J S BHAVSAR (CONSULTING) (1288 Points)
12 July 2018I understand STT cannot be deducted from the capital gains arising out of sales of equity stocks or equity Mutual Funds.
But can we deduct the brokerage charged on Buy and Sell side of the shares transaction?
a) What else can be deducted before arriving at capital gains for equity stocks?
b) What can be deducted before arriving at capital gains for equity mutual funds?
c) What can be deducted before arriving at capital gains for debt mutual funds?
Ruchika Somani
(Coaching and Practice in Tax Audit Law.)
(4429 Points)
Replied 12 July 2018
Brokerage & commission may be deducted as well as STT paid can also be deducted
J S BHAVSAR
(CONSULTING)
(1288 Points)
Replied 13 July 2018
Hello Ruchikaji,
As per the article below, STT charges cannot be deducted while computing capital gains on equity stock and MFs:
https://economictimes.indiatimes.com/wealth/tax/playing-the-stock-market-heres-how-to-compute-capital-gains/articleshow/54790989.cms
See section Expenditure on Sales/transfer. It says STT charges cannot be deducted.
Most stock trading websites while giving Capital Gains PDF statements are not deducting anything from the Capital Gains.
Hence my question whether the websites are right, or are the taxpayers allowed to deduct Brokerage and other charges on buy and sell segments.
Ruchika Somani
(Coaching and Practice in Tax Audit Law.)
(4429 Points)
Replied 14 July 2018
Right. Only brokerage can be deducted.
J S BHAVSAR
(CONSULTING)
(1288 Points)
Replied 17 July 2018
Most trading websites when giving the capital gains statement they are not deducting anything. They simply perform Sell minus Buy and display the Capital Gains statement.
J S BHAVSAR
(CONSULTING)
(1288 Points)
Replied 18 July 2018
In case of Mutual Funds, what charges can be deducted from the Capital Gains under "Expenditure on Sales/transfer"?
Ruchika Somani
(Coaching and Practice in Tax Audit Law.)
(4429 Points)
Replied 20 July 2018
Only brokerage / commission
J S BHAVSAR
(CONSULTING)
(1288 Points)
Replied 20 July 2018
But MFs do not have buy and sell Brokerages & Commissions.
J S BHAVSAR
(CONSULTING)
(1288 Points)
Replied 30 July 2018
| Originally posted by : Ruchika Somani | ||
 |
Only brokerage / commission |  |
What about annual demat charges? Most banks collect Rs 700 to Rs 850 charges for a demat trading account. Can these charges be deducted?
Ruchika Somani
(Coaching and Practice in Tax Audit Law.)
(4429 Points)
Replied 30 July 2018
| Originally posted by : J S BHAVSAR | ||
|
Originally posted by : Ruchika Somani Only brokerage / commission What about annual demat charges? Most banks collect Rs 700 to Rs 850 charges for a demat trading account. Can these charges be deducted? |
|
Nope.
In act it clearly says only Commission & Brokerage and STT paid is allowed to be deducted
J S BHAVSAR
(CONSULTING)
(1288 Points)
Replied 30 July 2018
| Originally posted by : Ruchika Somani | ||
|
Originally posted by : J S BHAVSAR Originally posted by : Ruchika Somani Only brokerage / commission What about annual demat charges? Most banks collect Rs 700 to Rs 850 charges for a demat trading account. Can these charges be deducted? Nope. In act it clearly says only Commission & Brokerage and STT paid is allowed to be deducted |
|
But one Economic Times Article clearly says STT cannot be deducted.
Ruchika Somani
(Coaching and Practice in Tax Audit Law.)
(4429 Points)
Replied 30 July 2018
| Originally posted by : J S BHAVSAR | ||
|
Originally posted by : Ruchika Somani Originally posted by : J S BHAVSAR Originally posted by : Ruchika Somani Only brokerage / commission What about annual demat charges? Most banks collect Rs 700 to Rs 850 charges for a demat trading account. Can these charges be deducted? Nope. In act it clearly says only Commission & Brokerage and STT paid is allowed to be deducted But one Economic Times Article clearly says STT cannot be deducted. |
|
Yes
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