I had purchased a G-Sec with a coupon rate of 7.19% (matures in 2060). Its interest was due on 15th September (as mentioned here).
As the interest landed in my bank account, I noticed that it was 15% less than the amount that I expected. After reading up on Varsity, I concluded that I had been charged STCG. Here, my question is that I had purchased these GSec at the steep premium of 114 (Face value is 100), then how was STCG charged on them given that they are trading at a value less than at what I had purchased. When checking if appreciation has happened in G-Sec price, is the price at which they are traded on NSE/BSE not taken into account? Are G-Sec prices on RBI’s NDS-OM taken for reference?
Also, reading up in Varsity, I noticed that the interest from the G-Sec will be taxed under Income from Other Sources as per tax slabs. From what I understand, this tax will be after the 15% STCG. Is this assumption correct? If my assumption is correct, then the tax rate for these bonds becomes very high. Given such high taxation, the real return for these instruments falls badly. I wanted to ask, in what scenario does investing in G-Sec make sense?