https://www.taxtmi.com/circulars?id=2877 Income from deep discount bonds is to be taxed annually by marking each bond to market on the financial year valuation date under RBI valuation guidelines; the increase between successive valuation dates is taxable as interest income for investors or business income for traders. On transfer before maturity, sale proceeds over adjusted cost (acquisition cost plus income already taxed under annual valuation) are taxable as capital gains for investors or business income for traders. On redemption, taxable income equals redemption price less last valuation date value (or adjusted cost for intermediate purchasers). STRIPS follow the same treatment and stripping/reconstitution is not a transfer. en-us Fri, 15 Feb 2002 00:00:00 +0530 Mon, 11 Aug 2008 10:08:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/circulars?id=2877 Income from deep discount bonds is to be taxed annually by marking each bond to market on the financial year valuation date under RBI valuation guidelines; the increase between successive valuation dates is taxable as interest income for investors or business income for traders. On transfer before maturity, sale proceeds over adjusted cost (acquisition cost plus income already taxed under annual valuation) are taxable as capital gains for investors or business income for traders. On redemption, taxable income equals redemption price less last valuation date value (or adjusted cost for intermediate purchasers). STRIPS follow the same treatment and stripping/reconstitution is not a transfer. Circulars Income Tax Fri, 15 Feb 2002 00:00:00 +0530 https://www.taxtmi.com/circulars?id=2877