE.

Example: If the market price is ₹5,948 per gram and you hold 10 grams, your sell price = ₹59,480 (before taxes and charges).

When redeemed via RBI at maturity (or after 5 years on interest payment dates), the redemption price is based on the average closing price of 999 purity gold over the last three business days.

To learn more, see redeeming Sovereign Gold Bonds in this article.

Taxation Rules

  • G-Secs:
    • Interest is taxed as “Income from Other Sources” based on your income slab.
    • Short-Term Capital Gains (STCG): If sold within 12 months → taxed as per income slab.
    • Long-Term Capital Gains (LTCG): If held >12 months → taxed at 10% without indexation.
  • Corporate Bonds: Interest is fully taxable as income. Capital gains tax depends on holding period (STCG/LTCG).
  • SGBs:
    • Interest (2.5% per annum) is taxable as income.
    • Capital gains from redemption at maturity are tax-free.
    • Capital gains from secondary market sales are taxable (STCG or LTCG depending on holding period).

Are SGBs Secure?

Yes, SGBs are considered among the safest investment options:

  • Backed by the Government of India (sovereign guarantee).
  • No storage risks since bonds are held electronically.
  • Issued at market-linked gold prices, ensuring transparent valuation.

What if...

ScenarioResolution
You sell your SGBs at a lower market priceYou’ll receive the prevailing market value, which may be below your purchase price.
You hold SGBs until maturityYou get redemption linked to gold prices plus tax-free capital gains.
You’re unsure how to declare bond interestDeclare under “Income from Other Sources” in your tax return.
You want a secure option among bondsSGBs are sovereign-backed and among the most secure investments.
Bond investments provide a balance of returns and safety. Always evaluate the type of bond, expected returns, and taxation before investing.

Last updated: 26 Sep 2025