Sebi bats for tax benefits to cos investing in 'zero coupon zero principal bonds'

NEW DELHI: To encourage social sector spending, markets regulator Sebi has suggested that the government should allow tax benefits to companies investing in zero coupon zero principal bonds issued by not-for-profit organisations listed at the social stock exchange. Talking to reporters here on Friday, Sebi’s Whole Time Member Kamlesh Chandra Varshney said the regulator has already sent a proposal to the finance ministry and is hopeful of getting the approval.
“We have given the proposal to the government that corporate entities who invest in ZCZPs should get the benefits of CSR (Corporate Social Responsibility). We are hopeful that the government will soon approve the proposal,” Varshney said at an event organised by NSE on SSE here.
Moreover, the CBDT has already clarified that investors or donors buying such bonds will get the tax benefits under section 8OG of Income Tax rules, he added.
These measures will be pertinent towards inclusive growth of the social sector and will help build trust and expand the donor base for the organisations, he said.

The ‘zero-coupon, zero-principal’ are instruments for donating money to non-profit organizations listed on the SSE.
The Social Stock Exchange (SSE) is a novel concept in India and such a bourse is meant to serve private and non-profit sector providers by channelling greater capital to them. The idea was floated by Finance Minister Nirmala Sitharaman in her Union Budget 2019-20 speech.
SSE is a separate segment of the existing stock exchanges that bring together social enterprises and donors, facilitates funding and growth of social enterprises and enables mechanisms to ensure robust standards of social impact and financial reporting.

At present, 8-9 NPOs are listed on the SSE with a collective fundraising of close to Rs 11 crore and now one NPO is soon going to raise Rs 14 crore alone through the platform, NSE MD and CEO Ashishkumar Chauhan said here.
“We believe that SSE has a great future ahead in India as the government is committed to supporting the platform, as this will help in the democratisation of investments,” he said.
Moreover, Sebi has been taking measures to widen the participation of subscribers at the social stock exchange. In November, the regulator reduced the issue size of ZCZP from Rs 1 crore to Rs 50 lakh. It has also reduced the minimum application size for donors to Rs 10,000 from Rs 2 lakh.
Last month, Sebi asked social enterprises, which have registered or mobilised funds through SSE, to submit an ‘annual impact report’ for the financial year 2023-24 to such bourse by October-end.
The annual impact report to SSE captures the qualitative and quantitative aspects of the social impact generated by the social enterprise.