Frequency of Interest Payment

• Interest is paid semi-annually (twice a year).
• The coupon rate (for example, 7.18%) is applied to the face value of the security (generally ₹100).
• Interest payments are processed by the Reserve Bank of India (RBI) on the scheduled coupon payment date.

How Interest Is Credited?

• The interest amount is directly credited to the investor’s primary bank account linked to the Demat Account
• RBI distributes the coupon, and the credit usually appears in the bank account on the same day.
• If the coupon date falls on a non-working day, the credit is processed on the next working day.

Eligibility to Receive the Interest (Mandatory Cut-off Rule)

• To receive the upcoming interest, an investor must hold the G-sec at least 15 days before the coupon payment date.
• Purchases made inside this 15-day window will not be eligible for the upcoming coupon.
• In such cases, the interest is paid to the previous holder. The new holder becomes eligible from the next interest cycle.

Tax Treatment of G-sec Interest

• No TDS is deducted on interest from Government Securities.
• Coupon payments are fully taxable as per the investor’s income-tax slab.
• Such interest must be reported under “Income from Other Sources” in the income tax return.

Example of Interest Calculation

• Face Value: ₹100
• Coupon Rate: 7%
• Payment Frequency: Semi-annual

If Interest Is Not Credited

1. Confirm that the G-sec was held before the 15-day eligibility cut-off.
2. Ensure that the bank account linked to your demat account is active and correctly updated.

Summary

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