NON CONVERTIBLE DEBENTure

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NCDs/BONDS. Fixed Income Instruments for Assured Returns. Non Convertible Debentures (NCDs) or Bonds are debt investments in which an investor lends money to an entity (corporation or governmental) that borrows the funds for a specified period of time at a fixed interest rate. 

Non-convertible debentures are used as tools to raise long-term funds by companies through a public issue. To compensate for this drawback of non-convertibility, lenders are usually given a higher rate of return compared to convertible debentures. 

 The debentures which can't be converted into shares or equities are called non-convertible debentures (or NCDs). 

Taxation and TDS: NCDs other than tax free bonds are taxed as per individual taxslabs under the head, “Income from Other Sources”. All NCDs listed on the stock exchange are not subject to TDS. Investors who exit the NCD before a year are subject to short-term capital gains tax.