What is zero coupon bond in india

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So where does an investor show the capital gains for a zero coupon bond on maturity in the ITR-2? Save my name, email, and website in this browser for the next time I comment. Leave a Reply Cancel reply Save my name, email, and website in this browser for the next time I comment.


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These bonds have a face value of Rs20,, are being issued at a discount at Rs9, and will be redeemed at face value at the end of 10 years. If one computes the inherent rate of interest in such bonds, it works out to only 7. However, the post-tax return on such bonds is a fairly decent 6.

The difficulty that one faces in taking a decision to invest in notified zero-coupon bonds is due to the uncertainty caused by the direct taxes code DTC.

Reserve Bank of India - Master Circulars

Though the draft DTC provides for taxation of discount on such bonds as capital gains, it does not have a concessional tax rate for long-term capital gains on zero-coupon bonds. The post-tax rate of return is, therefore, uncertain.

Deep Discount Bond Theory/ FM/ CA IPCC

One wishes there was clarity, certainty and stability in tax laws. Gautam Nayak is a chartered accountant. Market Watch.

ZERO COUPON BOND INTEREST RATES

Pinterest Reddit. By Dheeraj Tiwari. Another option is to issue zero-coupon bonds. Finance minister Arun Jaitley announced a Rs 2.

Zero Coupon Bond

The rest of the money, Rs 76, crore, will come through budgetary support and bank stake sales. Zero-coupon bonds do not pay interest during their tenure. Investors receive a lump sum equal to the initial investment plus the imputed interest. Jaitley had said the bond-sale mechanism was yet to be devised.


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  • An NOHC is one of the options being considered, a senior government official, adding that no final decision had been taken. Chief economic adviser Arvind Subramanian tweeted that the cost of issuing the Rs 1.

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    Along with a holding company structure, alternative ways of raising capital, such as the sale of non-voting shares, could be explored, said another official aware of discussions. Protective clauses would ensure that control remained with the government, he said. Click here for all you need to know about filing income tax return this year.

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