For long, there has been a quest to convert interest income to capital gains when investing in debt products. First zero-coupon bonds, and until recently MLDs, provided such avenues. The 2002 CBDT circular and Finance Bill 2023 has closed these avenues.
The Union Budget 2023 has sprung a spanner in the wheels of market-linked debentures (MLDs). The budget has proposed to tax MLDs at maximum marginal rate (MMRs) and take away the benefit of long-term capital gains taxation applicable on MLDs. There is significant confusion among investors who have invested in MLDs as to what they should do. Below, we intend to take a deep dive into MLDs and guide investors as to what they should or should not
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