What is a bond coupon rate?

A bond's coupon rate is the annual interest rate paid on the face value of the bond. For example, a bond with a face value of ₹1,000 and a coupon rate of 8% pays ₹80 per year in interest. This is fixed at issuance and does not change over the life of the bond.

What is the difference between semi-annual and annual coupon bonds?

A semi-annual coupon bond pays interest twice a year (every 6 months), each payment being half the annual coupon amount. An annual coupon bond pays the full year's interest in one payment. Most government and corporate bonds in India pay semi-annual coupons.

Is bond coupon income taxable in India?

Yes — coupon income from bonds is taxable as 'Income from Other Sources' at your applicable income tax slab rate in India. TDS may be deducted at source depending on the bond type and issuer. Consult a tax advisor for your specific situation.

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