A reader has pointed out an error in the Capital Gains Ready Reckoner regarding the indexation of listed and unlisted bonds/debentures. According to the 4th Proviso under Section 48, indexation is not available for debentures/bonds.
Abdul says, “In your Freefincal capital gains tax ready reckoner, there is an error regarding the Indexation on the Listed & Unlisted bonds/debentures. As per the 4th Proviso under Section 48, Indexation is not available for debentures/bonds. This would only effect a small portion of sales between 1st April 2024 to 22nd July 2024 for FY 2024-25”.
Tax expert Manmohan Sethumadhavan has kindly provided a revised Capital Gains Taxation Rules Ready Reckoner for FY 2025-2026, incorporating the following changes.
The SGB & ZCB will continue to be in 20%! or 10%, whichever is lower category.
In the Ready Reckoner, this is applicable to :
- Listed Bonds, SGB, ZCB
- Unlisted Bond/ Debenture
There is no doubt with regards to these instruments sold on or after 23-07-2024. All these are applicable for LTCG for those sold before.
- 2nd proviso to section 48 provides for indexation for transfers before 23-07-2024.
- 4th proviso to section 48 says that such indexation is not available for bonds or debentures other than:
- Capital Indexed Bonds issued by the Government; or
- Sovereign Gold Bond issued by the Reserve Bank of India.
Therefore, indexation is still applicable to Capital Indexed Bonds and SGBs.
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- 1st proviso to section 112 allows to ignore anything in excess of 10% of gains calcuated without indexation, in case of listed bonds and ZCB. As SGB is listed, this is applicable to them.
So, the following changes are being made:
- SGB : Sec.48 pro.2 & Sec.112 pro.1 applicable. LTCG tax @ 20% with indexation or 10%. No change. Old Sl.No.15. New Sl.No.15.
- ZCB : Indexation not applicable. Sec.112 pro.1 (10%) applicable. Thus either 20% without indexation or 10% without indexation. So LTCG tax @ 10%. Old Sl.No.15. New Sl.No.16.
- Other Listed Bonds : Indexation not applicable due to Sec.48 pro.4. Sec.112 pro.1 (10%) applicable. Thus either 20% without indexation or 10% without indexation. So LTCG tax @ 10%. Old Sl.No.15. New Sl.No.16.
- Unlisted Bonds : Sec.48 pro.2 applicable and hence indexation not available. Sec.112 pro.1 (10%) not applicable being unlisted. Hence LTCG tax @ 20% without indexation. Old Sl.No.21. New Sl.No.23.
The ready reckoned is presented below as images. Click on them to zoom in. PDF download link is given below.
Download the Revised Capital Gains Taxation Rules Ready Reckoner for FY 2025-2026
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