{"id":7738,"date":"2024-05-17T14:31:44","date_gmt":"2024-05-17T14:31:44","guid":{"rendered":"https:\/\/goldenpi.com\/blog\/?p=7738"},"modified":"2026-04-15T06:12:44","modified_gmt":"2026-04-15T06:12:44","slug":"how-are-corporate-bonds-taxed","status":"publish","type":"post","link":"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/","title":{"rendered":"How Are Corporate Bonds Taxed?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The Indian investment market has considered bonds a relatively safer option. Corporate bonds, with higher interest rates than other categories, are more attractive to investors. In the context of tax on bonds in India, obtaining the maximum yields possible from an investment at the lowest possible risk is a prime driving force for investors. That said, other crucial matters also require consideration, and the tax implications are among them!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Income Tax Act of India, 1961, has detailed provisions and guidelines on how different incomes are to be termed, how the tax liabilities of different individuals and entities are to be determined, and the percentage of tax to be imposed. Corporate bonds are no exception. In fact, the <\/span><a href=\"https:\/\/goldenpi.com\/\"><span style=\"font-weight: 400;\">bonds<\/span><\/a><span style=\"font-weight: 400;\"> have also been categorised based on taxation. This framework shapes tax on bonds in India for various instruments, including those in a corporate bond fund.<\/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 ' ><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#Key_Takeaways\" >Key Takeaways<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#What_are_tax-free_bonds\" >What are tax-free bonds?<\/a><\/li><\/ul><\/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\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#Categorising_Bonds_Based_on_Taxation_Where_Do_Corporate_Bonds_Fall\" >Categorising Bonds Based on Taxation: Where Do Corporate Bonds Fall?<\/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\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#Regular_Taxable_Corporate_Bonds\" >Regular Taxable Corporate Bonds<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#Tax_on_Interest_rates\" >Tax on Interest rates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#Tax_on_Capital_Gain\" >Tax on Capital Gain<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#Zero-Coupon_Corporate_Bonds\" >Zero-Coupon Corporate Bonds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#Market_Linked_Corporate_Bonds\" >Market Linked Corporate Bonds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#Tax-Free_Bonds_and_Tax_Saving_Bonds\" >Tax-Free Bonds and Tax Saving Bonds<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#Are_the_Tax_Benefits_Applicable_for_Corporate_Bonds\" >Are the Tax Benefits Applicable for Corporate Bonds?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#TDS\" >TDS<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#A_Quick_Recap_How_are_Corporate_Bonds_Taxed\" >A Quick Recap: How are Corporate Bonds Taxed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#Invest_in_the_Best_Corporate_Bonds_with_GoldenPi\" >Invest in the Best Corporate Bonds with GoldenPi<\/a><\/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\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#FAQs_About_Corporate_Bonds\" >FAQs About Corporate Bonds<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#1_How_are_corporate_bonds_taxed_in_India\" >1. How are corporate bonds taxed in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#2_What_is_the_tax_rate_on_capital_gains_from_a_5-year_bond\" >2. What is the tax rate on capital gains from a 5-year bond?<\/a><\/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\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#3_What_is_the_discount_on_a_bond\" >3. What is the discount on a bond?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#4_Should_I_choose_the_old_or_new_tax_regime\" >4. Should I choose the old or new tax regime?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#5_What_are_54_EC_bonds\" >5. What are 54 EC 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\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#6_What_is_the_highest_possible_rating_for_corporate_bonds\" >6. What is the highest possible rating for corporate bonds?<\/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\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#7_Do_corporate_bonds_pay_income\" >7. Do corporate bonds pay income?<\/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\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#8_When_is_the_last_date_for_filing_Form_15G\" >8. When is the last date for filing Form 15G?<\/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\/fixed-income\/corporate-bonds\/how-are-corporate-bonds-taxed\/#9Are_corporate_bonds_taxable_in_India\" >9.Are corporate bonds taxable in India?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Key_Takeaways\"><\/span><b>Key Takeaways<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The interest income in corporate bonds is taxable, depending on the tax slab rates of an individual.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The listed and unlisted bonds have different tax applicability for capital applications depending on the holding period, which is short-term capital gain tax and long-term capital gain tax.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Zero coupon bonds by default offer no interest, therefore no tax on interest, whereas capital gains are taxed as regular bonds are.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The interest in tax-free bonds is free of tax but the capital gains are subject to STCG and LTCG based on the holding period.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">TDS of 10% is applicable to the interest income if it exceeds INR 5,000 in the financial year unless Form 15G or Form 15H is submitted.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Corporate bonds, unlike government bonds, don\u2019t offer tax-free or tax-saving advantages; hence, capital gains are taxed accordingly.\u00a0<\/span><\/li>\n<\/ol>\n<h3><span class=\"ez-toc-section\" id=\"What_are_tax-free_bonds\"><\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/what-are-tax-free-bonds\/?utm_source=blog&amp;utm_medium=blog&amp;utm_Green_Bonds\"><span style=\"font-weight: 400;\">What are tax-free bonds?<\/span><\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Investors in a <a href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/why-liquidity-matters-in-the-corporate-bond-market\/\">corporate bond<\/a> fund should note how tax on bonds in India applies uniformly to underlying holdings.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Categorising_Bonds_Based_on_Taxation_Where_Do_Corporate_Bonds_Fall\"><\/span><b>Categorising Bonds Based on Taxation: Where Do Corporate Bonds Fall?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><b><br \/>\n<\/b><span style=\"font-weight: 400;\">Public and private sector companies, state and central governments, municipalities, and other entities in the country list bonds for the public to invest in. Bond issuance is intended to collect funds for business operations and development. Like any loan agreement, the bond is issued with a predetermined maturity date and preset interest rates.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Bonds\u2019 features vary depending on the different issuing entities, and the <\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/how-are-bonds-taxed\/\"><b>tax implications<\/b><\/a><span style=\"font-weight: 400;\"> vary depending on the investors and certain bond characteristics. Below are the different types of taxation-based categories for corporate bond investments.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here, corporate bond taxation follows specific Income Tax Act rules for tax on corporate bonds.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Regular_Taxable_Corporate_Bonds\"><\/span><b>Regular Taxable Corporate Bonds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><b><br \/>\n<\/b><span style=\"font-weight: 400;\">These bonds are taxed as per India\u2019s IT Act guidelines. The total earnings from regular taxable <\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/what-are-corporate-bonds-how-to-invest\/\"><b>corporate bonds<\/b><\/a><span style=\"font-weight: 400;\"> can be divided into two sections \u2013 interest and capital gain. The following are the two types of taxes imposed on both.<\/span><\/p>\n<h4><span class=\"ez-toc-section\" id=\"Tax_on_Interest_rates\"><\/span><b>Tax on Interest rates<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">The interest rates received on corporate bonds are deemed taxable and are taxed as per the individual tax slab rates. The accumulated interest is added to the investors\u2019 gross total income, and then the tax slab is determined.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is the core of tax on interest earned from corporate bonds.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, suppose an individual investor (age below 60) has invested INR 2,00,000 in a corporate bond at a 10% rate. The interest payout, hence, will be INR 20,000. If we assume the investor\u2019s gross total income is INR 10,00,000. The revised gross total income will become INR 10,20,000.<\/span><\/p>\n<p><b>With that calculation in mind:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As per the <\/span><a href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/should-you-pick-the-new-regime-or-the-old-regime\/\"><b>old tax regime<\/b><\/a><span style=\"font-weight: 400;\">, the investor will fall into the \u2018above INR 10,00,000\u2019 tax slab and be taxed at 30%.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Under the new regime, the investor will fall into the \u2018INR 9,00,000 to INR 12,00,000\u2019 tax slab and be taxed at 15%.<\/span><\/li>\n<\/ul>\n<h4><span class=\"ez-toc-section\" id=\"Tax_on_Capital_Gain\"><\/span><b>Tax on Capital Gain<\/b><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><span style=\"font-weight: 400;\">The payout structure of<\/span> <a href=\"https:\/\/goldenpi.com\/invest-in-bonds\"><b>regular bonds<\/b><\/a> <span style=\"font-weight: 400;\">involves periodic payouts of the interest and the principal amount redemption on the day of maturity. However, suppose an investor decides to sell the bond before maturity and receives a higher amount than the original purchase price. In that case, the difference between the original purchase and the current sale price will be considered capital gain.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Bonds will be taxed at different rates based on their holding period. Note that the holding period parameter can differ for bonds listed or unlisted on the <\/span><a href=\"https:\/\/www.nseindia.com\/\"><span style=\"font-weight: 400;\">National Stock Exchange<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The table below accurately explains the capital gains tax on <\/span><a href=\"https:\/\/goldenpi.com\/corporate-bonds\"><b>corporate bonds India<\/b><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<div class=\"pcrstb-wrap\"><table>\n<tbody>\n<tr>\n<td colspan=\"4\"><b>Search<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>Bond Type<\/b><\/td>\n<td><b>Holding Period<\/b><\/td>\n<td><b>Tax Type<\/b><\/td>\n<td><b>Tax Rate<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Listed Bonds<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Less than 12 months<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Short-Term Capital Gain (STCG) Tax<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Applicable tax slab rates<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><span style=\"font-weight: 400;\">More than 12 months<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Long-Term Capital Gain (LTCG) Tax<\/span><\/td>\n<td><span style=\"font-weight: 400;\">10%<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Unlisted Bonds<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Less than 36 months<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Short-Term Capital Gain (STCG) Tax<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Applicable tax slab rates<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><span style=\"font-weight: 400;\">More than 36 months<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Long-Term Capital Gain (LTCG) Tax<\/span><\/td>\n<td><span style=\"font-weight: 400;\">20%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Zero-Coupon_Corporate_Bonds\"><\/span><b>Zero-Coupon Corporate Bonds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Certain corporate bonds do not offer any coupon or interest but attract investors with discounted prices. The bond is held till maturity, and the investor will receive the actual face value of the bond.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here is how the tax on corporate bonds with<a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/what-are-zero-coupon-bonds\/\"> zero coupons<\/a> works!<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Since there is no interest accumulation and periodic payment, interest tax does not apply here.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Short and long-term capital gain taxes are applicable at the same rate as regular taxable corporate bonds (refer to the table above).<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Market_Linked_Corporate_Bonds\"><\/span><b>Market Linked Corporate Bonds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">These corporate bonds are linked to an index. Interest is paid only if the rate is higher than the index performance. The interest and the short-term and long-term capital gains are taxable.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The tax implications of such bonds are similar to those of regular taxable corporate bonds.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Tax-Free_Bonds_and_Tax_Saving_Bonds\"><\/span><b>Tax-Free Bonds and Tax Saving Bonds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Generally, the government and PSUs issue tax-free bonds at a lower rate than regular bonds. The interest earned under these bonds has no tax implications, but the capital gains are taxed at STCG and LTCG rates.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Tax-saving bonds, on the other hand, are not tax-free. They can help investors save tax on long-term capital gains from selling assets or properties like buildings or land. Here are the conditions for receiving the benefits:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The investment must be below INR 50,00,000.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The sale and investment must not be more than 6 months apart.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A 100% exemption applies to long-term capital gains, but the interest tax remains at the slab rate.\u00a0<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Are_the_Tax_Benefits_Applicable_for_Corporate_Bonds\"><\/span><b>Are the Tax Benefits Applicable for Corporate Bonds?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">There are no tax-free and tax-saving corporate bonds available. Hence, such tax benefits do not apply.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"TDS\"><\/span><b>TDS<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">As stated in the new amendment in Budget 2023, TDS, or tax deducted at the source, applies to interest earned on corporate bonds. If the interest accumulation is more than INR 5,000, 10% TDS will be charged.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Investors can present form 15G (for those below the age of 60) and 15H (for those above 60) at the beginning of the year to prove their income is less than the taxable limit and avoid paying TDS.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Understanding taxation on corporate bonds extends to how are corporate bonds taxed in aggregate, interest at slab rates, capital gains per holding periods, and TDS thresholds apply consistently.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_Quick_Recap_How_are_Corporate_Bonds_Taxed\"><\/span><b>A Quick Recap: How are Corporate Bonds Taxed?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Corporate bonds are subjected to four <\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/taxation-on-gains-from-bond-investments\/\"><b>types of taxes<\/b><\/a><span style=\"font-weight: 400;\">:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Interest Tax<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Short-Term Capital Gain Tax<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Long-Term Capital Gain Tax<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">TDS<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This aligns with broader tax on bonds in India principles.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Invest_in_the_Best_Corporate_Bonds_with_GoldenPi\"><\/span><b>Invest in the Best Corporate Bonds with GoldenPi<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">With a clear idea of the tax implications of corporate bonds, get your 2024 investment plans sorted. Here\u2019s where<\/span><b> GoldenPi<\/b><span style=\"font-weight: 400;\"> is ready to assist you with a user-friendly interface, and updated insights! Find the list of corporate bonds with the latest interest rates, maturity dates, credit ratings, and other dates. The organised display of information will make comparisons easier. If you\u2019re considering whether <\/span><a href=\"https:\/\/goldenpi.com\/blog\/fixed-income\/corporate-bonds\/corporate-bonds-or-stocks-whats-better\/\"><span style=\"font-weight: 400;\">corporate bonds are better or stocks<\/span><\/a><span style=\"font-weight: 400;\">, GoldenPi provides all the data you need to make informed decisions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Once you have the bonds selected, you can invest and monitor your investment conveniently. Ensure that you complete the online KYC for a seamless investing experience.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"FAQs_About_Corporate_Bonds\"><\/span><b>FAQs About Corporate Bonds<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1_How_are_corporate_bonds_taxed_in_India\"><\/span><b>1. How are corporate bonds taxed in India?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The taxes apply to corporate bonds for both interest and capital gains. The interest is taxed as per the individual tax slab. Short-term capital gains are applied as per the slab rates if the bond is held for less than 12 months in the case of listed bonds, whereas the same STCG is applied for unlisted bonds if held for less than 36 months.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The long-term capital gain tax for listed bonds if held for more than 12 months is 10% and 20% for unlisted bonds if held for more than 36 months. Zero coupon bonds offered by corporations have no tax on interest, whereas capital gains are taxed as per regular bonds. Also, the TDS is applied to the interest income of the bonds if it exceeds INR 5,000 in the financial year unless the form 15G\/H is submitted.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_What_is_the_tax_rate_on_capital_gains_from_a_5-year_bond\"><\/span><b>2. What is the tax rate on capital gains from a 5-year bond?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">A 5-year bond, whether listed or unlisted, is considered a long-term capital gain. The same will be taxed at 10% for listed and 20% for unlisted bonds.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_What_is_the_discount_on_a_bond\"><\/span><b>3. What is the discount on a bond?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The discount here refers to the discount on the bond\u2019s face value. The bonds are offered to investors at a discounted price. There is no interest payment, but the investors receive the original face value.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Should_I_choose_the_old_or_new_tax_regime\"><\/span><b>4. Should I choose the old or new tax regime?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The tax rates under both regimes range between 5% and 30%. However, the new regime has higher thresholds than the old regime. For example, the old regime charges a 30% tax for income over INR 10 lakhs, while the new regime charges the same when the income crosses the INR 15 lakh threshold. Likewise, the new regime offers tax exemptions on incomes up to INR 3 lakhs, while the old regime offers the same up to INR 2.5 lakhs.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"5_What_are_54_EC_bonds\"><\/span><b>5. What are 54 EC bonds?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">54 EC Bonds or<\/span> <a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/are-capital-gain-bonds-helpful\/\"><b>capital gains bonds<\/b><\/a><span style=\"font-weight: 400;\"> allow investors to save on longer-term capital gain taxes in the event of the sale of a property or asset.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"6_What_is_the_highest_possible_rating_for_corporate_bonds\"><\/span><b>6. What is the highest possible rating for corporate bonds?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">AAA is the highest possible rating corporate bonds can receive.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"7_Do_corporate_bonds_pay_income\"><\/span><b>7. Do corporate bonds pay income?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Corporate bonds can create a source of income by providing periodic payouts of interest. A corporate bond fund pools investments into corporate bonds, so tax on bonds in India passes through to investors, interest taxed at slab rates, capital gains per bond type and holding, mirroring direct holdings.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"8_When_is_the_last_date_for_filing_Form_15G\"><\/span><b>8. When is the last date for filing Form 15G?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">You can submit <\/span><a href=\"https:\/\/incometaxindia.gov.in\/pages\/downloads\/most-used-forms.aspx\"><span style=\"font-weight: 400;\">Form 15G<\/span><\/a><span style=\"font-weight: 400;\"> once throughout the financial year. It is best to submit at the beginning of the year to ensure no TDS is deducted. The same rule applies to Form 15H.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"9Are_corporate_bonds_taxable_in_India\"><\/span><strong>9.Are corporate bonds taxable in India?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Yes, corporate bonds are taxable in India. The interest you earn is added to your income (under the head \u201cIncome from Other Sources\u201d) and taxed as per your applicable income tax slab. If you sell the bond before maturity, any gains are treated as Short-Term Capital Gains (STCG) and taxed as per current tax rules (post-Union Budget 2025 amendments).<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>Latest Updated: 23-02-2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Indian investment market has considered bonds a relatively safer option. Corporate bonds, with higher interest rates than other categories, are more&hellip;<\/p>\n","protected":false},"author":8,"featured_media":11976,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"categories":[232],"tags":[64],"class_list":["post-7738","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-bonds","tag-corporate-bonds"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How Are Corporate Bonds Taxed? | GoldenPi<\/title>\n<meta name=\"description\" content=\"Learn how corporate bonds are taxed efficiently. 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