Shares,Debanture TAX Benefit ?

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Murtaza I Bhagat (Querist)
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21 September 2009 Dear Sir,

Can anybody take tax benefits of Shares,Debeture ? if Yes In which Sec ?

Thanks in Advance

Murtaza I Bhagat

Murtaza I Bhagat (Querist)
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20 November 2009 Dear Sir,

Can anybody take tax benefits of Shares,Debeture ? if Yes In which Sec ?

Thanks in Advance

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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25 July 2025 Yes, shares and debentures can offer tax benefits under various sections of the Income Tax Act, 1961 in India — depending on the type of income, investment, and holding period.

✅ Tax Benefits Related to Shares & Debentures
🔹 1. Capital Gains – Section 10(38) (now withdrawn), Section 112A, 111A
Equity Shares (listed) and Equity Mutual Funds

Long-Term Capital Gains (LTCG): Held for > 12 months

Taxed @ 10% under Section 112A if gain exceeds ₹1 lakh/year (No indexation)

Short-Term Capital Gains (STCG): Held ≤ 12 months

Taxed @ 15% under Section 111A

Debentures

LTCG: Held > 36 months — Taxed @ 20% with indexation (Sec 112)

STCG: Held ≤ 36 months — Taxed as per slab rate

📌 Prior to AY 2019-20, LTCG on shares was fully exempt under Sec 10(38), but now it is taxable.

🔹 2. Dividend Income – Section 56 & Section 115BBDA (now withdrawn)
Dividend from Shares/Debentures is taxable under "Income from Other Sources"

Since AY 2021–22: Taxed at applicable slab rates

No more Dividend Distribution Tax (DDT) for companies

TDS applies if dividend exceeds ₹5,000/year from a company

🔹 3. Section 80C – Tax Saving Bonds & Debentures (Selective)
While regular shares and debentures are not eligible under Section 80C, certain specific investments are:

Infrastructure Bonds (e.g., from NHAI, REC) – Earlier eligible under Sec 80CCF (now discontinued)

Tax-saving mutual funds (ELSS) – Eligible under Section 80C (limit ₹1.5 lakh)

🔹 4. Section 54EC – Capital Gains Exemption on Sale of Property
If you sell real estate and reinvest the capital gains in specified bonds (NHAI/REC), you can claim exemption:

Max investment: ₹50 lakh

Lock-in: 5 years

Applies to capital gains from property, not shares directly

🔹 5. Set-off & Carry Forward of Losses – Sections 70, 71, 74
Short-term capital loss can be set off against any capital gains

Long-term capital loss can only be set off against LTCG

Unused losses can be carried forward for 8 assessment years

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