LT/ST gains on Sale of Equity shares

Hi Pankaj,

I have been accumulating equity shares of few companies since 1.5 years. I am a NRI and have a NRI-PIS account. I have never done buy/sell on same day as this is not allowed for NRI-PIS.

I have a few queries related to sale of these shares

  1. When I sell the shares how are the capital gains classified as LT or ST. is it based on FIFO or LIFO. What gains would come under speculative gains.

  2. Are the brokerage and other charges like regulatory charges, STT, Stamp duty etc. (for buy and sell) to be deducted before calculating the gain.

  3. Do I need to consider the dividends received on these shares (prior to the sell) as part of income.

  4. anything else I need to consider while filing the Tax return for this income.

Thanks and appreciate your response. God Bless.

asked Sep 18 '12 at 15:59 by NRIPIO 16126


  1. You can take FIFO approach in computing short/long term gains. Intraday trading or selling stocks without taking delivery would come under speculative gains.
  2. Brokerage charges, STT, stamp duty and all such charges incurred in selling/buying stocks should be deducted in computing gain.
  3. Dividends earned on listed stocks are tax free.

Short term gains would be taxable @ 15%, Long term gains (sale after a year) would be tax free.

answered Sep 18 '12 at 16:24 by Pankaj Batra 5.2k320

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one more clarity please, in case of BHEL, there was a stock split... so eg. if I bought 20 in Mar 2011 at 1900 and sold 20 in Sep 2012 for 225. Since there was a FV revision from 10 to 2 and there was a stock split what would be my purchase price to arrive at the relevant profit/loss at the time of sale in Sep 2012
(Sep 24 '12 at 16:23) NRIPIO
Your can assume purchase cost proportionally. So you can assume purchase cost as 1900/5 for 100 shares.
(Sep 24 '12 at 16:27) Pankaj Batra

Pankaj has guided you in the right direction

I would just like to add that STT Paid shall not be deducted while computing Cap Gain as the Law has specifically excluded the same.

This is a error which many taxpayers make.

However, as per Fifth Proviso to Section 48, STT paid is not allowed to be deducted

Refer: http://law.incometaxindia.gov.in/DIT/HtmlFileProcess.aspx?FooterPath=D:\WebSites\DITTaxmann\Act2010\DirectTaxLaws\ITACT\HTMLFiles\2011&DFile=section48.htm&tar=top#

answered Sep 20 '12 at 20:10 by CA Karan Batra 53216

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Thanks Karan for clarification.
(Sep 20 '12 at 23:46) Pankaj Batra
1
Appreciate your guidance Karan & Pankaj. Thx and regards. God Bless
(Sep 22 '12 at 12:47) NRIPIO

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Asked: Sep 18 '12 at 15:59

Seen: 2,143 times

Last updated: Sep 24 '12 at 16:27

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