Taxation on WebNotes

G-Sec taxes on Zerodha

Wed, 20 May 2026 00:00:00 +0000

G-Sec taxation in India has two components: coupon income and capital gains.

1. Coupon income

Taxed as “income from other sources” at your slab rate.
Reported annually based on coupons received in the financial year.
TDS not deducted by RBI/Zerodha (sovereign instruments).
Self-declared in your ITR.

2. Capital gains on sale

Holding period	Treatment
Less than 12 months (listed)	Short-term, slab rate
12+ months (listed)	Long-term, 12.5% (post FY2024-25)

Indexation benefit was removed post-FY 2024-25 Finance Act for most debt instruments. Confirm applicable rates for the current FY before filing.

SGB tax treatment on Zerodha

Wed, 20 May 2026 00:00:00 +0000

SGB taxation in India has favourable treatment:

Event	Tax
Coupon (2.5% pa, semi-annual)	Taxed as interest income at slab rate
Capital gain at maturity (year 8)	Exempt under Section 47(viic)
Premature redemption (year 5-8)	LTCG; rate per FY
Sale on secondary market	STCG / LTCG; rate per FY and holding

Why maturity is special

Section 47(viic) of the Income Tax Act exempts capital gains arising on redemption of SGBs by an individual at maturity. This is the most tax-efficient way to exit.

FPI and mutual fund investing

Tue, 12 May 2026 00:00:00 +0000

A Foreign Portfolio Investor (FPI) registered under SEBI (Foreign Portfolio Investors) Regulations, 2019 may invest in units of Indian domestic mutual fund schemes, subject to aggregate limits set by the Reserve Bank of India and investment restrictions specified at the individual scheme level. FPIs constitute an important but non-dominant channel for foreign capital into Indian mutual funds; the more significant route for FPI participation in Indian equities is direct purchase of listed shares and bonds.

Partnership / LLP MF investor

Tue, 12 May 2026 00:00:00 +0000

A partnership firm or Limited Liability Partnership (LLP) as a mutual fund investor is a non-corporate business entity that pools resources of two or more persons to carry on business. Both general partnership firms registered under the Indian Partnership Act, 1932, and LLPs incorporated under the Limited Liability Partnership Act, 2008, are eligible investors in SEBI-registered mutual funds. Investment in mutual funds by such entities is typically used for treasury management of surplus funds, not for the core business activity.

Resident individual MF investor

Tue, 12 May 2026 00:00:00 +0000

A resident individual mutual fund investor is a natural person who is a tax resident of India within the meaning of Section 6 of the Income Tax Act, 1961, and who invests in units of a mutual fund registered with the Securities and Exchange Board of India (SEBI). Resident individuals constitute the largest and most heterogeneous category of mutual fund investors in India, accounting for the majority of retail assets under management (AUM) across equity, debt, and hybrid schemes. Their participation is governed by the SEBI (Mutual Funds) Regulations, 1996, AMFI guidelines, and the relevant provisions of the Income Tax Act, 1961.