Tata's new NON CONVERTIBLE DEBENTURES

This query is : Resolved

tarsem (Querist)
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14 February 2009 Sir please let me know whether I will be liable to tax on capital gain(on sale/redemption) or on income from other sources(annually) on the income from TATA's NCD(listed) if:-

1.I apply and get allotment from the company and will get it redeemed after 5 years .

2.I purchase it from market(being it will be listed)and will get redeemed after five years.

3.I purchase it from market and sell the same in market after 2 or 3 years.

K V Subba Rao

K V Subba Rao (Expert)
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14 February 2009 The interest will be taxable in the usual course. That is, the interest that you receive monthly, quarterly or cumulatively on maturity will be taxed as other income, that is, added to your total income and taxed thereof.

If you decide to sell at the stock exchange, it will be treated as a long-term capital asset if held for more than 12 months immediately preceding the date of sale.

The long-term capital gains tax will be taxed at 10 per cent without indexation of cost. And if you sell within 12 months, short-term capital gains will be applicable in accordance with the Income Tax Act at your regular tax slab.

Source: http://www.wealth.moneycontrol.com/columns/debt-investing/tata-capital-non-convertible-debenture-should-you-invest-/12272/1

tarsem

tarsem (Querist)
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14 February 2009 thanks for reply but sir I want to know that if I purchase the NCD from market and pay tax on accrual of interest yearly, say for two years and sale the same(rate will be cum interest) in third year,then what will be my cost for the calculation of capital gains.

As I would have paid tax on interest for two years,now my question is whether i will be able to add cumulative interest to the cost of debenture or will be liable to pay tax again on difference of sale and purchase price which would have the interest amount on which tax would have been paid on accrual bases annualy

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