Taxation of investments in Bonds, Debentures & Mutual Funds -CA Naresh Jakhotia

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Taxation of investments in Bonds, Debentures & Mutual Funds -CA Naresh Jakhotia

Taxation of investments in Bonds, Debentures & Mutual Funds -CA Naresh Jakhotia

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Taxation of investments in Bonds, Debentures & Mutual Funds -CA Naresh Jakhotia

Taxation of investments in Bonds, Debentures & Mutual Funds

With the drastic fall in the interest rate of bank FDR, an alternate investment option like bonds, debentures, mutual funds are getting added momentum. Income from bonds, debenture & mutual funds could be as under:

  1. Regular income in the form of interest or dividend
  2. Appreciation in the value of the investment at the time of redemption or sale.

Tax treatment of above income varies significantly. Let us have a look at the taxation aspect of all above income out of the investments referred above:

  1. Taxation of Interest:

Interest income from bonds (including gold sovereign bond) & debentures is similar to any other interest income like interest income from FDs and it will be taxable at normal rates under the head ‘Income from other sources’. However, interest received on investment done in various tax-free bonds is exempt from tax.

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