Capital gains on ncd

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R.N.Sahu

R.N.Sahu (Querist)

26 December 2012 I have purchased some NCDs in secondary market by paying brokerage etc. in Demat form. I propose to hold them till maturity. On redemption of NCDs on due date, how the loss/gains will be treated ? Please note that NCDs are purchased in secondary market.

Amol S Joglekar

Amol S Joglekar (Expert)

26 December 2012 You can take the benefit of indexation if it is going to be long term.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

26 December 2012 Presuming that the NCD's are treated as 'investment', the gain or loss is assessable under the head 'capital gains'. Cost can't be indexed for debentures as per 3rd proviso to section 48 of the Income tax Act,1961.

R.N.Sahu

R.N.Sahu (Querist)

26 December 2012 Thanks to all. The cost can not be indexed in case of NCDs as mentioned by Mr. Warrier. As far as my understanding goes, if the NCDs are acquired in the primary marked and are held till maturity/ redemption, there is no capital gains.
All the articles/ comments I had seen mention about selling the NCDs in secondary market before maturity. In my case it is the other way round - NCDs acquired in secondary mkt and are proposed to be held till maturity. Hence the query.
Once again thanks to Mr. Warrier.

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