What expenses can you claim when reporting capital gains

Hi @Neeraj_Goyal

  1. Yes, STT buy and STT sell are not deductible
  2. (i) Full Value of Consideration is the sale price of the capital asset, without deducting brokerage and other charges.
    (ii) The cost of acquisition is the purchase price of the asset which includes all the expenses directly related to the acquisition of the asset, including the purchase price, brokerage charges, commissions, transfer fees, legal fees, etc.
    iii) It is recommendable that you mention all your expenses incurred related to the sale of an asset and consider net asset value. But it is totally up to you if you want to show zero expenses and take Net Sale Value as Full Value of Consideration.

Hope this helps.

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Thank you very much. Explained very well.

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can I deduct “annual maintenance charges” I paid to my broker for calculating capital gains

I have a short term profit of 30k and long term loss of 29k so how should I deduct my expenses like brokerage and other taxes

Hi @Walker

No, you cannot deduct thec AMC (annual maintenance charges) paid to a broker for calculating capital gains.

You can claim expenses such as brokerage, stamp duty, sales commission, etc. can be claimed as an expense in your Income Tax Return.
LTCL cannot be set off against STCG, so you can carry forward the LTCL to future years.

can I also deduct pledging charges for the calculation of capital gains

Hi @Walker

Yes, you can claim the pledging charges for the calculation of capital gains.

Why aren’t all the taxes and charges incurred upon buying and selling equity shares in a particular F.Y. aren’t deducted from the LTCG and STCG in Quicko? The tax liability would ease off.

Hello @SAAD625,

Once you import your trading details from Zerodha, the taxes and charges incurred are automatically fetched on Quicko. However, as STT cannot be claimed as an expense while calculating capital gains, it is not reflected.

You can also refer to the following article to know that why the Tax P&L of Quicko does not match with Tax P&L of Zerodha : Help Center

Hope this helps!

While arriving at net short term capital gains or long term capital gains, can we offset the following charges?

  1. STT paid while purchasing and selling the shares
  2. Exchange transaction charges charged by the stock exchanges
  3. Stamp Duty charges
  4. DP charges: charged by CDSL whenever there is a debit of shares from the account.

Hi @swsriram

For arriving at the net capital gains, you can claim all these expenses except STT.

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Hi,

I do my investments though a portfolio management service …

capital gains is ~2,70,000 but expenses include-

Custodian fees ~6,000
Management fees ~ 3,20,000
Other expenses ~700
STT is ~2000

I think STT cannot be claimed as an expense for capital gain calculation in ITR. But which of the other expenses can I also claim?

Please help. It will make a huge difference in tax calculation.

Hi @Ashwin1

Yes, STT cannot be claimed as an expense for calculating capital gains.

Other expenses if wholly and exclusively incurred in connection with the transfer are allowed as a deduction.

Management fees and Custodian fees are expenses that are not necessary for the transfer and hence might not be allowed as a deduction.

There are contradictory views taken by different authorities of the ITD.

Hi, I have a query on whether this income is required to be included in my income tax return?-

Below is the document I received from ASK Real Estate Special Opportunites Fund

This is in reference to your investment in ASK Real Estate Special Opportunities Fund (“the Fund”), a domestic venture capital fund registered under the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996. As per the provisions of section 115U of the Income-tax Act, 1961 (“the Act”), the income arising to the Fund from investments in venture capital undertakings (“Investee Companies”) will be chargeable to tax in the hands of the beneficiaries in the same manner as if the beneficiaries had directly invested in the Investee Companies. Further, if the Fund has incurred losses from investments in the Investee Companies, such losses will be allowable in the hands of the beneficiaries in the same manner as if the beneficiaries had directly invested in the Investee Companies.
Further, in respect of income which is not exempt in the hands of the Fund under section 10(23FB) or any other section of the Act, the Fund has taken a position that the tax liability on such income will be directly discharged by the beneficiaries.
The detail of such income is provided in point number 2 and 4 of the Annexure.
The beneficiaries are required to pay tax on the income accrued / arisen / received by the Fund. If income accruing or arising or received by the Fund during the year, is not paid or credited to the beneficiaries, it shall be deemed to have been credited to the account of beneficiaries on the last day of year.
Attached as Annexure is a statement showing your share in the income (interest, dividend, short-term / long-term capital gains/loss, etc.) arising from your investment in the Fund, the expenses incurred by the Fund, tax deducted at source by investee companies. It may be noted that the Fund has not discharged any tax liability and requests you to discharge the
tax applicable on your share of income.

  1. Proportionate share in the gain being short term capital
    gain on account of sale of units of mutual fund
    computed in accordance with the provisions of the Act = Rs. 5
  2. Proportionate share in the interest income earned by
    the Fund (Debenture) = Rs. 256000
  3. Proportionate share in the interest income earned by
    the Fund as a result of delay in capital contribution = Rs.70
  4. Proportionate share of expenses incurred by the Fund*
    (Fund administration expenses) = Rs.1501

PLEASE HELP WITH THIS QUERY- IT WILL BE HELPFUL IN DETERMINING WHETHER I HAVE TO PAY SO MUCH TAX OR NOT

Hi, I have a query on whether this income is required to be included in my income tax return?-

Below is the document I received from ASK Real Estate Special Opportunites Fund

This is in reference to your investment in ASK Real Estate Special Opportunities Fund (“the Fund”), a domestic venture capital fund registered under the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996. As per the provisions of section 115U of the Income-tax Act, 1961 (“the Act”), the income arising to the Fund from investments in venture capital undertakings (“Investee Companies”) will be chargeable to tax in the hands of the beneficiaries in the same manner as if the beneficiaries had directly invested in the Investee Companies. Further, if the Fund has incurred losses from investments in the Investee Companies, such losses will be allowable in the hands of the beneficiaries in the same manner as if the beneficiaries had directly invested in the Investee Companies.
Further, in respect of income which is not exempt in the hands of the Fund under section 10(23FB) or any other section of the Act, the Fund has taken a position that the tax liability on such income will be directly discharged by the beneficiaries.
The detail of such income is provided in point number 2 and 4 of the Annexure.
The beneficiaries are required to pay tax on the income accrued / arisen / received by the Fund. If income accruing or arising or received by the Fund during the year, is not paid or credited to the beneficiaries, it shall be deemed to have been credited to the account of beneficiaries on the last day of year.
Attached as Annexure is a statement showing your share in the income (interest, dividend, short-term / long-term capital gains/loss, etc.) arising from your investment in the Fund, the expenses incurred by the Fund, tax deducted at source by investee companies. It may be noted that the Fund has not discharged any tax liability and requests you to discharge the
tax applicable on your share of income.

  1. Proportionate share in the gain being short term capital
    gain on account of sale of units of mutual fund
    computed in accordance with the provisions of the Act = Rs. 5
  2. Proportionate share in the interest income earned by
    the Fund (Debenture) = Rs. 256000
  3. Proportionate share in the interest income earned by
    the Fund as a result of delay in capital contribution = Rs.70
  4. Proportionate share of expenses incurred by the Fund*
    (Fund administration expenses) = Rs.1501

Hi @Ashwin1

  1. If ₹5 is the STCG, then it will be taxable under the capital gains head.
  2. Interest income will be taxable under IFOS.
  3. Interest income on account of delay will also be taxable under IFOS.
  4. Expenses incurred cannot be claimed while arriving at the capital gains or interest income under IFOS.

In case you want expert assistance with your taxes, you can book a MEET for filing your return or Ask an Expert.

@Himanshu @Yash_Kaviya

Q1. Is the above procedure valid for ITR-2 return also?

Q2. Can we say that half (of the expenses) are included in the cost of acquisition?
And the other half expenses are actually shown in the expenses column?

Q3. Where should we include the expenses incurred during buying of the securities:
in the cost of acquisition or the expenses?

I too have the same question… Can any expert respond?
Also zerodha does not deduct these expenses while calculating the STCG or LTCG
Does this mean, we can’t deduct these are expenses for LTCG and STCG?

Hi @S_Gupta @Venkat_Naidu

  1. Yes, it is valid for ITR 2.

  2. Cost of acquisition is the price inclusive of the expenses incurred for the acquisition of the asset. The expenses incurred for the sale of the asset can be claimed as transfer expenses.

  3. Buying expenses should be included in the cost of acquisition of the securities.

@Venkat_Naidu Except for STT which cannot be claimed for calculating LTCG/STCG, Zerodha takes into account all the expenses.

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But on Feb 27, You said DP charges are tax deductible