Interest on zero coupon bonds

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1 Points Posted on 02 April 2020
Interest in zero coupon bonds allowed as expenditure?
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On 02 April 2020 at 12:18 Report
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Zero coupon bonds typically don't pay periodic interest; instead, they are issued at a discount and the bondholder receives the face value at maturity. The discount amount on these bonds is generally permitted as an expenditure for tax purposes. This is in line with sections 36(1)(iiia) and rule 8C of the relevant tax regulations.

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Consultant
1891 Points Posted on 02 April 2020

No interest is generally paid in case of zero coupon bond.  At the time of maturity, bondholders will receive the face value of the bond and are issued at discount, 

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On 02 April 2020 at 12:59
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Yes, it is allowed as an expenditure. Since zero-coupon means no interest, the discount amount is allowed as an expenditure. See section 36(1)(iiia) and rule 8C.

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On 02 April 2020 at 15:54

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