Issued for a period of less than one year.
Issued by Government of India for meeting their debt obligations for a predefined period.
Issued by State Governments for meeting their debt obligations for a predefined period.
Zero Coupon Bonds created by separating cash flows into individual securities
G-Secs are guaranteed by Government of India
Returns are higher than traditional deposits
G-Sec prices are readily available due to highly liquid and active secondary market
Fixed rate is guaranteed for a predefined tenure.
G-Secs do not attract TDS
The customers does not have to quote price/yield while placing the bid.
| Nature of Income | Tax Rate * |
|---|---|
| Interest Income from Government Securities | As per applicable slab rate |
| Long Term Capital Gains (Without Indexation) | 10% |
| Long Term Capital Gains (With Indexation) | 20% |
| Long Term Capital Gains (Unlisted) | 20% |
| Short Term Capital Gain | As per applicable slab rate |
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Government Securities are tradeable instrument issued by the Central Government or the State Governments. It acknowledges the Government’s debt obligation. Such securities are short term (usually called treasury bills, with original maturities of less than one year) or long term (usually called Government bonds or dated securities with original maturity of one year or more). In India, the Central Government issues both, treasury bills and bonds or dated securities while the State Governments issue only bonds or dated securities, which are called the State Development Loans (SDLs).
Debt obligations of the Government that have maturities of one year or less are normally called Treasury Bills or T-Bills. Treasury Bills are short-term obligations of the Treasury/ Government. They are instruments issued at a discount to the face value and form an integral part of the money market.
Separate Trading of Registered Interest and Principal of Securities. - STRIPS are the securities created by way of separating the cash flows associated with a regular G-Sec i.e. each semi-annual coupon payment and the final principal payment to be received from the issuer, into separate securities. They are essentially Zero Coupon Bonds (ZCBs). However, they are created out of existing securities only and unlike other securities, are not issued through auctions. Stripped securities represent future cash flows (periodic interest and principal repayment) of an underlying coupon bearing bond.
State Governments also raise loans from the market which are called SDLs. SDLs are dated securities issued through normal auction similar to the auctions conducted for dated securities issued by the Central Government. Interest is serviced at half-yearly intervals and the principal is repaid on the maturity date. Like dated securities issued by the Central Government, SDLs issued by the State Governments also qualify for SLR.
The price of a Government Securities, like other financial instruments, keeps fluctuating in the secondary market. The price is determined by demand and supply of the securities. Specifically, the prices of Government Securities are influenced by the level and changes in interest rates in the economy and other macro-economic factors, such as, expected rate of inflation, liquidity in the market, etc. Developments in other markets like money, foreign exchange, credit, commodity and capital markets also affect the price of the G Sec.
Bonds issued to the public at a discount on face value but redeemed at par are zero-coupon bonds.
0.06% as brokerage on securities bought during Primary auction.
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