Tax treatment of bonds is complex, do not overlook it while investing

If it is a long-term bond, take the option of paying tax on accrual basis

The new financial year has witnessed nearly half a dozen non-convertible debenture (NCD) issues by companies to raise money, with the likelihood of many more to follow suit. Some of the names whose issues are currently on include L&T Finance, Shriram City Union Finance, Muthoot Homefin (India), Srei Infrastructure Finance, and Magma Fincorp. 

While deciding to invest or not depends mostly on interest rates on offer and credit rating of the company, do not overlook the taxation angle of bonds. And taxation of bonds, and not just NCDs, is a complicated process. 

Treatment of interest income: Interest is payable on