What expenses can you claim when reporting capital gains

When calculating equity capital gains, apart from the brokerage, exchange transaction charge, integrated gst, sebi turnover fees, stamp duty; can dp charges for selling stocks from demat that is charged by cdsl or nsdl also be deducted?
Also, if I choose the new tax regime for fy20-21, can i go back to old tax regime next year if my tax is lower under that regime? @Nireka

Hi @ranjit,

Expenses that are wholly and exclusively incurred in relation to the transfer of shares are allowed to be deducted from sales consideration. Expenses such as brokerage, stamp duty, sales commission, etc. can be claimed as an expense in your Income Tax Return. All these expenses are allowed as deductions only for the purpose of calculating the Capital Gains. However, Securities Transaction Tax (STT) is not allowed as a deduction.

Also, an individual having no business income has the option to choose between the old and new tax regimes every year.

Hi @Himanshu, if it is a Business and Profession Income (Fututres and Options or Speculative Intraday) then you can claim that as an expense. If it is a capital gains transaction then you can’t claim it as an expenses. let me know if you need any further help. :blush:

Hi @Himanshu, only expenses related to transfer (sale of shares) can be claimed in capital gain. Since this amount is to be paid whether you sell or not, you won’t be getting a deduction on this expense. Let me know if you need any further help. :blush:

Happy to help @Himanshu

The following can be claimed as expense while filing ITR-2.

Central GST
SEBI Turnover Fees
Stamp Duty
State GST
Clearing Charge
Exchange Transaction Charges
Integrated GST

However you won’t be able to claim DP Charges as expenses.
Let me know if you need any further help. :blush:

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Hi @Himanshu, you will not be able to claim DP charges as expenses in your ITR as DP charges are not dependent on your selling of stocks. You will have DP charges regardless of you selling a single unit of a stock or multiple units and the charge shall remain in constant. The charge is levied by the Depository which is CDSL.

Hi @Himanshu, all the expenses that you incur for the sale of Mutual Fund Units can be claimed by you in your ITR filing. Let me know if you need any further help, would love to assist you. :blush:

Hi @Yash_Kaviya @Himanshu

I think DP charges on debit of securities can be deducted as an expense from the gains as it is an expense incurred exclusively on transfer of capital asset.

However, the annual AMC charges cannot be deducted as as expense.

Looked this up a few years ago when I started and had found this :point_down:

Here’s a screenshot

Source: tradingqna.com


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Hi @Himanshu,

You can claim Exit Load, but as you mentioned in your example, exit load is already deducted from the sell price, you can not claim the same expense twice.
The example you mention is correct in its process. Let me know if you need further help. :blush:

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Hi @vinith.r,
The DP charges include, an initial fee for opening an account, maintenance charges and transaction charges.
Account opening fees and Maintenance Charges are administrative and hence not allowed as claims against capital gains. While the transaction charges which are charged on each trade can be claimed. So these type of DP charges can be claimed.

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Yes @Himanshu, you can deduct such DP charges as an expense.

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Hi everyone,
While filling ITR2, I am claiming expenses (expenses in connection to transfer) to reduce STCG.
How do I split the expenses quarterly like upto 15/6, 16/6 to 15/9 etc.? I am not able to do it from Tax pnl excel sheet.

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Hello @imnishantm,

If you’re trying to add the trades in Quicko’s excel template, you can add the expenses tradewise so the capital gains and expenses both shall be considered quarterly only for interest calculation.

Hope this helps!

i have bought shares for which i have paid brockrage ,sebi fees , stamp duty , stt etc . i have also sold some shares for which again i paid brockrage,sebi fees , stamp duty , stt .
in my filing of income tax in capital gain section can i deduct the brockrage, sebi fees , stamp duty as expenses on share bought and sold(some share) or only those fees could by deducted in which i have capital gains ie by selling only

Hi @akrit

You can claim expenses directly connected to the trading business as a business expense.
Here’s a read on Expenses a Trader Can Claim in ITR - Learn by Quicko for your reference.

Can this be claimed in itr 2 since in previous years i have treated gains as capital gains and not as my business income

Hi @akrit

Yes, these expenses can be claimed while filing ITR 2 & ITR 3.

For a salaried person who reports capital gains (ITR-2)

So, can DP Charges(about Rs. 15) be claimed as a deduction for calculating capital gains?
Can GST charged on brokerage etc (mentioned in the contract note) be deducted as an expense for capital gains?


Hi @S_Gupta

You can claim DP Charges while calculating STCG. Since this is an expense incurred exclusively in connection with the transfer.​​ And it will reduce your total taxable STCG.

A trader can claim expenses such as brokerage, stamp duty, sales commission, etc. in the Income Tax Return. However, GST charged on brokerage cannot be deducted as an expense for capital gains.

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I learn that when Shares are Buy and Sale as Investment, STT is not deductible and in case of Business STT is deductible.
Pls. tell whether both STT buy and STT Sell are not deductible in case of Investment.
Second Query : While filing IT Return there are columns of CG :
3(a)(i) Full Value of Consideration, Cost of Acquisittion and Expenditure in connection with Transfer/Sale.
Here (i) Full Value of Consideration is the Sale Price of Share without deducting any bokerage etc?
(ii) Cost of Acquisittion includes Purchase Price+Brokerages etc. ?
(iii) Expenditure in connection with Transfer/Sale, here expenses for sale like brokerage etc. hv to mentioned?
or one can mention Expenditure as Zero and take the Net Sale Value as Full Value of Consideration
(as it is convenient)?
Pls. throw some light. :pray: