Whenever a company wants to raise money from the public, it issues a debt paper for a specified tenure, where it pays a fixed interest on the investment. This paper is known as debenture. A non-convertible debenture or NCD do not have the option of conversion into shares and on maturity the principal amount along with accumulated interest is paid to the holder of the instrument.

A Bond is a fixed income investment in which an investor loans money to an entity (corporate or government) which borrows the funds for a defined period of time at a variable or fixed interest rate .Bonds are used by companies, municipalities ,states and sovereign governments to raise money .Owners of bonds are debt holders or creditors.

NCDs are rewarding financial product as investing in listed NCDs will retain the benefits of long-term capital gains when sold after a year. This makes listed NCDs that are sold after a year long‐term capital assets unlike 3 years in case of debt Mutual Fund. The gains are taxed at the rate of 10.30% (the indexation benefit is not available for bonds and debentures). So, NCDs score over debt mutual funds (growth option) and Bank Fixed Deposits for the investments kept for the period. Investors with highest tax bracket (30%) get more tax benefit from NCDs than Debt Mutual Fund and Fixed Deposits for the time horizon of the investment for the period between one and three years.