Is LTCG or STCG applicable on credit event (default) in securities payouts?

I received two such payouts (totalling Rs.26000) from Tata Mutual Fund, and I'm unsure if payouts of such a nature attract capital gains? The amount was automatically credited to my bank account. I didn't have to withdraw it. When filing taxes, under what category would this income be filed under?

This was the message I received (I've replaced the original company names with "ABC" and "DEF"):

We wish to share an Update on recovery of dues from ABC company. We are pleased to inform that we have received payouts from ABC on 30th September 2021, who was referred for insolvency in November 2019. The payments have been received towards all the schemes of Tata Mutual Fund where ABC claims were outstanding as on 29th September 2021. We have received payouts as a mix of upfront cash and secured, 10 year bonds issued by the merged entity DEF company for all schemes of Tata Mutual Fund. Payout under Tata Treasury Advantage Fund – Segregated Portfolio. The cash component so received has been distributed in the ratio of net assets of the said scheme (i.e. individual investor’s share in AUM) by redemption of proportionate units. The payout amount of Rs. 13,000 has been sent for credit to your bank account on October 12, 2021 or a warrant has been despatched to the address registered in records. This is with reference to the “SEGREGATED PORTFOLIO” created in “TATA TREASURY ADVANTAGE FUND” on account of credit event (default) in securities of ABC on its payments.

 

Replies (1)

So I contacted Tata Mutual Fund, and they sent me a statement that indicated that Long Term Capital Gains (LTCG) were applicable for the amount. Hope this helps anyone else who is searching for similar answers. I'm surprised that nobody answered. Usually the response from CA Club is quick.

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