Tax Report - Inclusions of Fees/Charges while calculating P&L for Capital Gains Reporting

General
1

Hi Team,

I have a few questions regarding how charges are handled in Zerodha reports:

#1
On May 17, 2024, I sold 90 shares of Wockhardt at ₹543.
The Tax P&L report shows a sale value of ₹48,870 (90 × 543), but this doesn’t include any GST,STT, SEBI , Tax etc fees of Zerodha
So, does the Tax P&L report exclude all these charges when calculating the total buy and sell value and the final capital gain for tax purposes?

#2
Also, I’ve seen that platforms like Nuvama include these charges/fees in their tax reports when calculating total buy/sell values and capital gain. Just wanted to confirm if Zerodha works differently in this regard.

Please advise. Thanks

2

Hey @sbadlani14

In Zerodha’s tax P&L report, the calculations for Short-Term Capital Gains and Long-Term Capital Gains do not include associated charges such as GST, STT, transaction tax, etc. However, these charges are listed separately under a different section, allowing you to deduct them from your STCG and LTCG - except for STT, which is not deductible.

Hope this helps!

3

Could you please confirm that STT Fees is not to be included

Below is a snapshot of an actual case:

Instrument: AGI Greenpac Ltd
Transaction Date: 11-Nov-2024
Transaction Type: NSE
Action: Buy
Quantity: 340
Price per Share: 974

Other Charges total is 416.43
Brokerage: 20
GST on Brokerage: 5.43
STT: 331.16
Stamp Duty: 49.67
SEBI Fees: 0.33
Transaction Charges: 9.84
Tax on Transaction Charges: 0
Other Charges: 0

If you add all of these additional charges then the avg price of share will go from 974 Rs to 975.22 Rs
because ((974*340)+416.43)/340=975.22 Rs

And Nuvama is using 975.22 as the avg price in tax pnl report

Please advise. Thanks

4

Hey @sbadlani14

STT is not allowed as a deduction when calculating short-term or long-term capital gains. That means:

  • You cannot add STT to the purchase cost of your securities.
  • You also cannot claim STT as a separate expense.

Hope this helps!

5

is it allowed if i file itr 3 and show as business ?

6

Hey @HIREiN

Yes, if you show your capital gains as your business income you can claim STT as your expense.

Hope this helps!

7

I need your clarification regarding the treatment of trading-related charges while filing taxes. Here’s what I’m trying to confirm:

  1. If I report Capital Gains as Business Income (i.e., I opt for the business income approach for taxation), can I deduct all the following charges as business expenses?
  • Brokerage (Brok)
  • STax_GSTOnBrokerage
  • STT (Securities Transaction Tax)
  • Stamp Duty
  • SEBI Fees
  • TxnCharges
  • TaxOnTxnCharges
  • OtherCharges
  1. If I do not report the income as Business Income (i.e., treat it as regular Capital Gains), then:

  • STT is not allowed to be included as a cost/deduction in capital gains computation – correct?

  • Are the other charges (Brokerage, GST, Stamp Duty, SEBI Fees, etc.) allowed to be added to the cost of acquisition or deducted from sale consideration for capital gains calculation?

Please confirm if my understanding is correct for both scenarios.

Thanks

8

Hey @sbadlani14

Yes, if you treat your capital gains as business income, you can claim all related charges, including STT, as business expenses. However, if you report them under capital gains, STT is not deductible, although other charges like brokerage, GST, stamp duty, SEBI fees, and similar expenses are allowed.

Hope this helps!

9

Means we have to pay Tax on Tax. In zerodha my realised profit is 4.72 lakhs , charges and taxes 17300 , net realised p&l 4.54 lakhs . Paying tax on 4.72 Lakhs ie 20 % STCG we have to pay Tax on STT also .

10

Hey @S_K

While STT is not allowed as a deduction, other expenses such as brokerage, GST, stamp duty, SEBI fees, and similar transaction-related charges can be deducted when calculating short-term and long-term capital gains.

Hope this helps!

11

When calculating P&L for Capital Gains Reporting, include brokerage fees, transaction charges, and taxes to reflect the true profit or loss. Accurate inclusion ensures correct tax liability.