Taxation on zero-coupon bonds

I had purchased g sec strips in July 2022 IN001223C030 and IN001224C079. One matured in Dec 2023 and one will mature in 2024. As these are considered zero coupon bonds, how are these taxed?

Hey @SashidharB,

In case of zero coupon bonds, if the holding period is less than 12 months, they’ll be classified as short-term and if the holding period is more than 12 months, long-term.

STCG will be taxed as per the applicable slab rate, whereas in case of LTCG, the tax liability will be lower of the following:

  • 10% of capital gains without indexation benefit
  • 20% of capital gains with indexation benefit

Hope this clarifies!

Hi @Surbhi_Pal , thank you for the explanation . Are all GOI STRIPS considered zero coupon bonds ?

Hey @SashidharB,

According to RBI, STRIPS are the securities created by way of separating the cash flows associated with a regular G-Sec i.e. each semi-annual coupon payment and the final principal payment to be received from the issuer, into separate securities. Hence, they are essentially Zero Coupon Bonds (ZCBs).

Thank you for the clarification

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This article claims that T-Bills gains are tax free.

Is this true?

@Surbhi_Pal @TeamQuicko

I have been reading Varsity and your posts on the Trading QNA forum.


What is the applicable slab rate mean here? Does that mean if I fall under a 30% bracket while filing the taxes, I pay taxes based on 30% of the appreciated amount? Please clarify.

@Surbhi_Pal @TeamQuicko Please respond,

Hey @Mehfooz9910,

Tax applicable at slab rate means that the profits that you earn will be added to your taxable income along with other incomes that you have.

Based on your total taxable income, your tax slab will be identified and the tax rate will be applicable accordingly.

Below are the income tax slabs under the new regime for your reference.

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