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Gifting a fixed deposit is simple—you just move money. Gifting a bond requires a bit more work, since a bond is a security that is either in a demat account or an RBI Retail Direct Gilt (RDG) account, and to gift it, you would need to follow a formal transfer process. If you wish to give government securities, corporate bonds, or sovereign gold bonds to your spouse, child, or parent while you are alive, this article contains all the information you need to know to gift the securities: the steps required in demat and the RBI Retail Direct process, the required documents, and the tax and stamp duty rules applicable in FY 2026-27.
If you’re instead dealing with bonds after an investor’s death, see our guide on bond transmission on death.
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Why Gift Bonds Instead of Cash
A few reasons investors choose this route:
- Investments continue to compound. The recipient does not lose any accrued interest and does not have to reinvest from scratch.
- This option provides a structured way to transfer wealth to the family, especially for long-tenure instruments like G-Secs or SGBs.
- It’s fully tax-exempt when done between specified relatives, regardless of the bond’s value.
How to Gift Bonds Held in a Demat Account
If your corporate bonds, listed NCDs, or SGBs are in a demat account, a gift will be an off-market transfer of securities between two demat accounts. Each party needs a demat account, and the depository participant debits the donor’s account and credits the recipient’s account.
Here’s the broad process:
- Confirm that the beneficiary has an active demat account. If not, open one.
- Submit a Delivery Instruction Slip (DIS) to your Depository Participant (DP) in person, or do the transfer through your broker’s online portal. Most brokers have an online “gift flow,” which is processed through OTP via CDSL. If the recipient isn’t already added as a beneficiary, CDSL verifies the beneficiary details before the transfer, and the cut-off for same-day processing is 2 PM.
- It’s advisable to draft a simple gift deed on stamp paper, which is not mandatory for demat transfers but useful if the tax department ever asks questions later.
- The transfer cost is approximately Rs. 25 per security plus 18% GST, charged to your account, although this may vary for each broker, so it is better to check your DP’s tariff sheet.
One quirk worth knowing: on some platforms, the recipient’s “buy price” resets to the transfer date’s price rather than carrying over your original purchase price, which can complicate their tax record-keeping later. It is advised to keep your records handy and provide them to your recipient.
Gifting Government Securities via RBI Retail Direct
If you hold G-Secs, T-Bills, SDLs, or SGBs through an RBI Retail Direct Gilt (RDG) account, the process is even simpler. RBI Retail Direct supports value-free transfers, which are non-monetary movements allowed for gifting, inter-account transfers, and settling inheritances. Retail investors can use the online portal to gift their G-Secs directly to other retail investors. Both parties must have an active RDG account, and the transfer is governed by the Government Securities Act, 2006.
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Tax Rules on Gifting Bonds (FY 2026-27)
From 1 April 2026, Section 92 of the Income Tax Act, 2025, replaces the old Section 56(2)(x) with almost similar provisions. Because bonds, like shares, count as movable property, they’re covered under this framework, subject to the usual tax, demat, and RBI/FEMA rules.
| Who’s gifting | Tax treatment for recipient |
| A specified relative (including spouse, siblings, parents, children and certain other relatives) | Fully exempt, regardless of value |
| A non-relative aggregates monetary gifts up to ₹50,000 in the financial year | Exempt |
| A non-relative aggregate monetary gifts above ₹50,000 in the financial year | The entire aggregate amount is taxable as income from other sources, not just the amount above ₹50,000 |
Source: Income Tax Department
A few more points worth knowing:
- The donor will not have to pay capital gains tax on the gift donation. The recipient will be responsible for the tax event, if any.
- On eventual sale, the recipient inherits the donor’s original cost of acquisition and holding period for capital gains purposes, which is important for calculating tax when the bonds are later sold or mature.
- Clubbing: if you gift bonds to your spouse or minor child, any income they earn from those bonds (interest, capital gains) gets clubbed back into your own taxable income, while gifts to adult children, parents, or siblings don’t attract clubbing.
Worked example: Say you bought ₹5 lakh worth of a corporate bond three years ago and now gift it to your adult daughter. She owes no tax on receiving it (relative exemption). When she eventually sells it, her capital gains are calculated using your original purchase price and your three-year holding period, not the value on the day of the gift.
Stamp Duty on Bond Gifts
Since stamp duty is charged on the consideration stated in the transfer instrument, and a gift has zero consideration, SEBI’s official FAQ on the amended Indian Stamp Act states that off-market transfer of securities without consideration (including gifts and legacy transfers) does not attract stamp duty. This includes both corporate bonds and government securities transferred through demat. In practice, check your DP’s contract note, as some depositories show a nominal processing fee distinct from the actual stamp duty. So it’s worth confirming with your broker if you see anything unexpected.
Frequently Asked Questions
Yes. Bonds held in dematerialized form can generally be transferred from one beneficial-owner demat account to another through an off-market transfer. CDSL specifically recognizes gifting securities to family members as an example of an off-market transfer.
The usual process involves adding the recipient as a beneficiary, selecting the bonds and initiating an off-market transfer through your depository participant or applicable depository facility. CDSL requires client authentication, including OTP consent, for off-market transfers.
Yes. The bonds need to be credited to the recipient’s demat account. Both the transferor and recipient therefore need eligible demat accounts with the necessary details correctly registered.
Yes. A gift can be effected through an off-market transfer rather than selling the bonds and transferring the cash. The transferor needs to specify the reason and consideration, if any, when executing the transaction.
Not necessarily. A genuine gift is different from a sale for consideration. However, the income-tax consequences depend on the nature of the transfer, the relationship between the parties, and any subsequent sale or redemption of the bonds, so the tax treatment should be checked separately.
Disclaimer
Fixed returns do not constitute guaranteed or assured returns. Investments in corporate debt securities and municipal debt securities/securitized debt instruments are subject to credit risks, market risks, and default risks, including delay and/or default in payment. Read all the offer-related documents carefully. This blog/article should not be construed as financial advice or as an offer or recommendation to buy or sell any security or any products/services of/on GoldenPi or any product/services of its third-party client(s). For a detailed calculation of YTM, visit our website. T&C’s Apply.
