Question

Which Instrument saves tax?

Options

• Equity Shares

• Debentures

• Retained Earnings

• Preference Shares

Answer 1

Debentures

Explanation:

• Debentures are a type of debt instrument, and the interest paid on them is deductible from the company’s taxes.
• This essentially saves tax by lowering the company’s taxable income.
• On the other hand, dividends paid on preference and equity shares are not tax deductible.