Best Bonds to Invest In

Corporate bonds pay more. The extra yield is payment for credit risk you usually cannot assess. That is the whole argument on this page, and everything below is detail.

Which bonds can an Indian retail investor actually buy?

Sovereign Gold Bond taxation is from the Credsir capital gains dataset, as of 17 August 2026. New tranches are issued only when the government announces them, so availability varies.

What does the RBI floating rate bond pay right now?

It pays the National Savings Certificate rate plus 35 basis points, reset every six months. The NSC rate is 7.7%, notified by the Ministry of Finance for the current quarter. That puts the coupon at 8.05%.

The tenure is seven years. Interest is paid half-yearly, on 1 January and 1 July, and it is fully taxable. There is no cumulative option, so this is an income product, not a compounding one.

That combination suits a retired investor who wants a sovereign-backed income stream and is in a low tax bracket. It suits a 30% taxpayer far less well. At 8.05% pre-tax, a top-bracket investor nets roughly 5.6%. Our page on RBI floating rate bonds goes into the lock-in and premature exit rules.

Why do corporate bonds pay more, and should you take it?

Because someone can default. That is the only reason. A AA-rated company pays more than the government because the market prices the chance it does not repay.

SEBI made these bonds far easier to buy. The face value of privately placed debt securities was cut from ₹1,00,000 to ₹10,000 on 3 July 2024. Online bond platform providers must register with SEBI under a framework issued on 14 November 2022 and amended on 16 June 2023.

Easier is not the same as suitable. SEBI has itself warned investors about platforms operating without that registration. Before you buy, check that the platform is a registered OBPP. Our page on corporate bond platforms covers how to verify it.

Then ask the question that decides it. Can you read the issuer’s balance sheet? If not, you are not being paid for risk you understand. You are being paid for risk you are guessing at. A government security at a slightly lower yield is the better trade.

The tax point that changes the ranking

Bond interest is taxed at your slab rate. There is no special treatment, and no indexation. Since 1 April 2023, interest on listed debentures also attracts 10% TDS under Section 193 of the Income-tax Act, 1961. The exemption for demat-held listed securities was removed.

This matters more than the coupon. For someone in the 30% bracket, a 9% corporate bond nets about 6.3%. A sovereign gold bond held to maturity has its capital gain exempt entirely.

So the ranking flips by bracket. Low bracket: floating rate bonds and corporate paper look reasonable. High bracket: sovereign gold bonds and equity-oriented options look better, and debt funds deserve a look despite their own slab-rate treatment.

How to buy government bonds without a broker

The RBI Retail Direct platform lets an individual open a gilt account. You can then bid directly in primary auctions for G-Secs, treasury bills and state development loans. There is no intermediary taking a cut.

Two practical notes. Primary auction bidding needs you to be present on auction day, and secondary market liquidity in retail sizes is thin. If you cannot hold to maturity, size the position accordingly. See government securities for the mechanics and bond yields for how to read the curve.