TAXATION OF FIXED INCOME INSTRUMENTS 

​

​

The government of India and the banking system offers individual investors the opportunity to park their money in a number of safe and relatively liquid financial instruments. The direct and sometimes indirect sovereign guarantee on these instruments make them a very attractive proposition for investors who are either risk averse or are seeking downside protection for creating a well-diversified portfolio.  

 

These instruments by their very nature promise a relatively safe and stable source of income-returns. However, to understand their suitability and maximize the benefits they offer, it is essential to understand the tenure options and taxation implications associated with each of these instruments. Below is a snapshot of the liquidity (lock in) and taxes applicable on some of the most popular instruments (updated as per Budget 2019).