SEBI (Securities and Exchange Board of India) has recently proposed tax benefits for companies investing in zero-coupon and zero-principal bonds issued by not-for-profit organizations listed on the social stock exchange. The Central Board of Direct Taxes (CBDT) has stated that investors or donors who purchase these bonds will receive tax benefits under which section?

The correct answer is Section 80G.

In News

• SEBI's recent proposal for tax benefits related to zero-coupon and zero-principal bonds involves tax benefits under Section 80G for investors and donors.

Key Points

• Section 80G of the Income Tax Act provides tax deductions for donations made to charitable organizations, which includes the zero-coupon and zero-principal bonds issued by not-for-profit organizations listed on the social stock exchange.
• These bonds, also known as ZCZPs, are aimed at encouraging investment in socially responsible and not-for-profit organizations, while also offering tax incentives to the investors.
• Investors who purchase these bonds will be eligible for tax relief as per the provisions of Section 80G, which applies to contributions to approved charitable organizations.
• SEBI's initiative is designed to bolster the growth of social enterprises by facilitating easier funding through these tax-advantaged bonds.

Additional Information

• Section 80G
  • Section 80G provides a deduction for donations made to charitable institutions or funds, with the exact percentage varying depending on the recipient of the donation.
• Zero-Coupon Bonds
  • Zero-coupon bonds do not pay interest during the life of the bond but are issued at a deep discount to their face value, which is paid at maturity.
• Social Stock Exchange
  • A Social Stock Exchange (SSE) is a platform for listing and trading social enterprises, enabling them to raise capital and gain visibility.