Government bonds in India

The list of government bonds in India

"Government bonds" is an umbrella term. In India it covers five distinct instruments issued by the Reserve Bank of India (RBI) on behalf of the central and state governments. They differ on tenure, whether the rate is fixed or floating, how they are taxed, and where you buy them — so treat them as five separate products, not one.

The single most-quoted number, the "10-year G-Sec yield", is just the yield on the current benchmark dated government security. It was around 6.7% as of 8 July 2026 — a point-in-time snapshot that moves every trading day, so verify it live on CCIL or worldgovernmentbonds.com before you act (more on that below). Short T-Bills yield less; the RBI Floating Rate Savings Bond pays the most at 8.05% — but with a 7-year lock-in and interest taxed at your slab.

The 10-year yield, in context (not a live number)

The 10-year G-Sec yield is India's benchmark interest rate for long-term borrowing — the reference point that FD rates, home loans and corporate bonds are priced off. As of 8 July 2026 it was hovering around 6.7%, having drifted lower over the preceding weeks on strong foreign inflows and lower crude oil prices. That is a point-in-time snapshot, not a live quote — the number changes every trading day and this page does not track it.

What moves it: the RBI's repo rate (5.25% and on a neutral stance as of mid-2026, with the next policy meeting scheduled for 3–5 August 2026), inflation, government borrowing, and global rates. The key intuition for a buyer: bond prices move opposite to yields. When yields fall, the price of bonds you already hold rises; when yields rise, existing bonds lose price value. That is why "lock in the yield before rates fall further" is the common pitch in a rate-cutting cycle — and also why selling a bond before maturity after yields have risen can mean booking a loss.

To see the live number, use CCIL's indicative yields, worldgovernmentbonds.com, or your broker's G-Sec order page — all show today's 10-year yield free.

How government bonds are taxed (they are not tax-free)

This is where a lot of retail buyers get caught. With one narrow exception, government-bond income in India is fully taxable. There is no blanket "tax-free" government bond for new money today — the old tax-free PSU bonds (NHAI, PFC, IRFC issues from 2012–16) still trade on the exchange but are not being issued anymore.

Two things are taxed separately: the interest you earn, and any capital gain if you sell before maturity.

• Interest / coupon (G-Sec, SDL, FRSB, SGB): added to your income and taxed at your slab rate. For a 30%-slab investor, a ~6.7% G-Sec is roughly 4.7% after tax — barely ahead of inflation, so run the after-tax maths.
• T-Bills: bought below face value and redeemed at face value; the difference is taxed at your slab (the tenure is under a year, so it is always short-term).
• Capital gains on listed bonds (Budget 2024, effective 23 Jul 2024): sell after holding >12 months and the gain is Long-Term Capital Gain at 12.5% with no indexation; sell within 12 months and it is Short-Term, taxed at your slab. Held to maturity at face value, there is usually no capital gain to tax.
• The ₹1.25 lakh annual LTCG exemption is an equity-only benefit (Section 112A) — it does not apply to bond capital gains.
• RBI FRSB: TDS is deducted on the interest, and the bond is non-transferable, so there is no capital gain — only slab-taxed interest.
• SGB: the 2.5% coupon is taxed at slab. Redemption at maturity is capital-gains-tax-free only for the original subscriber who holds to maturity — a Budget 2026 change from 1 Apr 2026 means anyone who bought an SGB on the secondary market now pays 12.5% LTCG (>12 months) or slab STCG on redemption.

Where to buy — the route comparison

For plain government securities (G-Secs, T-Bills, SDLs), the cheapest route is almost always RBI Retail Direct or a broker's auction window — not a bond platform. The "zero brokerage" bond platforms (OBPPs) are built for corporate bonds and NCDs, where they add value; for pure G-Secs they typically bake a price markup into the quote, so you pay more than you would buying at the RBI auction.

One money-saving fact: Zerodha waived its 0.06% brokerage on G-Secs, T-Bills and SDLs from 1 March 2024, so buying government paper through a broker auction is now all but free. Note the "all but": Zerodha still levies the regulatory minimum of ₹0.01 (1 paisa) per contract note, so the cost is a rounding error rather than a literal zero. Fees still vary broker to broker — always check the live charge list.

How to buy government bonds in India (step by step)

The cheapest route is RBI Retail Direct — the RBI's own portal, with no account, commission or brokerage fees (you only bear any payment-gateway charge when you fund a bid). It takes a one-time account setup, then bids take a couple of minutes. If you already trade, your existing demat/broker does the same job with a familiar interface.

• Route A — RBI Retail Direct (no fees, bar payment-gateway charges): Go to rbiretaildirect.org.in and open a Retail Direct Gilt (RDG) account with PAN, Aadhaar (mobile-linked for OTP), a bank account and email. KYC is online and takes 1–2 working days.
• Place a non-competitive bid: in each weekly auction, pick the security (dated G-Sec, T-Bill or SDL), enter the amount (minimum ₹10,000, in multiples of ₹10,000), and pay via UPI or net banking (net-banking/UPI funding may carry a small payment-gateway charge; the ASBA option blocks the funds in your account instead and avoids it). You get the same cut-off price the big institutional bidders set — you don't set the price yourself.
• For the RBI FRSB (8.05%): buy it through the same portal via a Bond Ledger Account, or apply at SBI and designated bank branches. Minimum ₹1,000, no upper limit, 7-year lock-in.
• Route B — via your broker: in Zerodha Kite go to Bids → Govt. securities → Place bid (Groww, ICICI Direct and others have an equivalent flow). Same ₹10,000 minimum and auction mechanism; the bonds settle into your existing demat.
• Route C — the secondary market: listed G-Secs, SDLs and SGBs also trade on NSE/BSE during market hours. You can buy any quantity through your demat at the live price, but retail liquidity is thin, so spreads can be wide — check the order book before you place a market order.
• Hold to maturity for the cleanest outcome: the coupon lands in your bank on schedule and the face value is repaid at the end, sidestepping secondary-market price risk entirely.

The catches, and who each bond actually suits

Government bonds are safe on default risk, not on every risk. Be clear-eyed about the trade-offs before you lock money in.

• Modest returns, taxed hard: at a ~6.7% G-Sec yield taxed at slab, a 30%-slab investor nets under 5%. Compare that to your own tax situation and to what a good FD or debt fund does after tax.
• Lock-ins: the RBI FRSB has a hard 7-year lock-in (limited premature exit for senior citizens); 54EC bonds lock in for 5 years. Dated G-Secs have no lock-in but you must sell in the market to exit early.
• 54EC "no TDS" is not "no tax": REC, PFC and IRFC do not deduct TDS on the 5.25% coupon, but that interest is still fully taxable — you must report it and pay tax at your slab rate yourself. Treat the annual coupon as income that arrives untaxed, not as tax-free money.
• Liquidity is thin for retail: RBI Retail Direct's secondary market and small on-exchange bond lots can be hard to sell at a fair price. If you might need the money early, that matters more than the headline yield.
• Price risk if you sell early: bond prices fall when yields rise. Sell a long-dated G-Sec after a rate rise and you can book a capital loss.
• The floating rate can fall: the FRSB's 8.05% is NSC + 0.35%, reset every 1 January and 1 July — if the NSC rate is cut, your coupon drops at the next reset.
• SGBs are winding down: no new tranche since February 2024, and from 1 April 2026 secondary-market SGBs lost their tax-free-maturity advantage. Treat them as a legacy holding, not a fresh entry.