123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Investing---Finance >> View Article

What Are Non-convertible Debentures And Capital Gain Bonds

Profile Picture
By Author: Maithili Pawar
Total Articles: 23
Comment this article
Facebook ShareTwitter ShareGoogle+ ShareTwitter Share

Non-convertible debentures (NCD) are fixed-income securities, typically issued in the form of a public issue by high-rated companies to raise long-term capital appreciations. As compared to convertible debentures, non-convertible debentures pay comparatively low-interest rates.

What are Non Convertible Debentures (NCDs)

Non-convertible debentures come under the category of debt. These are not convertible into shares or securities. NCD has a set maturity date, and the interest may be charged following the principal amount either monthly, quarterly or annually depending on the stated fixed term. These benefit investors as opposed to convertible debentures, with their supreme returns, liquidity, low risk and tax advantages.

Features of Non-convertible debentures

• Taxation: NCDs have fiscal consequences depending on the tax bracket in which the investor falls. If NCDs are sold within one year, or less STCG would apply as per the slab rate of income tax. Unless the NCDs are sold after one year or more or before the date of maturity, LTCG may comply with indexation at 20 per cent.

• Credit rating: ...
... Companies are rated by credit rating agencies including CRISIL, CARE etc. It's ranking plays a major role in assessing a company's ability. Higher credit rating means the firm will meet credit obligations. Low credit rating, however, means the company carries high credit risk. If any issuing entity fails to make payments, then they are given less ranking by the rating agencies.

Types of NCDs

• Secured NCDs: Secured NCDs are considered healthier of both types because the company's assets fund their issues. In case the company fails to pay on time, the creditors will recoup their dues by liquidating the assets of the company. The interest in NCDs, however, is low.

• Unsecured NCDs: Unsecured NCDs are far more volatile than the secured NCDs because the company's assets do not cover these. Therefore, when the company defaults on its bill, the creditors have no choice but to wait before payments are collected because there are no company assets to recover their dues. The interest rate on unsecured NCDs, however, is higher than that of secured NCDs.

What is capital gain bonds?

Any income you get from the selling of an asset is a long-term capital gain. The asset could be land, real estate or even investment. You are responsible, under the Income Tax Act, to pay tax on these gains. You will reduce the responsibility of such taxes, however.

To take advantage of tax deductions in the future, invest in section 54EC shares, also widely known as capital gain bonds. The bonds are issued in compliance with the rules of IT Act section 54EC.

Author bio:

Maithili Pawar is a financial expert with 5 years of experience in the investment banking field. In her free time, she writes on trading topics. In this, she has given an overview of non-convertible debentures and capital gain bonds

Total Views: 662Word Count: 460See All articles From Author

Add Comment

Investing / Finance Articles

1. How To Protect Your Crypto Wallet: Essential Tips Beyond Passwords
Author: Eldon Ryder

2. Ipo Grey Market Premium (gmp) Guide | Live & Upcoming Ipo Gmp Trends
Author: finowings

3. Top Benefits Of Enrolling In A Certificate Course In Banking
Author: sandeep

4. Crizac Ipo Gmp 2025: Key Dates, Price Band & Gmp Update
Author: finowings

5. Stock Market Advisory: The Growing Importance Of Professional Stock Advisory Services
Author: Vinay

6. What Is Sip And How Does It Help Build Wealth?
Author: Sagar Shah

7. Choosing The Right Accounting Firm In East And South Auckland: What You Need To Know
Author: WhizBiz

8. Goldco Review: Best Ira Guide For Investors, Retirement Planners, & Retirees
Author: Gold and Silver Investment News

9. Navigating Financial Growth With Avendus
Author: Drishti Desai

10. The 4 Types Of Income You Need For True Financial Freedom
Author: Wealth Samurai

11. Why Hyderabad Millennials Are Choosing Personal Loans Over Credit Cards
Author: anilsinhaanni

12. How A Retail Lending Specialist Can Help You Secure The Best Loan Deals
Author: sandeep

13. How Knee Replacement Improves Quality Of Life For Arthritis Patients
Author: uttam

14. Stock Market Advisory: Unlocking Investment Success With Share Market Advisory Services
Author: Vinay

15. The Rise Of Investment Banking Companies In Hyderabad’s Financial Scene
Author: Verity knowladge solutions

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: