I am planning to purchase NCDs (non-convertible debentures) that offer interest at the time of maturity. What is the tax treatment on the sale of NCDs before completion of the maturity period?

R. Kumar, Calcutta

If you sell your NCDs in the secondary market before maturity, you will only receive the selling price and no interest. If you make any capital gains, there will be tax liability, depending on the period of holding. If you sell your NCDs within 12 months from the purchase, there will be short-term capital gains and the amount will be taxed according to your income tax slab. If the sale takes place after a year, there will be long-term capital gains and the amount will be taxed at 10.3 per cent.

For wife dear

What is the tax liability if I gift shares to my wife? Will there be any tax liability on her when the shares are sold?

N. Roychowdury, Calcutta

The receipt of shares by your wife should not give rise to any taxable income as she will be receiving the shares from a relative. However, if the shares are sold, the gains arising from such a sale will be taxable in the hands of your wife. But there will be no tax liability if she sells these shares one year after the transfer through a recognised stock exchange.

Policy break

What is the meaning of a ‘break in policy’ in the case of health insurance? Is there any grace period if there’s a break in policy?

A. Kar, Calcutta

According to the Insurance Regulatory Development Authority, a ‘break in policy’ in a health cover occurs at the end of an existing policy term when the premium due for renewal on a given plan is not paid on or before the renewal date or within 30 days.

If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to: btgraph@abp.in, or write to: Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700 001.