Taxation on zero-coupon bonds

Income Tax 1961 Income from Capital Gains
2

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!