{"id":7049,"date":"2024-01-25T06:28:39","date_gmt":"2024-01-25T06:28:39","guid":{"rendered":"https:\/\/goldenpi.com\/blog\/?p=7049"},"modified":"2026-01-15T11:26:10","modified_gmt":"2026-01-15T11:26:10","slug":"how-are-bonds-taxed","status":"publish","type":"post","link":"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/","title":{"rendered":"How Are Bonds Taxed?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Before thinking of any investment, the first thing that pops up in the investor&#8217;s mind is &#8220;tax.&#8221;. Is this investment tax-free, or if there is any tax, how much is applicable, and knowing it is there, how is this tax filed? In this article, let\u2019s talk about the tax on bonds, and you\u2019ll get a complete understanding of this subject.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Interest on bonds is taxed at the individual&#8217;s income slab rate; no tax bonds are excluded.<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_79_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#How_are_bonds_taxed_in_India\" >How are bonds taxed in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#What_is_Interest\" >What is Interest?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#What_is_a_Capital_Gain\" >What is a Capital Gain?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#Long-term_Capital_Gain\" >Long-term Capital Gain\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#Short-term_Capital_Gain\" >Short-term Capital Gain<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#What_are_Corporate_Bonds\" >What are Corporate Bonds?<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#How_are_Interest_and_Capital_Gains_Taxed\" >How are Interest and Capital Gains Taxed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#Other_Types_of_Bonds\" >Other Types of Bonds\u00a0<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#Tax-free_Bonds\" >Tax-free Bonds\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#Tax_Saving_Bonds\" >Tax Saving Bonds\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#Zero_Coupon_Bonds\" >Zero Coupon Bonds\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#Market_Linked_Bonds\" >Market Linked Bonds<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#What_is_a_Corporate_Fixed_Deposit\" >What is a Corporate Fixed Deposit?<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#The_Recent_Update\" >The Recent Update\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#The_Wrap\" >The Wrap\u00a0<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#Stocks_might_be_eye_catchy_bonds_are_relaxing_though\" >Stocks might be eye catchy bonds are relaxing though<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#Key_Takeaways\" >Key Takeaways<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#_FAQs_About_Bonds_Taxed\" >\u00a0FAQs About Bonds Taxed<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#1_Are_all_types_of_bonds_taxable_or_are_there_exceptions_like_tax-free_bonds\" >1. Are all types of bonds taxable, or are there exceptions like tax-free bonds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#2_How_are_long-term_and_short-term_capital_gains_taxed_on_listed_and_unlisted_bonds_in_India\" >2. How are long-term and short-term capital gains taxed on listed and unlisted bonds in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#3_How_are_corporate_bonds_taxed\" >3. How are corporate bonds taxed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#4_Are_corporate_bonds_taxable\" >4. Are corporate bonds taxable?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/#5_Can_investors_below_60_years_of_age_and_with_zero_tax_liability_submit_Form_15G_to_avoid_TDS_on_interest_income_from_bonds\" >5. Can investors below 60 years of age and with zero tax liability submit Form 15G to avoid TDS on interest income from bonds?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"How_are_bonds_taxed_in_India\"><\/span><span style=\"font-weight: 400;\">How are bonds taxed in India?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Interest on bonds is taxed according to the individual&#8217;s income tax slab. Long-term capital gains (LTCG) from listed bonds are taxed at 12.5% flat rate on gains (sale price minus purchase cost), no indexation benefit since Budget 2024. Short-term capital gains (STCG) are taxed based on an individual&#8217;s income tax slab rate.<\/span><\/p>\n<p><img decoding=\"async\" class=\"wp-image-11375 aligncenter\" src=\"https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2024\/01\/08124334\/Old-Blog-Banner-2-300x215.png\" alt=\"tax on bonds in India\" width=\"873\" height=\"626\" srcset=\"https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2024\/01\/08124334\/Old-Blog-Banner-2-300x215.png 300w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2024\/01\/08124334\/Old-Blog-Banner-2-1024x735.png 1024w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2024\/01\/08124334\/Old-Blog-Banner-2-768x551.png 768w, https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2024\/01\/08124334\/Old-Blog-Banner-2.png 1200w\" sizes=\"(max-width: 873px) 100vw, 873px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Taxation takes place when there is some sort of income coming from an investment. If you take bonds, the income comes from two sources. One is interest, and the other is capital gains, which investors should clearly understand before participating in an <a href=\"https:\/\/goldenpi.com\/bond-ipo-online\" target=\"_blank\" rel=\"noopener\">upcoming bond IPO<\/a>.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_Interest\"><\/span><b>What is Interest?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Interest is the fixed payment received on the principal invested initially, and the interest is paid to an investor based on the investor\u2019s preference that would have been made while investing. It can either be monthly, quarterly, semi-annually, or annually.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_Capital_Gain\"><\/span><b>What is a Capital Gain?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">An investor would have bought the bond at face value during the purchase. If the investor decides to sell it at a better price in the secondary market, the net difference between the purchase and the sale is a <a href=\"https:\/\/en.wikipedia.org\/wiki\/Capital_gain\" target=\"_blank\" rel=\"noopener noreferrer\">capital gain<\/a>. There are two types of it:<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Long-term_Capital_Gain\"><\/span><strong>Long-term Capital Gain\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">If the investor holds the bond for more than 12 months in the case of a listed bond, the net difference made by the investor during purchase and sale is called long-term capital gain, also known as LTCG. If it is for unlisted bonds, then the holding period must be more than 36 months.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Short-term_Capital_Gain\"><\/span><b>Short-term Capital Gain<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">If the investor holds the bond for less than 12 months, the net amount made from the difference between the purchase and sale of a listed bond is called short-term capital gain, also known as STCG. If it is for an unlisted bond, it must be less than 36 months.<\/span><\/p>\n<h4 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"What_are_Corporate_Bonds\"><\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/what-are-corporate-bonds-how-to-invest\/?utm_source=blog&amp;utm_medium=blog&amp;utm_taxed\" target=\"_blank\" rel=\"noopener noreferrer\"><b>What are Corporate Bonds?<\/b><\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<h2><span class=\"ez-toc-section\" id=\"How_are_Interest_and_Capital_Gains_Taxed\"><\/span><b>How are Interest and Capital Gains Taxed?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img decoding=\"async\" src=\"https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2024\/03\/02111215\/how-are-bonds-taxed-1.gif\" alt=\"how-are-bonds-taxed (1)\" \/><br \/>\nThe interest received is considered income received, and it is taxed as per the slab rate of an individual. For instance, if the capital of Rs 1,00,000 is invested at an interest rate of 9%, the interest earned is Rs 9000 from this investment, and it is added to the gross total income. Assuming the income of the individual is Rs 10,00,000 and adding the Rs 9,000, the investor will fall under the Rs 10L-12L slab, which is taxed at 15% as per the new regime (plus 4% cess), and for the old regime, it is 30% (plus surcharges and cess).<\/p>\n<p><span style=\"font-weight: 400;\">This may vary from person to person, depending on their income level. It\u2019ll attract some surcharges and cess. If the income level is below the taxable bracket, interest is not taxed that way.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When it comes to capital gains, the short-term capital gains for both listed and unlisted bonds are taxed as per the applicable slab rates mentioned above, and the long-term capital gains of listed bonds are taxed at 10% without indexation and at 20% for unlisted bonds without indexation.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That\u2019s pretty straightforward to comprehend; both interest and capital gains are taxed this way for any type of bond, but are all the bonds taxable? Not really.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Other_Types_of_Bonds\"><\/span><b>Other Types of Bonds\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Tax-free_Bonds\"><\/span><b>Tax-free Bonds\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">It is popularly known for its tax-free benefits, which are commonly issued by governments and <a href=\"https:\/\/goldenpi.com\/bonds\/INE134E08KQ1\/power-finance-corporation-ltd-74-bond-yield?src=preview\" target=\"_blank\" rel=\"noopener noreferrer\">PSUs<\/a>. As the name suggests, it is indeed tax-free but for interest income alone, which means the investor doesn\u2019t need to pay any tax on the interest received from such bonds. The capital gains are still taxed as per the tax norms mentioned for LTCG and STCG in the above section.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Tax_Saving_Bonds\"><\/span><b>Tax Saving Bonds\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">These bonds don\u2019t work as similarly to <a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/what-are-tax-free-bonds\/\" target=\"_blank\" rel=\"noopener noreferrer\">tax-free bonds<\/a>; they are tax-saving for a reason. They help you save tax on the long-term capital gains earned on capital assets you sell, like land or buildings. The investment can\u2019t exceed 50 lakhs, and the gap between the sale and the investment in tax-saving bonds must be within six months. The investor receives a 100% exemption on LTCG held till maturity, but the interest is taxed as per the tax slab.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Zero_Coupon_Bonds\"><\/span><b>Zero Coupon Bonds\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">These bonds will not pay any interest but are bought at a discounted price and sold at face value. No interest means no tax on interest, but LTCG and STCG are applicable, respectively.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Market_Linked_Bonds\"><\/span><b>Market Linked Bonds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The bonds are linked to some index; if the interest rate is above the performance of the index only, then interest is paid and not otherwise. The interest is taxed as per the slab rate, and the capital gains are taxed accordingly as per LTCG and STCG.\u00a0<\/span><\/p>\n<h4 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"What_is_a_Corporate_Fixed_Deposit\"><\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/what-is-corporate-fixed-deposit\/?utm_source=blog&amp;utm_medium=blog&amp;utm_taxed\" target=\"_blank\" rel=\"noopener noreferrer\"><b>What is a Corporate Fixed Deposit?<\/b><\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<h2><span class=\"ez-toc-section\" id=\"The_Recent_Update\"><\/span><b>The Recent Update\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The new amendment in Budget 2023 about tax deducted at source for listed bonds applies only to <a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/what-are-corporate-bonds-how-to-invest\/\" target=\"_blank\" rel=\"noopener noreferrer\">corporate bonds<\/a> and is exempt from government and sovereign bonds. If the interest income is more than Rs 10,000, as per this amendment, the issuer would deduct the tax at the source of about 10% on the interest earned.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Those whose tax liability is nil for the total annual income, and if below age 60, can submit form 15G, and those above 60 can submit form 15H to the issuer to claim TDS. These forms must be completed at the beginning of the year to avoid TDS.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_Wrap\"><\/span><b>The Wrap\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Now that the tax liability is clear, you can invest in bonds without having any questions in mind. Depending on your needs, you can invest in other types of bonds to benefit from their tax exemption. But regardless of what, bonds are those fixed-income assets that offer not slightly but higher interest rates compared to traditional FDs at lower risk.\u00a0<\/span><\/p>\n<h4 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Stocks_might_be_eye_catchy_bonds_are_relaxing_though\"><\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/stocks-might-be-eye-catchy-bonds-are-relaxing-though\/?utm_source=blog&amp;utm_medium=blog&amp;utm_taxed\" target=\"_blank\" rel=\"noopener noreferrer\"><b>Stocks might be eye catchy bonds are relaxing though<\/b><\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Key_Takeaways\"><\/span><b>Key Takeaways<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Bond interest income is taxed at the individual&#8217;s income tax slab rate.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Listed bonds are taxed depending on the individual&#8217;s income bracket. Unlisted bonds are taxed at the individual&#8217;s income level if carried for less than 36 months.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Tax-free bonds are those whose interest income is tax-free.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Tax-saving bonds provide a deduction for LTCG from the sale of other assets, such as land or a home.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Zero-coupon bonds mean that no interest is paid, and there is no interest tax.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As per the Budget 2023, TDS on bond interest stands at 10% if annual interest exceeds Rs 10,000 for listed debentures (post-April 2023 amendment) or Rs 5,000 for unlisted debentures<\/span><\/li>\n<li aria-level=\"1\">G-Secs and sovereign bonds remain exempt. All capital gains on unlisted bonds (regardless of holding period) are taxed at your income slab rates, with no LTCG concession.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"_FAQs_About_Bonds_Taxed\"><\/span><b>\u00a0FAQs About Bonds Taxed<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1_Are_all_types_of_bonds_taxable_or_are_there_exceptions_like_tax-free_bonds\"><\/span><b>1. Are all types of bonds taxable, or are there exceptions like tax-free bonds?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Most bonds are taxable, but there are non-taxable bonds that eliminate interest income from taxation; however, capital gains are still taxed.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_How_are_long-term_and_short-term_capital_gains_taxed_on_listed_and_unlisted_bonds_in_India\"><\/span><b>2. How are long-term and short-term capital gains taxed on listed and unlisted bonds in India?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Long-term profits from listed bonds are taxed at 12.5% flat rate, and no indexation benefit since Budget 2024.. Short-term profits are taxed at the current rate of income tax.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_How_are_corporate_bonds_taxed\"><\/span><b>3. How are corporate bonds taxed?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Corporate bond interest is taxed at the investor&#8217;s eligible slab rate. Long-term capital gains that are kept for more than 12 months are taxed at 12.5%; on the other hand, short-term profits are taxed as per income tax slabs.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Are_corporate_bonds_taxable\"><\/span><b>4. Are corporate bonds taxable?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Yes, corporate bonds are taxed. Interest income is included in your income and taxed at the relevant slab rate. Capital profits are taxed in accordance with the holding term and type.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"5_Can_investors_below_60_years_of_age_and_with_zero_tax_liability_submit_Form_15G_to_avoid_TDS_on_interest_income_from_bonds\"><\/span><b>5. Can investors below 60 years of age and with zero tax liability submit Form 15G to avoid TDS on interest income from bonds?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">No, a Form 15G can only be filed if the total taxable income is less than the basic exclusion funds for not worrying about TDS on bond interest gained.<\/span><\/p>\n<div>Investments in debt securities\/ municipal debt securities\/ securitised debt instruments are subject to risks including delay and\/ or default in payment. Read all the offer related documents carefully.<\/div>\n<p><script type=\"application\/ld+json\">{\"@context\":\"https:\/\/schema.org\",\"@type\":\"FAQPage\",\"mainEntity\":[{\"@type\":\"Question\",\"name\":\"Are all types of bonds taxable, or are there exceptions like tax-free bonds?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Most bonds are taxable, but there are non-taxable bonds that eliminate interest income from taxation; however, capital gains are still taxed.\"}},{\"@type\":\"Question\",\"name\":\"How are long-term and short-term capital gains taxed on listed and unlisted bonds in India?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Long-term profits from listed bonds are taxed at 10%, but unlisted bonds are taxed at 20%, including indexation. 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Is this investment tax-free, or&hellip;<\/p>\n","protected":false},"author":4,"featured_media":7050,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"categories":[24,22],"tags":[18,207],"class_list":["post-7049","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bond-market","category-essentials","tag-bonds","tag-capital-gains-taxed"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Learn How the Tax On Bonds In India is Taxed with Golden Pi for Clarity. - Tax on Corporate Bonds<\/title>\n<meta name=\"description\" content=\"Understanding Taxation of Bonds: Learn about tax on bonds in india, bond interest, capital gains, and tax-efficient strategies for financial planning. 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