Investment Bonds are debt instruments in which the authorized issuer owes the bond holders a debt. Depending on the terms of the type of bonds, the authorized issuer is obliged to pay interest and/or repay the principal at a later date upon maturity. In simpler terms, a bond is a formal contract to repay borrowed money with an interest at fixed intervals. Investment bonds are a way to raise money. When you purchase any type of bond (government, convertible, callable, etc.), you are lending money to the issuer which may be a corporation, the government, a federal agency or any other entity.

In return, the issuer promises to pay a specified rate of interest during the life of the bond. The issuer also repays the face value of the bond when upon maturity of the term.

Learn about different types of bonds and find suggestions for best bonds to invest in!

Some useful features

ZERO COUPON BONDS

These investment bonds are issued at a discount, but redeemed at the principal amount.

CORPORATE BONDS

These bonds are straightforward; a company borrows and pays interest regularly.

G - SEC BONDS

These are issued by the government and are one of the safest types of bonds to invest in.

INFLATION LINKED BONDS

These bonds are straightforward; a company borrows and pays interest regularly.

CONVERTIBLE BONDS

The bond holder has the option to convert these types of bond into equity on pre-specified terms.

Sovereign Gold Bond

Sovereign Gold Bonds are the safest way to buy digital Gold, as they are issued by Govt. of India.

The salient features of the Bond

An individual, not being a Non-Resident Indian (NRI)

In his or her individual capacity, or In an individual capacity on joint basis, or In an individual capacity on anyone or survivor basis, or On behalf of a minor as father/mother/legal guardian

Limit of Investment

Tax Treatment

Interest on the Bonds will be taxable under the Income-Tax Act, 1961 as applicable according to the relevant tax status of the bond holder.

Issue Price

The Bonds will be issued at par i.e. at Rs.100.00 percent.
The Bonds will be issued for a minimum amount of Rs. 1000/- (face value) and in multiples thereof. Accordingly, the issue price will be Rs.1000/- for every Rs.1,000/-(Nominal).

54EC Bonds

54EC bonds, or capital gains bonds, are one of the best way to save long-term capital gain tax. 54EC bonds are specifically meant for investors earning long-term capital gains and would like tax exemption on these gains. Tax deduction is available under section 54EC of the Income Tax Act. 54EC bonds do not allow any tax exemption on short-term capital gains tax. Invest in 54EC bonds to get benefits of tax deduction. The maximum limit for investing in 54EC bonds is Rs. 50,00,000. The eligible bonds under Section 54EC are REC (Rural Electrification Corporation Ltd), PFC (Power Finance Corporation Ltd) and NHAI (National Highways Authority of India) and IRFC (Indian Railways Finance Corporation Limited).