Bonds vs stocks: what is the difference, and is a bond debt or equity?

Both trade on NSE and BSE and both sit in the same demat, which is why they get compared. They promise very different things.

Side by side

	Bond or NCD	Share
What you hold	A loan to the issuer	A slice of ownership
Income	Fixed coupon on set dates	Dividends, if the company pays them
At maturity	Face value repaid, if the issuer pays	No maturity
If the company fails	Creditors, including bondholders, are paid before shareholders	Paid last, often nothing
What moves the price	Interest rates and the issuer's credit	Profits, outlook and the market
Tax on income	Interest at slab; 10% TDS on listed debentures	Dividend tax rules
Tax on a listed holding sold after 12 months	12.5%, no indexation	Equity rules

Sources: EY, Business Standard.

Can I lose money on a bond?

Yes, in 2 ways. The issuer can miss payments: TruCap Finance NCDs went to CARE D on 18th Jul 2025 (CARE). And the price can fall if interest rates rise, so selling before maturity can bring back less than you paid, even for a government bond (TradingQnA). What a bond limits is the upside: the most you get, if all goes well, is the coupons and face value.

Is a company's bond safer than its shares?

It ranks ahead of them, and within bonds the order runs secured, senior unsecured, subordinated, then perpetual and AT1 paper. Ranking ahead is not a guarantee: what bondholders recover depends on the assets and how fast the trustee can enforce. See secured vs unsecured vs subordinated and what happens if the issuer defaults.

Do I buy them the same way?

Listed bonds can be bought on the exchange order book through the same broker you use for shares, for example on Kite at Zerodha (TradingQnA). The order books are much thinner: SEBI's chairman cited a corporate bond secondary turnover ratio of about 0.3 in May 2026 (Outlook Money). Broker apps such as Groww and specialist platforms also sell bonds through the exchange RFQ platform; see how to buy bonds in India. STT does not apply to G-secs, T-bills or SGBs (Zerodha).

What about bonds that turn into shares?

Convertible debentures can become equity on stated terms, which puts them between the 2. Most retail bonds are non-convertible. See bond vs debenture.