Tax treatment of discount on issue of debentures

This discussion clarifies the tax treatment for companies issuing debentures at a discount or redeeming them at a premium. Such costs are generally considered revenue expenditure under Section 37 and are allowable. However, the deduction is not immediate; it must be amortised over the life of the debenture. Additionally, the discussion confirms that Tax Deducted at Source (TDS) under Section 193 is applicable to interest paid on debentures at a rate of 10%.