How To Buy Tax-free Bonds Online

By Author: Ravi
Total Articles: 60
Comment this article

A lot of investors look for ways to earn without giving a big share away in taxes. If that sounds like you, tax-free bonds might be something to consider. They’re not about quick returns or fancy features — they just give you regular income, and the best part is, the interest doesn’t get taxed.
These bonds have been around for a while, and even though new ones aren’t being issued anymore, you can still buy them in the secondary market. If you’ve ever wondered how to go about it, especially through online platforms, here’s how it works.
 
Let’s start with the basics
Tax-free bonds were issued by government-owned companies for long-term funding needs. Names like NHAI, REC and IRFC are behind them. They offered these bonds to the public for fixed terms — usually 10 to 20 years.
The interest from these bonds is fully exempt from tax. So whatever amount is credited to your account, you keep it all. No need to declare it as income or worry about deductions.
That’s one reason why these bonds became so popular, ...
... especially among people who wanted predictable income over the long run.
 
 
 
Can you still invest in them?
Yes, but not directly from the companies anymore. The original issue period is over. However, these bonds are still traded in the bond market, and you can buy them from someone who wants to sell.
The easiest way to do this now is through online platforms that deal with fixed income products. If you’ve used a stockbroker’s website or app before, the experience will feel somewhat familiar — just more focused on bonds.
 
How to buy tax-free bonds online

Pick a platform
Start with a bond investing website that lists these bonds. Make sure it gives you all the information — issuer name, interest rate, maturity, price and credit rating.
Complete your profile
You’ll need a demat account and KYC details like PAN and address proof. Setting this up is usually a one-time process.
Search and compare
Use the filters to find tax-free bonds that match what you’re looking for. Some offer annual payouts, others pay semi-annually. Also check how many years are left to maturity.
Place your order
Once you decide, place the order. You’ll need to make the payment through net banking or UPI. After the transaction, the bonds will reflect in your demat account.
Sit back and track payouts
You’ll get interest according to the bond’s schedule. Most platforms also allow you to see upcoming payouts and maturity timelines.

 
A few points to think about
Since most of these bonds were issued several years ago, they often trade at a premium in today’s market. That means you might pay more than the original issue price. This affects your yield, so it’s important to look at the effective return and not just the interest rate.
Also, these are best suited for long-term holding. If you sell before maturity and make a profit, you may have to pay capital gains tax.
Another thing — not all bonds are liquid. Some don’t trade as often, so if you need to exit early, finding a buyer at your price might take time.
 
Final word
You don’t need to be a market expert to understand how to buy tax free bonds online. It’s about knowing what you want — a simple product that pays you regularly and doesn’t complicate your tax life.
The bond market in India may not get as much attention as stocks, but for those who want to keep their income stable and their returns clean, this space offers something useful.
Tax-free bonds are quiet performers. And sometimes, that’s exactly what your portfolio needs.