How to Buy Corporate Bonds in India (Complete Beginner’s Guide)

If you want to earn steady returns without taking too much risk, investing in corporate bonds can be a good option for you to start. Many new investors wonder how to buy corporate bonds in India and if they are safe. The good news is that investing in them is now easier than ever, even for beginners.

Let’s explore what corporate bonds are and where to buy corporate bonds.

What Are Corporate Bonds?

Corporate bonds are a way for companies to borrow money. When you buy one, you are simply lending your money to the company. They promise to pay it back to you with interest after a certain time. 

For example: 

Let us say a company gives you a bond of ₹1,00,000. The bond gives you 8% interest for every 5 years. This means you will get ₹8,000 each year as interest. When the years are over, you will also get your ₹1,00,000 back.

Who Can Buy Corporate Bonds in India?

Almost anyone can buy corporate bonds today. You can invest as an individual, a business entity, or even through your demat account. If you already invest in shares, buying company bonds is quite similar.

You can buy corporate bonds through:

• Banks and financial institutions
• Investment companies or online platforms
• Online portals and fintech apps that show bonds from different companies

Why Should You Consider Corporate Bonds?

Corporate bonds can be a good addition to your investment portfolio. Here’s why:

• You get a steady income.
• There is a lower risk than shares.
• It helps you in diversification.
• You can choose bonds that match your financial goals.
• You get better returns than FDs.

Where Can I Buy Corporate Bonds?

Knowing where to buy corporate bonds is key to starting your investment. You can purchase them through several routes:

How to Buy Corporate Bonds in India?

Here is a simple guide on how to purchase corporate bonds:

1. Understand Your Investment Goal

Decide what kind of income you want. It can be regular income, long-term stability or short-term growth. Your goal helps you choose the right option.

2. Choose the Right Platform

Choose a bank or online investment platform. Make sure it is registered with SEBI. A safe and transparent platform helps you make secure investments.

3. Open a Demat and Trading Account

Most corporate bonds are available in digital form. So open a demat and trading account with a registered broker or bank.

4. Check Bond Ratings

Always check the bond’s credit rating before you invest. A higher rating usually means lower risk.

5. Compare Interest Rates and Tenure

Each bond comes with a coupon rate and a maturity period. Choose what suits your needs best, which can be short or long-term.

6. Review Tax Implications

Interest earned on corporate bonds is taxable as per your income tax slab. However, long-term capital gains on bond sales after 12 months are taxed at 10% without indexation.

7. Place Your Order

Once you’ve selected your bond, place your order through your broker or online platform. The bond units will appear in your demat account after the transaction is processed.

8. Track and Manage Your Investment

You can monitor your bond holdings in your demat account. Stay updated about the company’s performance and interest payout dates.

These are the steps that show you how to buy company bonds.

Corporate Bonds vs Government Bonds

Many new investors wonder how corporate bonds vs government bonds compare. Here’s a simple comparison:

Corporate bonds carry slightly higher risk but can reward you with better returns. For safety, you can mix both in your portfolio.

Example of a Corporate Bond

Let’s take simple corporate bond examples:

A company offers you a bond for 5 years, which is worth ₹50,000. It has an annual interest rate of 8.5%. If you invest ₹50,000 in it, the company will pay you ₹4,250 each year as interest. Once the 5 years are over, you will get your full ₹50,000 back from the company.

This way, you get a regular income and capital safety if the issuer stays financially sound.

Tax on Corporate Bonds

The tax on corporate bonds depends on how you earn from them:

• Interest Income: You will be taxed based on your income tax slab.
• Short-Term Capital Gains (STCG): Gains are added to your income and taxed accordingly if it is sold before 12 months.
• Long-Term Capital Gains (LTCG): It is taxed at 10% without indexation if sold after 12 months.

Best Way to Buy Corporate Bonds Online

The best way to buy corporate bonds is through trusted online investment platforms. They list verified bonds from reputed issuers and provide all necessary details such as rating, coupon, and maturity.

Look for platforms that:

• Offer easy comparison between different bonds
• Display updated credit ratings
• Have a simple paperless KYC and purchase process

Things to Remember Before You Buy

• Always check the bond’s credit rating before you invest. 
• Understand the company’s financial background.
• Choose the period and coupon rate that fit your financial goals.
• Review all costs like agent charges and transaction fees.
• Keep track of tax implications and payment dates.

To explore more options, check out the Best Platforms to Buy Corporate Bonds. It guides you through some of the most reliable and beginner-friendly platforms available.

How My Mudra Can Help You Invest in Corporate Bonds?

If you are new to investing or unsure where to begin, My Mudra can make the process of corporate bonds to buy simpler for you. Here is how you can benefit:

• You can explore bonds offered by top banks and NBFCs in one place instead of visiting multiple sites.
• You can compare different corporate bonds. It is based on interest rates, period and credit ratings.
• You can complete your KYC, check eligibility and invest online without paperwork or branch visits.
• You get clear information and support. It helps you understand how bonds work and what suits your financial goals.

My Mudra acts as your trusted bridge between you and the financial institutions offering bonds and loans. We help you save time, reduce confusion and invest smartly from one reliable platform.

Summing Up

Understanding how to buy corporate bonds in India gives you a new way to grow your money. As a beginner, you can start small and learn how the market works. Corporate bonds can balance your investment portfolio.

With digital platforms simplifying the corporate bond process, it is now easier for you to explore these opportunities from the comfort of your home and learn how to buy corporate debt.

Research well, compare your options and take your first step towards smarter investing.

Also Read:
- How to Invest in Mutual Funds for Beginners
- Where to Buy Direct Mutual Funds: Your Complete Guide