## Equity Oriented Fund (EOF)
An Equity Oriented Fund is a mutual fund scheme or an insurance company scheme (ULIP) that satisfies a minimum equity-investment threshold. The threshold depends on whether the fund invests directly in shares or indirectly through another fund:
| Situation | Required investment in equity |
|---|---|
| Fund-of-fund (invests in another fund) | ≥ 90% of total proceeds in listed units of another fund, AND that other fund invests ≥ 90% of its total proceeds in listed equity shares of domestic companies |
| Other (direct) cases | ≥ 65% of total proceeds in listed equity shares of domestic companies |
How the percentage is measured: The percentage of equity shareholding or units held is computed as the annual average of the monthly averages of the opening and closing figures (not a single snapshot on one date).
Why it matters: classification as an EOF determines whether the concessional capital gains regime under sections 111A / 112A applies.
## Zero Coupon Bond [Section 2(48)]
A Zero Coupon Bond is a bond that meets all of the following:
1. Issued by an eligible entity — infrastructure capital company / fund, infrastructure debt fund, public sector company, or a scheduled bank.
2. No payment or benefit is received or receivable before maturity or redemption from the issuing entity (i.e. there is no periodic coupon — the return comes only from the discount).
3. It is notified by the Central Government.
Tax treatment: Income on the transfer of a zero coupon bond — provided it is not held as stock-in-trade — is taxed as capital gains. Importantly, "transfer" here includes maturity or redemption, so gains crystallise even when the bond is simply redeemed at maturity.