If I opt to purchase MF units of a given scheme from an AMC by opening a new portfolio every time I purchase.and sell them later, I need to calculate my capital gains folio wise - scheme wise only. I should not calculate scheme wise on FIFO basis across all portfolios. Is this understanding correct?
Hey @Sankar , your understanding is correct. Capital gains from sale of mutual funds is calculated on a scheme-wise basis for each folio.
Example: You bought 50 units of the ABC Liquid Growth Fund from Upstox in February and then bought another 100 units of the same scheme from Zerodha in April. Later, you sold 10 units in December via Zerodha.
In this case, your capital gains will be calculated based on the Zerodha folio, considering the holding period from April (when you bought from Zerodha) to December.
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Will the above thing remain true: if I create different folios (in Statement of Account mode rather than hold it in demat form)?
Hi @S_Gupta,
Yes, the rule remains the same. Capital gains are calculated folio-wise, regardless of whether the units are held in a demat account or in Statement of Account mode. Each folio is treated separately, so gains should be computed scheme-wise within each folio.
Hope this clarifies!
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A little bit related question: Does it work in the same way for stocks also?
Say, I bought 50 shares of ITC from Upstox in February and then bought another 100 units of ITC from Zerodha in April. Later, I sold 10 units in March next year via Zerodha.
Which 10 units will be considered to be sold?
I don’t do F&O. I only report “income from capital gains”.
Thanks
Hey @S_Gupta,
The 10 units sold through Zerodha will be considered for capital gains, since the gain is realised through Zerodha as the selling broker, not Upstox.
Hope this helps!
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If tax planning done properly before exiting a trade, this can reduce tax outgo to a great extent: in my above example: If a person chooses to sell those 10 units via Upstox will incur LTCG at lower rates/free 1.25L limit instead of incurring STCG via Zerodha. Or if a person has lots of short term losses and free LTCG limit reached, this person can book STCG via Zerodha and reduce short term losses. A person can choose wisely.
Thanks for the answer.
Just curious: but will it create a mismatch with AIS as Income Tax Department may be seeing things at PAN level instead of folio level? Every tax payer, including me, fears ITD! I even fear using two demat accounts and having salary income.
There’s no need to worry about an AIS mismatch here. All equity transactions are ultimately reported at the PAN level by the depository (CDSL/NSDL), not broker-wise or folio-wise.
So even if you use multiple demat accounts or brokers like Upstox and Zerodha, the Income Tax Department sees the consolidated picture under your PAN. As long as you report your capital gains correctly in the ITR, there won’t be any issue or mismatch just because you used different brokers.
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