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Deferred tax liability
Buying bonds at a discount (below par) allows you to defer tax payment until maturity or sale. Unlike a bank deposit, where tax is deducted annually, here you control the full coupon amount until the very end of the term.
This deferred payment effect improves capital efficiency: the money "saved" on taxes continues to work within the portfolio. But be careful: upon bond maturity, the tax hit will be one-time and quite significant.
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