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CBDT Issues Notification for Ten-Year Zero Coupon Bond (ZCB) of PFC.

Economy Business | Dated: 19 Mar 2025

In March 2025, the Ministry of Finance (MoF), through the Central Board of Direct Taxes (CBDT) based in New Delhi (Delhi), notified the "Ten Year Zero Coupon Bond of Power Finance Corporation Limited (PFC)" as a Zero Coupon Bond (ZCB) under clause (48) of section 2 of the Income-tax Act, 1961.

🎯 Key Highlights:

  • - This bond is designed as a long-term investment option, offering a fixed maturity value. Investors can purchase it at a discounted price and receive a guaranteed return when it matures.
  • - The Ten Year Zero Coupon Bond of PFC has a duration of 10 years and 1 month (121 months), with an issue date set on or before March 31, 2027. The maturity amount is Rs. 1,00,000 per bond, with a discount of Rs. 49,546 per bond. A total of 10 lakh bonds will be issued.

💡 Other Important Facts:

  • (i) These bonds carry interest rate risk if sold before maturity. Their value decreases when interest rates rise and increases when interest rates fall.
  • (ii) If the bond is held for more than 12 months, the gains are subject to a Long-Term Capital Gains (LTCG) tax of 12.5%, which is lower compared to many other investment options.
  • (iii) A ZCB (Zero Coupon Bond) is a debt instrument that does not pay regular interest. Instead, it is sold for less than its face value, and the difference between the purchase price and the face value is the return the investor gets at maturity.

📚 Test Your Knowledge:

Recently, which organization issued a notification for the Ten-Year Zero Coupon Bond (ZCB) of PFC?

Correct Answer: CBDT

🚀 Quick Recap: