How do Gilt Funds work?

Gilt Funds invest your money primarily in Government Securities (G-Secs), which are debt instruments issued by the central and state governments. These funds aim to offer a secure investment avenue, as they're backed by the government, making them relatively low-risk. They seek to generate returns through interest income from these securities, suitable if you're looking for safety along with modest returns.

Where are Gilt Funds typically invested in?

Gilt Funds are typically invested in a variety of government securities, including treasury bills, government bonds, and state development loans. These investments are considered safe because they're backed by the government, reducing the risk of default. The funds may invest across different maturities, from short to long-term, depending on the fund manager's outlook on interest rates.

Do Gilt Funds give profit?

Gilt Funds can give profit primarily through interest income generated from government securities. While the returns on these funds are generally lower compared to equity funds due to their lower risk profile, they can still offer attractive returns, especially in a falling interest rate environment when the price of older, higher-yielding securities tends to increase.

Are Gilt Funds tax-free?

No, Gilt Funds are not tax-free. The returns from these funds are subject to taxation. If you hold your investments for less than three years, the gains are taxed as short-term capital gains according to your income tax slab. For holdings over three years, gains are taxed as long-term capital gains at 20% with indexation benefits.

How are profits under Gilt Funds taxed?

Profits from Gilt Funds are taxed depending on the holding period. Short-term capital gains (if the investment is sold within three years) are taxed according to your income tax slab rates. Long-term capital gains (for investments held for more than three years) benefit from a lower tax rate of 20% with indexation, which adjusts the purchase cost for inflation, reducing the taxable gain.

How to choose the best Gilt Funds?

To choose the best Gilt Fund, consider factors such as the fund's past performance, expense ratio, and the fund manager's experience in managing debt funds. Also, look at the fund's duration and how it aligns with your investment horizon and interest rate outlook. Since these funds invest in government securities, credit risk is low, but interest rate risk should be considered, especially for long-duration funds.

Is it necessary to open demat account for investing in Gilt Funds?

No, it's not necessary to open a demat account to invest in Gilt Funds. You can directly invest through the AMC's website or through online investment platforms that allow you to buy and sell fund units without a demat account. However, having a demat account might be convenient if you already invest in other securities and wish to consolidate your investments.

What is better in Gilt Funds - Lump Sum or SIP?

Both lumpsum and SIP (Systematic Investment Plan) have their advantages in Gilt Funds, depending on your investment goal and market outlook. Lump Sum investments can be beneficial when interest rates are expected to decline, as bond prices move inversely to interest rates. SIPs are suitable for averaging the cost of investment over time, reducing the impact of market timing and interest rate volatility.

How to start Gilt Funds SIP online?

To start an Gilt Fund SIP online, follow these 4 steps: 1. Open Demat Account 2. Choose the Gilt Fund you wish to invest in. 3. Choose the SIP option, specifying the amount and SIP date 4. Set up an auto-pay via bank account to automate the SIP payments

Can you sell Gilt Funds anytime?

Yes, you can sell or redeem your units in Gilt Funds at any time. However, it's important to consider the market conditions as the NAV (Net Asset Value) of the fund will fluctuate based on interest rate movements. Immediate selling might not always be advantageous, depending on the current bond prices and interest rates.

Is there any lock-in period for Gilt Funds?

No, Gilt Funds do not have a lock-in period, allowing you flexibility in managing your investment according to your liquidity needs and market outlook. This makes them an attractive option for you if looking for safer debt investments without the restrictions of a lock-in period.

What are the risks associated with Gilt Funds?

The primary risk associated with Gilt Funds is interest rate risk. As interest rates rise, the prices of existing bonds (with lower interest rates) tend to fall, affecting the fund's NAV negatively. However, since Gilt Funds invest in government securities, there's minimal credit risk, making them one of the safer investment options within the debt category.

Are Gilt Funds 100% safe?

While Gilt Funds are considered safe due to their investment in government securities, they are not 100% risk-free. Interest rate fluctuations can impact the fund's returns, making them subject to market volatility. However, the credit risk is very low, as the chances of a government default are minimal, making them a relatively secure investment option compared to other types of mutual funds.

Top Rated Gilt Funds in 2026 - Best Gilt Funds

Name	1Y Returns	3Y Returns	5Y Returns
ICICI Prudential Gilt Fund Direct - Growth Compare	5.35%	7.86%	6.94%
SBI Gilt Fund Direct - Growth Compare	3.73%	7.32%	6.46%
DSP Gilt Fund Direct - Growth Compare	2.60%	7.22%	6.26%
Bandhan Gilt Fund Direct - Growth Compare	3.47%	7.49%	6.23%
Axis Gilt Fund Direct - Growth Compare	3.97%	7.59%	6.18%
Edelweiss Government Securities Fund Direct - Growth Compare	1.91%	6.64%	6.14%
Baroda BNP Paribas Gilt Fund Direct - Growth Compare	3.56%	7.31%	6.06%
Tata Gilt Securities Fund Direct - Growth Compare	2.82%	7.05%	6.03%
PGIM India Gilt Fund Direct - Growth Compare	2.44%	6.89%	6.02%
UTI Gilt Fund Direct - Growth Compare	4.45%	7.13%	5.93%
Nippon India Gilt Fund Direct - Growth Compare	2.16%	6.71%	5.89%
Kotak Gilt Investment PF & Trust Fund Direct - Growth Compare	0.71%	6.30%	5.84%
Kotak Gilt Investment Fund Direct - Growth Compare	0.71%	6.29%	5.84%
HDFC Gilt Fund Direct - Growth Compare	3.48%	6.97%	5.81%
Aditya Birla Sun Life Government Securities Fund Direct - Growth Compare	0.52%	6.19%	5.75%
Invesco India Gilt Fund Direct - Growth Compare	1.92%	6.95%	5.70%
Franklin India Government Securities Fund Direct - Growth Compare	4.89%	6.50%	5.65%
Canara Robeco Gilt Fund Direct - Growth Compare	2.51%	6.57%	5.60%
HSBC Gilt Fund Direct - Growth Compare	1.94%	6.34%	5.55%
LIC MF Gilt Fund Direct - Growth Compare	0.57%	5.91%	4.98%
Bajaj Finserv Gilt Fund Direct - Growth Compare	1.30%	-	-
Groww Gilt Fund Direct - Growth Compare	-	-	-
Quant Gilt Fund Direct - Growth Compare	3.35%	6.48%	-
Union Gilt Fund Direct - Growth Compare	0.17%	5.64%	-

Gilt funds represent a specific category of investment vehicles primarily concentrated on government securities. These funds allocate their investments to fixed-income instruments issued by the government, offering a lower risk of default compared to other bond types. For investors in search of a secure investment option with a stable return, gaining a comprehensive understanding of gilt funds is crucial. Here are the fundamental aspects to consider:

Government Backing: The primary feature of gilt funds is that they invest in government securities, which are generally considered safe due to government backing.
Risk Profile: These funds have a lower credit risk because the government is unlikely to default on its obligations.
Interest Rate Sensitivity: Gilt funds are sensitive to changes in interest rates, which can affect the fund's performance depending on the market scenario.

Gilt funds can be a suitable option if you're looking for relatively safe investment avenues and are comfortable with the nuances of interest rate fluctuations. They offer a lower-risk profile compared to corporate bonds, but it's important to align such investments with your understanding of interest rate movements and overall financial goals.

Investing in gilt funds offers several benefits, particularly for risk-averse investors:

Lower Credit Risk: The primary advantage is the lower credit risk, as the government backs these securities.
Stability: Gilt funds can offer stability in a diversified investment portfolio, especially in times of economic uncertainty.
Potential for Steady Returns: They provide the potential for steady returns, particularly appealing if you're looking for safer investment options.
Diversification: Adding gilt funds to your portfolio can enhance diversification, especially if your other investments are concentrated in higher-risk categories.
Liquidity: Government securities are typically liquid, making gilt funds a relatively liquid investment option compared to other fixed-income instruments.
Suitable for Conservative Investors: If you have a conservative investment approach and are seeking a secure place for your funds, gilt funds can be a good match.

Gilt funds present the benefit of reduced credit risk and the potential for stability in an investment portfolio. They prove especially fitting for conservative investors or individuals seeking diversification through a lower-risk alternative. Despite providing safety and liquidity, it is crucial to recognize their susceptibility to fluctuations in interest rates, which can influence returns. Just like any investment, it is prudent to evaluate how gilt funds integrate into your comprehensive financial plan, ensuring alignment with your investment objectives and risk tolerance.

Deciding whether gilt funds are a good investment option for you depends on your investment goals, risk tolerance, and understanding of how these funds operate. Gilt funds invest primarily in government securities, which are known for their high credit quality. Here are some important aspects to consider:

Risk Profile: While gilt funds are considered low risk in terms of credit risk, they are susceptible to interest rate risk. If interest rates rise, the value of the bonds in the fund can fall, and vice versa.
Investment Horizon: Gilt funds are more suitable for medium to long-term horizons. Due to their sensitivity to interest rate changes, they can be volatile in the short term.
Financial Goals: If your objective is to invest in a low-credit-risk instrument and you are comfortable with the interest rate risk, gilt funds might align with your goals.

Opting for gilt funds can prove advantageous for those desiring involvement in low-credit-risk securities and being at ease with interest rate risk. These funds are more suitable for investors with a medium to long-term perspective. It is essential to align such investments with your financial goals and risk tolerance.

Gilt funds may be suitable for specific types of investors based on their investment profile:

Risk-Averse Investors: If you are averse to high credit risk but can manage interest rate risk, gilt funds could be a suitable choice.
Medium to Long-term Investors: These funds are ideal for investors who have a medium to long-term investment horizon, allowing them to ride out interest rate volatility.
Conservative Investors Seeking Government Securities: If you prefer investments in government securities due to their high credit safety, gilt funds can be a good option.
Investors Looking for Diversification: For those looking to diversify their portfolio beyond corporate debt and equities, gilt funds offer a different risk-return profile.
Investors with an Understanding of Interest Rate Movements: If you have a grasp of macroeconomic factors, particularly interest rate movements, and can strategically enter and exit investments, gilt funds might be appropriate.

Gilt funds can be a fitting choice for investors who are risk-averse in terms of credit risk, have a longer investment horizon, and are knowledgeable about interest rates and their impact on bond prices. They offer an avenue for investing in government securities, which can provide a sense of security and diversification. However, it's essential to carefully consider the interest rate risk associated with these funds and how they fit into your overall investment strategy and objectives. As always, aligning these investments with your personal financial goals and understanding of the market is key.

Explore | Sitemap

*All securities mentioned on this website are exemplary and not recommendatory.

*Current prices on the website are delayed by 15 mins, login to check live prices.

We are bullish on India, we are bullish on India's prospects to be one of the largest economies in the world. We believe that the stock market provides a unique opportunity for all of India's traders and investors to participate in the growth story of the country.

Yet, most investing & trading platforms in India have remained more or less the same over the past decade. Times have changed and retail traders and investors have become smarter about managing their trades and money. Modern traders & investors require an online trading platform that helps them keep up with the technological advancements of our time.

That's why we're building Dhan - to help you trade, to help you invest, and to help you participate in India's growth stock via the stock market with awesome features and an incredible experience.

We are doing so by giving you access to not just one but 6 products within the Dhan ecosystem:

Dhan App: The only online trading app you need for buying and selling equity, futures, options, commodity, and currency.
Dhan Web: Trade on the big screen across segments with our web trading platform.
Options Trader App: A dedicated option trading app built for India's F&O traders.
Options Trader Web: Love big screens and F&O trading? Use our web option trading platform.
Dhan + TradingView: The magic of Tradingview charts for free with the Lightning-Fast experience of Dhan on tv.dhan.co.
Connect to TradingView: Our Tradingview broker integration allows you to trade in Stocks, Futures, and Commodities directly from tradingview.com via Dhan.

This means that with Dhan, you'll be able to start:

Lakhs of users already trust Dhan for their online stock trading and investing needs. Dhan is growing rapidly because of the love we receive from SuperTraders and Long-Term Investors who acknowledge that the platform is innovating for them, building super useful features that help them do everything from investing in stock market to trading F&O like a pro on the Tradingview charts and much more.

While we are growing, we will always remember why we started building in the first place - you. Our user-first approach will always be at the heart of our philosophy. Come join us on this incredible journey!

Try it out, you can close your account at anytime using this link.

SEBI Stock Broker Registration No: INZ000006031 | Depository Participant (CDSL) ID: IN-DP-289-2016 | SEBI Research Analyst Registration No: INH000023357
Exchange Membership No. : NSE: 90133 | BSE: 6593 | MCX: 56320
Registered & Corporate Office: Unit No. 2201, 22nd Floor, Gold Medal Avenue, S.V. Road, Beside Patel Petrol Pump, Piramal Nagar, Goregaon West, Mumbai – 400104, Customer Care: 9987761000.

Details of client bank account

For any query / feedback / clarifications, email at help@dhan.co.

In case of grievances for any of the services rendered by Raise Securities Private Limited, please write to grievance@dhan.co (for NSE, BSE and MCX) or grievancedp@dhan.co (for Depository Participant). Please ensure that you carefully read the Risk Disclosure Document as prescribed by SEBI, our Terms of Use and Privacy Policy. Compliance Officer: Mr. Manish Garg and Mobile: 8655740961 Email: complianceofficer@dhan.co To lodge your complaints using SEBI SCORES, click here.

Disclaimer: All communications with the client via chat, phone, or email are for support purposes only. Any commitments or statements made by the agent (human or virtual) shall not be binding on the company.

DHAN is a brand owned by Raise Securities Private Limited. All DHAN clients are registered under Raise Securities Private Limited. Clients are advised to refer to our company as Raise Securities Private Limited when communicating with regulatory authorities.

Procedure to file a complaint on SEBI SCORES: Register on SCORES portal. Mandatory details for filing complaints on SCORES: Name, PAN, Address, Mobile Number, E-mail ID. Benefits: Effective Communication, Speedy redressal of the grievances. You may refer the website https://scores.sebi.gov.in/ for more information. You may also download the SEBI Scores app to log a complaint Android: https://play.google.com store apps sebiscores iOS: https://apps.apple.com app sebiscores.

Disclaimer: Investment in the securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed the SEBI prescribed limit

Attention investors:

Stock brokers can accept securities as margins from clients only by way of pledge in the depository system w.e.f September 01, 2020.
Update your e-mail and phone number with your stock broker / depository participant and receive OTP directly from depository on your e-mail and/or mobile number to create pledge.
Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month.

Note: As a policy we do not give stock tips or recommendations and have not authorized anyone to give this on behalf of us. If you know anyone claiming to be a part of Dhan / / Raise or our associate companies or partners and offering such services, please report us on help@dhan.co. Important Information for Investors: To prevent unauthorized transactions in your trading / demat account, do not share your account details, credentials or any personal details with anyone. Keep your mobile number updated with your Stock Broker, Depository Participant and ensure that the same is registered with Stock Exchanges, Depository and KRAs. You will receive alerts and information on your registered mobile number / email for debit and other important transactions in your demat account directly from CDSL / Exchange on the same day. KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (Stock Broker, DP, Mutual Fund, etc.), you need not undergo the same process again when you approach another intermediary. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account. This is issued in the interest of investors.

Investors should be cautious on unsolicited emails and SMS advising to buy, sell or hold securities and trade only on the basis of informed decision. Investors are advised to invest after conducting appropriate analysis of respective companies and not to blindly follow unfounded rumours, tips etc. Further, you are also requested to share your knowledge or evidence of systemic wrongdoing, potential frauds or unethical behaviour through the anonymous portal facility provided on BSE & NSE website. Issued in the interest of the investors.

Raise Securities Private Limited also known as Dhan is only an order collection platform that collects orders on behalf of clients and places them on BSE StarMF for execution. Client expressly agrees that Dhan is not liable or responsible and does not represent or warrant any damages regarding non- execution of orders or any incorrect execution of orders with regard to the funds chosen by the client or due to, but not being limited to, any link/system failure, delay in transfer of the funds on account of any unforeseen circumstances/issues in the banking system/payment aggregators or any other problems that may result in a delay in crediting the funds into the BSE Star MF's bank account. Raise Securities Private Limited (Dhan) does not engage in proprietary trading on its own account.

Mutual fund investments are subject to market risks, read all scheme related documents carefully before investing. Dhan is not a distributor or agent of any mutual fund. Mutual Funds are not exchange-traded products. Any related disputes will not have access to the Exchange-investor redressal forum or arbitration mechanism. For other disclaimers please refer https://dhan.co/advertisement-disclaimer/

Download client registration documents (Rights & Obligations, Risk Disclosure Document, Do's & Don'ts) in vernacular language: BSE | NSE | MCX

Kindly, read the Advisory Guidelines of BSE | NSE | MCX for investors as prescribed by the exchange with reference to their circular dated 27th August, 2021 regarding investor awareness and safeguarding client's assets

Gilt Mutual Funds

Best Gilt Funds to Invest in 2026

Sorted highest to lowest: 3Y Returns

Returns Calculator Based on Annualised Returns

About Gilt Funds

What are Gilt Funds

Advantages of investing in Gilt Funds

Is it good to invest in Gilt Funds

Who should invest in Gilt Funds

Other Debt Funds

Explore Mutual Funds by Types

Open NFOs

Popular Funds

Mutual Fund Calculators

FAQs