Wintwealth- Tax on market linked debentures

Hi Quicko team,

Ref this article:

Wint wealth is offering a securitised debt investment product through an instrument called covered bonds.

They are linking these to market linked debentures (MLDs) for taxation purposes. They claim the taxation treatment is better for MLDs held for > 1 year (10%) vs. covered bonds, which are taxed at slab rates.

In your opinion, is it possible to link a debt offering which has nothing to do with the state of the markets to a MLD, just to save on tax? This seemed quite weird to me.

@Sakshi_Shah1 @Laxmi_Navlani @Kaushal_Soni @Divya_Singhvi can you guys help

Hey @Veejayy ,

Market Linked Debentures are debentures where the pay-off is not defined as in a regular coupon-bearing debenture, but linked to the movement in another security or index such as NSE Nifty index or 10-year government security (G-sec) yield.

Taxation of this instrument is efficient. These are listed on the exchanges and capital gains from listed debentures, after a holding period of more than one year, are taxable at 10 per cent (plus surcharge and cess).

MLDs may be considered tax saving options compared to pure debt investments, if you hold it for long term ie, more than one year.

You can also read below article for more insights about MLDs:

I hope this helps! :slightly_smiling_face:

This was very useful @Kaushal_Soni.
Thanks for your help :slight_smile: