Corporate bonds vs government bonds: what is the difference?

The difference that matters is who repays you. Everything else, from yield to where you can buy, follows from that.

How do they compare side by side?

	Government bonds (G-secs, SDLs, T-bills)	Corporate bonds and NCDs
Who repays	Government of India or a state	One company
Main risk	Price moves with interest rates	Issuer default, plus price moves
Yield	Set in RBI auctions	Higher; GoldenPi states 8% to 14% for AAA to BBB
Where to buy	RBI Retail Direct, broker bids, exchange order book, some OBPPs	OBPPs on the RFQ platform, exchange order book, NCD IPOs
Fee to buy	₹0 on Retail Direct, Zerodha and Fyers; 0.06% plus GST at Upstox and HDFC Securities	Usually no stated fee; a spread sits in the price
Minimum	₹10,000 face value in auctions	Often ₹10,000 face value for private placements since 3rd Jul 2024; some ₹1 lakh
Tax on interest	Slab rate	Slab rate, with 10% TDS on listed debentures
Stamp duty on transfer	0%	0.0001%

Sources: RBI, HDFC Securities, Zerodha staff, Fyers, Upstox, GoldenPi, SEBI NCS Master Circular, EY, Vinod Kothari.

Are government bonds risk-free?

They carry no meaningful default risk, but they do carry price risk. If yields rise, a long G-sec sold before maturity fetches less than you paid, which is why forum users ask why long dated G-secs trade below 100 (TradingQnA). Held to maturity, you get face value. SDLs carry a state's credit; state guaranteed bonds issued by state bodies are a different thing, and their safety depends on the issuer and the guarantee's terms (TradingQnA).

Why do corporate bonds pay more?

Because a company can fail to pay. TruCap Finance NCDs sold to retail investors through bond platforms went to CARE D on 18th Jul 2025 after a missed payment (CARE). The rating, whether the bond is secured and where it ranks set how much extra yield the market asks. From about 21st Nov 2026 every bond platform must show a Credit Risk-o-Meter using the lowest available rating (SEBI circular). See are corporate bonds safe.

Do they trade differently?

On the NSE or BSE order book, G-secs and SDLs trade at the dirty price, including accrued interest (NSE circulars). Corporate bonds sold by platforms on the RFQ platform are quoted clean, with accrued interest added. Corporate bond trading is thin: SEBI's chairman cited a secondary turnover ratio of about 0.3 in May 2026 (Outlook Money).

Where can I buy each?

For government securities see how to buy G-secs and SDLs and how to buy T-bills. For corporate bonds see how to buy bonds in India and the options by need. RBI Retail Direct vs Wint Wealth sets a government channel against a corporate bond platform.