Question

According to Income Tax Act "zero coupon bond" means a bond:

• A. issued by any infrastructure capital company or infrastructure capital fund or public sector company or scheduled bank on or after the 1st day of June, 2005;
• B. in respect of which no payment and benefit is received or receivable before maturity or redemption from infrastructure capital company or infrastructure capital fund or public sector company or scheduled bank
• C. which the Central Government may, by notification in the Official Gazette, specify in this behalf.
• D. All of the above

Hint:

Zero coupon bonds do not pay periodic interest, but are issued at a discount and redeemed at face value at maturity.

Answer 1

The Correct Option is D

Step 1: Understanding Zero Coupon Bond.
According to the Income Tax Act, a zero coupon bond is a bond issued by infrastructure capital companies or public sector companies or scheduled banks after June 1st, 2005. These bonds do not provide any interest payments or benefits before their maturity or redemption. The details about such bonds are also specified by the central government in the official gazette. Step 2: Explanation of Other Options.
- (a) This option correctly describes the issuer of the zero coupon bond. - (b) This is accurate as zero coupon bonds do not provide payments or benefits before maturity. - (c) This is also correct as the central government can specify details about zero coupon bonds by notification. Step 3: Conclusion.
All the options are correct, so the answer is (d) - All of the above.