A debt investment in which an investor loans money to an entity either corporate or government that borrows the funds for a defined period of time at a fixed interest rate.
Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Bonds and stocks are both securities, but the major difference between the two is that (capital) stockholders have an equity stake in the company (i.e., they are owners), whereas bondholders have a creditor stake in the company (i.e., they are lenders). Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks may be outstanding indefinitely.
Non Convertible Debentures (NCDs)

NCDs are simply regular debentures, cannot be converted into equity shares of the liable company. They are debentures without the convertibility feature attached to them. As a result, they usually carry higher interest rates than their convertible counterparts.
Tax Free Bonds

Tax Free Bonds are instruments where interest earned is not taxed. However, there is no deduction for the principal invested in these bonds. These bonds will be eventually listed on the Bombay and National Stock Exchange, so investors will have the option of selling them before the full term of the bond. However, the price you may get for selling before they mature will depend on market conditions.
Capital Gain Bonds

As per provisions of Income Tax Act, 1961, any long term capital gains arising from transfer of any capital asset would be exempt from tax under section 54EC of the Act if:

• The entire capital gain realized is invested within 6 months of the date of transfer in eligible bond.
• Such investment is held for 3 years.
• To avail of capital gain exemption, the bonds so acquired cannot be transferred or converted into money or any loan or advance can be taken on security of such bond within 3 years from date of acquisition else, the benefit would be withdrawn
• If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.
Infra Bonds

In FY 2010-11, Finance Minister in Union Budget had introduced a new section 80CCF under the Income Tax Act, 1961 that provide income tax deduction of Rs. 20,000 in addition to Rs 1 Lakh available under other provisions for claiming tax deductions for investments made in the Long Term Infrastructure Bonds that are notified by the central government.
In Finance Bill 2012, The 20,000 tax benefit from infrastructure bonds U/s 80CCF has disappeared.