Shares,Debanture TAX Benefit ?

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Murtaza I Bhagat (Querist)

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)

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)

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 Capital Gains – Section 10(38) (now withdrawn), Section 112A, 111A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 Dividend Income – Section 56 & Section 115BBDA (now withdrawn)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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