Are non convertible debentures deposits?

Non-convertible debentures (NCD) are fixed-income instruments, usually issued by high-rated companies in the form of a public issue to accumulate long-term capital appreciation….Difference between Corporate FDs and NCDs.

Corporate Fixed Deposit	NCDs
No interest risk	The interest varies as per market

What are non convertible debentures?

Definition of ‘Non Convertible Debentures’ The debentures which can’t be converted into shares or equities are called non-convertible debentures (or NCDs). Description: Non-convertible debentures are used as tools to raise long-term funds by companies through a public issue.

Is NCD a bond?

NCD issue means Non-Convertible Debenture public issue. NCD is a Secure and Redeemable Corporate Bond, a bond issued by a corporation to raise money from the capital market. Unlike equity shares, bondholders do not have any ownership interest in the company.

What are the advantages and disadvantages of debentures?

Advantages and Disadvantages of Debentures Investors who want fixed income at lesser risk prefer them. As a debenture does not carry voting rights, financing through them does not dilute control of equity shareholders on management.

How are NCDs taxed?

Interest on NCD is taxed under head ‘other sources’ at applicable slab rates, paid periodically or cumulatively. Interest is not subject to tax deduction at source if NCDs are held in dematerialised form and are listed on a stock exchange. Profit on sale/ redemption of NCDs has to be offered to tax as ‘Capital Gains’.

Is Iifl NCD taxable?

Ans: NCD scores above Fixed Deposits and other Fixed Income Products • No TDS in case on Listed & Dematerialized NCD, unlike Fixed Deposits where Tax is deducted at source; • NCDs are listed on stock exchanges i.e. NSE and/or BSE, are easier to liquidate as compared to NSCs, Fixed Deposits and other fixed income …

Are debentures tax deductible?

As per Income Tax Act, 1961, debenture issuing companies are required to deduct TDS on interest on debentures at a specified rate of interest. However, such a tax is imposed only if the payable interest amount exceeds the mentioned limit.

What are the merit of debentures?

The use of debentures can encourage long-term funding to grow a business. It is also cost-effective when compared with other forms of lending. Debentures usually provide a fixed rate of interest for the lender, and this has to be paid before any dividends are issued to shareholders.