STATE GOVERNMENT BONDS
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State Government Bonds

Government bond in India is essentially a contract between the issuer and the investor, wherein the issuer guarantees interest earnings on the face value of bonds held by investors along with repayment of the principal value on a stipulated date.

These types of bonds issued by state owned corporations wherein the government generally extends an unconditional and irrevocable guarantee for timely interest and principal payments. In case of default or bankruptcy, the government shall pay all the outstanding dues to the bondholders.

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These instruments can be guaranteed by the state or the central government. They are an attractive investment option for investors seeking a safe and reliable way to earn interest income, as it reduces the default risk. The long-term nature of these bonds also provides investors with a steady stream of cash flow over time from their idle funds.

Some of the Examples of government guaranteed bonds are UP Power corporation Ltd, AP State Beverages Corp Ltd, Rajasthan Rajya Vidyut Prasaran Nigam Ltd etc.


Eligibility Investment Limit Maturity Interest Rate Tax treatment
Need to Have Demat account. Minimum Investment – 10 Lacs 2 - 10 Years. Can be sold in market. 7% - 9% p.a Interest Income is taxable.