Zero-Coupon Bonds

Tax Glossary Definition

Zero-Coupon Bonds

Zero-Coupon Bonds – Bonds issued at a discount to their face value and do not pay periodic interest. The accrued interest (difference between issue price and redemption value) is taxable as income, even if not actually received during the holding period.

Example: A bond with face value ₹1,00,000 issued at ₹90,000 has ₹10,000 deemed interest, which is taxable. This completes your glossary from “P” to “Z.” Do you want me to compile all entries into a clean, alphabetically ordered document?

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