Invest in Bonds with Groww

Bonds and FDs are different investment products. FDs provide a predetermined interest rate for a specified tenure, while bonds have features such as coupon payments, maturity periods and market prices that can affect returns. They also differ in terms of liquidity, risk and taxation.

Corporate bonds come with risks such as credit risk, which refers to the possibility that the issuer may be unable to meet its interest or principal repayment obligations. The level of risk can vary based on the issuer’s financial strength, credit rating, security and other terms of the bond.

Bonds are not inherently tax-free in India. The tax treatment depends on the type of bond and the income or gains earned. Certain specified bonds may provide tax exemptions or other tax benefits, subject to applicable tax rules. For a detailed understanding of how bonds are taxed, read the guide on taxation of bond investments.

If a bond is sold before maturity, any resulting capital gain or loss may be subject to taxation. The applicable tax treatment depends on factors such as the type of bond, holding period and prevailing tax rules.

The minimum investment varies by bond and issue. Some bonds may have a minimum investment of ₹10,000, while others may require a higher amount.

Not all bonds provide monthly income. Some pay interest monthly, while others pay quarterly, half-yearly or annually, depending on the bond’s terms.

A Bond IPO or a Non-Convertible Debenture (NCD) is a primary market issue through which investors can subscribe to bonds before they are listed, while a listed bond can be bought or sold in the secondary market. The two may differ in terms of issue price, yield, maturity, liquidity, credit rating and other terms.

A stock market crash does not necessarily affect the repayment of a bond. However, the market price of a listed bond may fluctuate due to changes in interest rates, credit conditions, liquidity and market sentiment.

Common types of bonds in India include government securities (G-Secs), Public Sector Undertaking (PSU) bonds, corporate bonds, floating-rate bonds, zero-coupon bonds, Sovereign Gold Bonds (SGBs) and infrastructure bonds. Each type has different features, risk levels, returns and tax treatment.