In India, bonds have become an increasingly attractive investment avenue, especially for those seeking low-risk, fixed-income alternatives to volatile equity markets. Traditionally viewed as instruments for institutions or HNIs (High Net-Worth Individuals), bonds are now more accessible to retail investors — thanks to digitization.
If you’re wondering how to invest in bonds online in India, this article will walk you through the process step-by-step, discuss platforms, types of bonds, benefits, risks, and taxation — all tailored for the Indian investor in 2025.
✅ What Are Bonds?
A bond is a fixed-income instrument where an investor lends money to an entity (government, corporation, etc.) for a defined period at a fixed interest rate.
Key Features:
- Fixed or floating interest (called coupon)
- Fixed tenure (maturity)
- Issuer repays principal at maturity
- Tradable in secondary markets
🧾 Types of Bonds Available Online in India
| Type of Bond | Issuer | Risk | Interest Rate (Approx.) | Tax Status |
|---|---|---|---|---|
| Government Securities (G-Secs) | RBI/Govt of India | Very Low | 7.1% – 7.5% | Fully taxable |
| Sovereign Gold Bonds (SGBs) | RBI on behalf of Govt | Very Low | 2.5% + Gold price returns | Capital gain tax exempt |
| RBI Floating Rate Bonds | RBI | Low | 8.05% (June 2025) | Taxable |
| Corporate Bonds | Private/Public Companies | Moderate | 7% – 9.5% | Taxable |
| Tax-Free Bonds (Old Issues) | PSUs like PFC, NHAI | Very Low | 5.5% – 6.5% | Tax-free interest |
| PSU Bonds | Govt-backed entities | Low | 6.5% – 7.5% | Taxable |
| Municipal Bonds | Local Governments | Moderate | 6.5% – 7.75% | May be tax-free |
🧑💻 How to Invest in Bonds Online – Step-by-Step Guide
🔹 Step 1: Open a Demat and Trading Account
To invest in most bonds online, you need a Demat account and a trading account with a SEBI-registered broker such as:
- Zerodha
- Groww
- Upstox
- HDFC Securities
- ICICI Direct
- Axis Direct
These accounts allow you to invest in bonds issued on BSE, NSE, or RBI’s platforms.
🔹 Step 2: Know Your KYC Status
Ensure you’ve completed full KYC with PAN, Aadhaar, and address proof. KYC is mandatory for all bond investments — whether through brokers, RBI Retail Direct, or aggregators like GoldenPi.
🔹 Step 3: Choose Your Preferred Platform
1. Stock Brokers (Zerodha, Groww, etc.)
- Offer secondary market listed bonds
- Tradeable through normal stock exchanges
2. RBI Retail Direct Platform (https://rbiretaildirect.org.in)
- Direct platform to buy government bonds and T-bills
- No brokerage, fully managed by RBI
3. Bond Aggregators
- GoldenPi, Wint Wealth, BondsIndia, TheFixedIncome, etc.
- Curated selection of bonds and fixed-income products
- Simplified dashboard and tracking
| Platform Type | Example | Best For |
|---|---|---|
| Stock Brokers | Zerodha, Groww | Buying/selling in secondary market |
| RBI Retail Direct | rbiretaildirect.org.in | Investing in government bonds directly |
| Aggregators | GoldenPi, Wint Wealth | Curated, easy-to-use corporate bonds |
🔹 Step 4: Select the Type of Bond
Choose bonds based on:
- Risk profile (G-Sec for safety, Corporate Bonds for higher returns)
- Investment tenure
- Coupon (interest) rate
- Liquidity (ability to sell in secondary market)
- Tax treatment
🔹 Step 5: Place the Order
For Government Bonds (via RBI Retail Direct):
- Register at RBI Retail Direct
- Choose bond/T-bill/SG bond you want to buy
- Make payment via UPI, net banking
- For Listed Bonds (via broker):
- Search bond by ISIN or name on the broker platform
- Check bond yield, rating, and price
- Place buy order like a stock
- Settlement takes T+1 or T+2 days
For Aggregator Platforms:
- Sign up and verify KYC
- Browse available bonds
- Invest online using UPI, net banking
- Bonds get credited to your Demat account
🔹 Step 6: Track and Redeem/Sell
- Track interest payments (usually half-yearly or annually)
- Bonds can be held to maturity or sold before (if listed)
- Redemption automatically credited to linked bank account
📌 Tips Before You Invest in Bonds
1. Check Bond Rating
Always verify ratings by CRISIL, ICRA, or CARE.
- – AAA: Very safe
- – AA/BBB: Moderate risk
- – Anything below: Caution required
Understand Yield vs. Coupon Rate
- Coupon rate: Fixed interest on face value
- Yield: Actual return depending on purchase price
Assess Liquidity
Some bonds are illiquid. Check if it’s listed on NSE/BSE for easy exit.
Diversify
Spread investments across G-Secs, PSU bonds, and corporate bonds for balanced returns and safety.
💸 Taxation of Bonds in India
| Bond Type | Interest Taxable? | Capital Gains Tax |
|---|---|---|
| G-Secs, Corporate Bonds | Yes (slab rate) | LTCG @10% (after 1 year, listed) |
| Tax-Free Bonds | No | Gains taxable on sale |
| RBI Floating Rate Bonds | Yes | Not listed, only interest taxable |
| Sovereign Gold Bonds (SGBs) | Yes (2.5%) | Tax-free if held till maturity (8 years) |
🔸 Section 193 mandates TDS on listed bonds only if interest exceeds ₹5,000.
📊 Pros and Cons of Online Bond Investing
| Pros | Cons |
|---|---|
| Easy access to multiple bond types | Liquidity may be low for some bonds |
| Transparent, regulated platforms | Requires understanding of credit risk |
| Predictable income & diversification | Some bonds are not easily tradeable |
| No middlemen if using RBI Retail Direct | Taxation may reduce net returns |
🧠 Final Thoughts
Investing in bonds online is now more convenient than ever in India. Whether you’re a conservative investor looking for capital safety or someone seeking predictable income, bonds offer an ideal alternative to volatile equity markets.
Make sure you evaluate ratings, compare yields, and understand tax implications before investing. For most retail investors, platforms like RBI Retail Direct, Zerodha, and GoldenPi are great starting points.
Need help choosing the right bond based on your risk appetite or monthly income goals?
Ask your question below, and I’ll help you find the best fixed-income investment for your needs.
