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Please help me out on bond washing transaction

Dhruvi N suthar (Account Executive) (303 Points)

28 June 2013

Hello

Can anyone please let me know that what excalty the Bond Washing Transaction is?

Meaning of the same i know but i need to know practically with eg.

Thanks

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2 Replies

Ankit (CA, CS) (3064 Points)
Replied 28 June 2013

Dhruvi, Bonds are fixed income instruments and in this type of transaaction, the bonds are sold off just before the due date for the payment of the interest. they are usually sold to a close friend or a relative and then they are re-acquired once the interest is paid. this is done so that, the buyer (relative) gets the interest and the tax is levied on him. the buyer is usually a low tax slab person. - Ankit