Discount on Zero Coupon Bond - (New) Section 32(d) / (old) Section 36(1)(iiia)

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....infrastructure debt fund or public sector company or scheduled bank; and • (c) which the Central Government may, by notification, specify, • "Infrastructure debt fund" means the infrastructure debt fund notified by the Central Government under Schedule VII (Table: Sl. No. 46). Deduction of Discount on a zero coupon bond [ Section 32(d) ] Section 32(d) allows a deduction for the "discount" on a zero coupon bond, but: • Not in lump sum • Only pro rata over the life of the bond Meaning of Important Term within the section: • Discount = Difference between: • Issue price (amount received), and • Redemption/maturity value (amount pay....

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....l company, infrastructure capital fund, infrastructure debt fund, or public sector company. • Must apply in Form No. 2. • Timeline: at least 3 months before the bond issue date. • Every application shall be accompanied by the following documents • Infrastructure capital company / debt fund / Govt company → Certificate of incorporation. • Infrastructure capital fund → a copy of the trust deed registered under the provisions of the Registration Act, 1908 • Public sector Company being any corporation, established by or under any Central Act or State Act or Provincial Act,  → Copy of relevant Act. • Application cannot be....

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....ructure debt fund, such fund shall along with the application, • submit an undertaking that a sinking fund shall be maintained for the interest which will accrue on all the zero coupon bonds subscribed and • such interest shall be invested in Government security as defined under section 2(f) of the Government Securities Act, 2006. • (f) Every entity shall submit within two months from the end of each financial year, a certificate from an accountant specifying the amount invested in each year in Form No. 3. Issue Notification of the Approval, Rejection or Withdrwal • Approval of Application • The Central Government, after having satisfied itself about fulfilling of the ....

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.... of Discount:- Discount means the difference between the amount received or receivable at the time of issuing the bond and the amount payable by on maturity or redemption of such bond. • Meaning of Period of Life of the Bond:- Period of life of the bond means the period commencing from the date of issue of the bond and ending on the date of the maturity or redemption of such bond. • Guidelines for Notification  [ Rule 8B ] • Application should be made in Form 5B. • The application should be made at least 3 months before the date of issue of Zero coupon bonds. • The application should be accompanied by a copy of certificate of Incorporation/ a copy of registered trust....