Housing and Urban Development Corporation Ltd (HUDCO) Zero Coupon Bond notified under section 2(48): Central Government specifies the Ten year Zero Coupon Bond of HUDCO as zero coupon bond under section 2(48) Income Tax Act. The duration of the bond is ten years one month, to be issued on or before the 31st day of March, 2027, the amount to be paid on maturity or redemption of the bond is Rs.1,00,000/- for each bond, the discount is Rs. 47,030/- per bond, i.e. issue price is Rs. 52,970/- per bond, the number of bonds to be issued is five lakhs.
— A Zero Coupon Bond (ZCB) is a financial instrument that does not pay periodic interest (coupon) during its tenure. Instead, it is issued at a discount and redeemed at its face value upon maturity. The difference between the issue price and face value represents the return for investors. If held beyond 12 months, the long term capital gains will attract a 12.5% tax rate. If sold before 12 months, the short term capital gains will be taxed as per the bondholder’s income tax slab. (Income Tax Notification 34/2025 Dated 17/04/2025)