21 January 2016
Income from such instruments is to be considered as capital gains. These bonds will be considered as short term capital asset if held for a period for not more than 12 months. Long term capital gains on such bonds will attract 10% tax if the taxpayer does not claim the benefit of indexation.
he provisions of section 112 have been amended so as to bring parity of such bonds with other securities. The infrastructure company or fund or public sector company, which issues such bonds will be allowed a deduction for the discount, if any, on prorata basis subject to rules to be prescribed in this regard. Section 194A has been amended so as to provide that no tax will be deducted at source in respect of income payable on zero coupon bonds.
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