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Crack ur brain

Tax queries 526 views 1 replies

ARPIT RAMSISARIA

Articled Trainnee

33 Points Joined October 2009

Can Someone help me to tell about taxability of bond In below example with Any write-up available:-

Suppose I had Purchased a bond ( F.V Rs.1000) for Rs. 1005 from Secondary Market,

In Addition I had Paid 15 Rs. for interst accrued.

Now , when I am selling the bond, I Sold it for Rs. 1030+ 30 Rs.for Interest accrued.

Now , what will be the tax treatment for increase in its price (ie.1030-1005= 25), and increase in interest of Rs. 15(30-15). Would both be liable to be taxable as Capital gain or Interest.?

Replies (1)

Rakesh Kumar

B.Com ( H ) Pursuing CA Final

327 Points Joined January 2008

i think since as per AS 13 what ever u receive as interest or dividend before held the investments are reduced from the cost of investement, so watever interest which is accrued paid is included in cost of purchase i.e., 1005+15=1020 and since u havn't received interest but u sold the bond including interest accrued thereon so it doesn't amount to interest received and taxable under other sources but considered as sale price i.e., 1030+30= 1060 and hence there is only capital gain of rs.1060-1020=40 and no income from other sources.