Is broker commission and STT deductible from STCG?

This query is : Resolved

Abhishek Kumar Srivastava (Querist)
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31 July 2008 Hi,

Can anyone help me in usnderstanding following:

1. I buy and sell shares on NSE and pay commission and STT on both sides of transaction. Can this STT be deducted from my STCG that I make in this process?

Suppose I buy 10 shares of company XXX for Rs 10/- per share. I pay Rs 1000/- for my purchase and additionally pay commission of Rs 5/- and STT of Rs.5/-. So my total cost becomes Rs. 1010/-. Now if I sell these 10 shares after 10 days for Rs. 15/- per share and make Rs. 1500/-. I again pay a coomission of Rs. 5/- and STT of Rs. 5/-. So by total inflow is Rs. 1490/-.

Now, is spent Rs. 1010/- for buying the shares and got Rs. 1490/- when I sold all. So my Short Term Capital Gain (STCG) is Rs 480/- (1490-1010).

Is this correct? If not then can anyone please explain what my STCG using above example?

Thanks,
Abhishek

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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31 July 2008 Yes, STT and brokerage paid is the component of cost of acquisition in case of purchase and the same is the cost of transfer for sale transaction for the purpose of STCG.

Abhishek Kumar Srivastava

Abhishek Kumar Srivastava (Querist)
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31 July 2008 Hi Ramesh,

Thanks a lot for clariying. Is it always mandatory to cost of tranfer in the return form? Can I just deduct cost of transfer from my sale consideration and have no cost of transfer?

Just to confirm again - cost of acuisition will include share price+commission+STT and cost transfer will just have commission+STT?

Thanks,
Abhishek

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Abhishek Kumar Srivastava

Abhishek Kumar Srivastava (Querist)
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31 July 2008
Hi Ramesh,

Thanks a lot for clariying. Is it always mandatory to cost of tranfer in the return form? Can I just deduct cost of transfer from my sale consideration and have no cost of transfer?

Just to confirm again - cost of acuisition will include share price+commission+STT and cost transfer will just have commission+STT?

Thanks,
Abhishek

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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31 July 2008 Yes, you are right; the cost of transfer may be deducted from Sale consideration and the Capital Gain may be worked out on the net consideration. The algorithm given is correct.