NCD buy/sell related

Hi, if I purchase a NCD from secondary market at 1100 when its face value is 1000 and hold it till maturity then when the units are debited from the demat account they’ll be sold for the face value of 1000 or the value I bought them at?(1100)
Also, after purchasing how can I select the interest payout interval ?

Can some1 please tell the full form of these ?

Sec Red NCD 9.10% Sr. III



Sec Red NCD

@TeamQuicko @Divya_Singhvi

Any help regarding the question please?

Hey @FalconZex

Listed NCDs bought from secondary market will be transferred to your demat account on market value/buy value. The pricing mechanism will also remain same if you sold the holdings on or before the maturity.

Additionally, interest payout duration, rate of interest, face value of bond etc. are vary in bond markets. These terms can be verified from the respective bond offer document.

Further, there may not any specification in full form, it depends from bond to bond.

For example, Bond detail: Sec Red NCD 9.10% Sr. III.

Here, the full form may be referred as:
Sec Red - Secured Redeemable
NCD - Non-convertible debentures
9.10 % - Interest coupon Rate (%)
Sr. III - Series number

Here, you can read below article for bond taxation as well for more insights:

I hope, it helps!

1 Like

@Kaushal_Soni thanks for the information. Could you please tell me what does ‘whether guaranteed or partially guaranteed’ means? It’s written in bond info page.

If I buy a bond/debenture in the secondary market and sell the same before its maturity within a year, will it attract slab rates or STCG rates like stocks? The bond INE866I08311 is a zero coupon bond with fv of Rs.1,000 issued in 2019 and maturing in 2024 and it is expressly mentioned that an amount of Rs.1,771.16 would be paid on maturity and no interest is paid in between. Is it technically a zero-coupon bond for the purpose of tax calculations?

@Bharti_Vasvani If you can help here.

Hello @gdshan,

Yes, If the listed bonds/ debentures are sold within a period of 12 months then it will be treated as short-term capital gain and taxed at slab rates.

“Zero Coupon bond” means a bond: -
(a) issued by any infrastructure capital company or infrastructure capital fund or public sector company or scheduled bank on or after the 1st day of June 2005
(b) in respect of which no payment and benefit is received or receivable before maturity or redemption from infrastructure capital company or infrastructure capital fund or public sector company or scheduled bank and
(c) which the Central Government may, by notification in the Official Gazette, specify in this behalf.

Generally, Zero coupon bonds are issued at discount and maturity is at par. Taxability in the case of zero coupon bonds capital gains are calculated as Sell Price- Invested Price if sold in the secondary market before maturity.

Hope this helps!

Thanks for clarifying. Can you please lead me to resources where I can get to understand tax implications on debts better? Quicko’s article on this is quite useful but it doesn’t, for example, talk about what the tax implications are if a bond is sold in secondary market before maturity and also other tax implications on debts.


In case of bonds bought and sold in the secondary market and are held for more than a year, can the capital gain or loss arising out of such bonds be shown as such while filing returns? The interest earned out of these are taxable at slab rates which I fully understand.

Hi @gdshan

Yes, If you sell these listed bonds and debentures in the secondary market, it attracts capital gains. Depending on the holding period taxes are levied.

If you sell these bonds/NCDs within 12 months, the gains are considered STCG and taxed at the applicable slab rate. If you sell them after 12 months, the gains are considered LTCG and taxed at 10% without indexation.

Hence, capital gains arising from these bonds need to be reported in filing ITR.

And yes interest earned on these bonds is taxed at slab rates.

Hi @Muskan_Balar

if such bonds are not sold in secondary market but are redeemed on maturity, would it still attract STCG/LTCG as the case may be at special rates?

Hi @gdshan

If such bonds are not sold in the secondary market and are redeemed on maturity, then also it would attract the same taxability.

LTCG will be taxed at 10% without indexation and STCG at applicable slab rates.

Hope this clarifies.

Hi @Muskan_Balar

Suppose I buy a bond issued by a housing finance company at a discount to its face value, the difference would be subject to capital gains tax on redemption at maturity?

Hi @Muskan_Balar

Request your clarification on the above query.

Hi @gdshan

If you purchase a bond issued by a housing finance company at a discount to its face value and hold it until maturity, the difference between the purchase price (discounted price) and the redemption value (face value) are treated as capital gains.

It would be either STCG or LTCG, depending on the holding period.

Hi @Muskan_Balar,

Thanks for the detailed answer. However, in the case where we buy the NCD from the secondary market, I find it difficult to understand how this fits with the accrued interest calculation described here: Know your bond transactions and the tax implications | Mint for adjusting the accrued interest in the dirty settlement price on the exchange.

I really appreciate any help you can provide.

6 posts were merged into an existing topic: Tax Free Bonds: An Overview