Types of Government Bonds in India – Which One is Right for You?

1. Fixed-Rate Bonds

• Example: A bond labeled 7% GOI 2021 offers a 7% interest rate until its maturity in 2021.

2. Floating Rate Bonds (FRBs)

3. Sovereign Gold Bonds (SGBs)

• Tax Benefits: Interest earned is tax-free.
• Maturity: 8 years, with an option to redeem after 5 years.

4. Inflation-Indexed Bonds (IIBs)

5. 7.75% GOI Savings Bond

• Taxation: Interest is taxable as per the investor’s income tax slab.
• Minimum Investment: ₹1,000, with multiples thereof.

6. Bonds with Call or Put Options

7. Zero-Coupon Bonds

1. Safety: Backed by the Indian government, these bonds are virtually risk-free.
2. Regular Income: Interest is paid semi-annually, providing a steady income stream.
3. Inflation Protection: Bonds like IIBs and SGBs offer protection against inflation.
4. Tax Benefits: Some bonds, like SGBs, offer tax exemptions on interest earnings.

• Risk-averse investors seeking secure, low-risk investments.
• Long-term investors looking to diversify their portfolios.
• Beginners who want to start investing without exposure to market volatility.

1. How do you buy government bonds? Submit a completed application form to the Reserve Bank of India (RBI) or the central government. Once processed, you’ll receive a bond certificate.

1. How to invest in government bonds in India?
   • Invest through GILT mutual funds.
   • Open a Demat Account with a bank or brokerage platform like RMoney.

1. Are government bonds tax-free? While interest income is taxable, some bonds like SGBs offer tax exemptions on interest earnings.

1. What is the current interest rate on government bonds? For I bonds issued from November 2022 to April 2023, the composite rate is 6.89%.

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