Sharekhan: Create an account and Log in, Download ledger, Tax P&L Report and Contract note

To understand your trading activity and the income tax compliances, you need certain documents like Tax P&L, Contract notes, Holding Statement, etc. But, before you get any of these documents you first need to have a Sharekhan Demat account and log in.

This article will guide you through the following:

How to Create and Log in to Sharekhan?

  1. Visit the Sharekhan website

    Click on Open an account. You can access it here.

  2. Click on Open trading account

    As seen below:

  3. After that, fill in your details

    Including:
    -Name
    -Email id
    -Mobile number
    -Location
    -Pincode

  4. Next, click on Open trading account

    As seen below:

  5. Online process of account opening is completed

    Finally, the process is offline from here.

  6. A sales representative will shortly contact you

    After that, will require documents such as:
    -Self-attested PAN
    -Self-attested Aadhaar
    -Passport size photo
    -Canceled cheque or bank passbook to link with your account

  7. Finally, once your documents get processed, your account will get activated.

    You will receive a notification for the same.

8. Sharekhan login

Once your account is activated, navigate to the website and enter your user id and password and click on login.

How to download Ledger for Sharekhan traders?

Here’s how you can download the ledger from your account:

  • Step 1: Log in to Sharekhan portal
  • Step 2: Click on Reports
  • Step 3: Select the ledger of any segment that you want to view. Eg: Equity Ledger Summary
  • Step 4: From the options, click on Equity Ledger Summary
  • Step 5: Select the necessary filters. Click on Show. You can now view your Ledger summary.
  • Step 6: Click on the excel sheet to download the ledger. You can view it from your PC

How to download Tax Profit and Loss Report?

  • Step 1: Log in to the Sharekhan portal and login to your account.
  • Step 2: Search for Scrip summary. You can do this from the search bar. You can view the scrip summary separately for all the segments i.e Equity or F&O.
  • Step 3: Now you can now view your Scrip summary from the dashboard
  • Step 4: Click on the Excel sheet. Click on download your scrip summary

How to download Contract notes for Sharekhan traders?

  • Step 1: Visit the Sharekhan portal and click on the “Login/Trade” option
  • Step 2: Next, you will be redirected to the login page. Enter the login ID/e-Mail ID and click on the “Next” option. Then fill in the “Membership Password” in the respective field.
  • Step 3: After you log in, click on the “Reports” option and select this from the dashboard
  • Step 4: Next, click on the “Contract Tracker” option from under the particular column. Select which Contract Note you wish to view/download.

FAQs

How does the Tax profit and Loss Statement help me?

This statement is used to calculate your Tax liability. Therefore, it is needed to file ITR 3.

What is the difference between Trading and Demat account?

A Demat account holds securities and certificates of stocks, shares, etc electronically while a Trading account lets you buy or sell those securities in the stock market.

Is Trading Turnover same as Contract Turnover?

No. The Contract Turnover is the sum of the purchase value and sales value. It is not considered for income tax purposes. However, the Trading Turnover or Business Turnover is the absolute profit i.e. sum of positive and negative differences. Hence, this turnover is considered to determine the applicability of the tax audit and the applicable ITR form. Therefore, Trading Turnover is different from Contract Turnover.

GST for Traders – Do they need GST Registration?


GST is applicable if the aggregate turnover of a business exceeds the threshold limit. Once the business is registered under GST, it must charge GST on the sale of goods or services. It is applicable to manufacturers, traders and service providers. Does GST apply to stock traders also? The applicability of GST to trading in securities is a confusing question prevalent amongst traders. GST is not applicable to income from trading in stocks, shares, mutual funds, futures, options etc. Let us understand in detail.

Does having GST for Traders have any benefit?

What is recommended - having GSTIN and filing both GST and ITR or just simply file ITR no need of GST?

Does having GST for Traders have any benefit?

What is recommended - having GSTIN and filing both GST and ITR or just simply file ITR no need of GST?

Is GST applicable to Securities Traders?

It is mandatory to register under GST if the Aggregate Turnover exceeds the threshold limit of INR 40 Lakh (INR 20 Lakh for special category states) for sale of goods or INR 20 Lakh (INR 10 Lakh for special category states) for sale of services. As per Section 22 of CGST Act, Aggregate Turnover is the total sales value of taxable/exempt goods or services.

The GST Act specifically excludes Securities from the definition of Goods. As per Section 2(52), Goods means any movable property except money and securities. The definition of Services means anything other than goods, money and securities. Thus, trading in shares and securities is not considered as supply as per the GST Act and falls outside the purview of GST. Therefore, securities traders are not liable to register under GST.

However, it must be noted that if a broker is earning brokerage income from securities trading, GST registration is mandatory if such brokerage exceeds the threshold limit.

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Should I include Trading Turnover in Aggregate Turnover?

Trading Turnover is the turnover calculated for each trading segment as per the reporting requirements of the Income Tax Act.

Aggregate Turnover includes the sum of the sale of goods and services. Since the definition of goods and services excludes securities, the aggregate turnover should not include trading turnover to determine the applicability of GST Registration.

Trading Expenses on Securities Trading

Expenses incurred on trading in securities also includes CGST, SGST or IGST. This is the GST on expenses such as brokerage, transaction costs, turnover fees, etc that the trader pays for trading transactions. The trader can claim such expenses against the profit/loss from trading while filing the Income Tax Return on the income tax website.

GST for Traders – Reporting in ITR-3

Turnover as per ITR must match with sales reported in GST Return to avoid any mismatch notice. If the trader does not have GST Registration, he/she need not report details of GSTIN in the Income Tax Return. If the trader has income from any business other than securities trading and has GST Registration, it is advisable to report the trading turnover from securities trading under Non-GST Supply in the GST Return.

FAQs

Does securities also cover derivatives?

The GST Act excludes Securities from the definition of Goods. Securities shall have the same meaning as per Section 2 of Securities Contracts (Regulation) Act, 1956 and includes shares, scrips, stocks, bonds, debentures, debenture stock, other marketable securities and derivatives.

Is GST applicable on brokerage earned in Stock broking services?

Yes. A stockbroker provides stockbroking services that fall under the definition of ‘Services’ under GST. Therefore, such sale value must be included in Aggregate Turnover to determine the applicability of GST Registration.

My trading turnover from share trading exceeds INR 40 lacs. Do I need to register under GST?

Trading in securities does not fall under GST since the definition of ‘Goods’ and ‘Services’ as per the GST Act excludes securities. Therefore, even if the trading turnover exceeds the threshold limit, GST is not applicable.

Securities Transaction Tax – STT

STT i.e. Securities Transaction Tax is levied on the purchase and sale of securities listed on a recognized stock exchange in India. The STT Act has a list of securities on which STT is applicable. Such securities include equity, derivatives, and units of equity mutual fund. The STT rate is prescribed by the Government. STT should be paid by buyer or seller.

  • The recognized stock exchange collects STT from the buyer or seller
  • The recognized stock exchange deposits STT with the government on or before 7th of the next month
  • Buyer or Seller can claim STT as a business expense against trading income

If the recognized stock exchange is unable to collect STT from the trader, it is still liable to deposit STT with the government to avoid interest and penalty.

Securities on which STT is levied

Securities Transaction Tax is charged on the Securities that are traded on a recognized stock exchange in India. Following is the list of securities on which STT is levied.

Securities Transaction Tax Rates

Transaction STT Rate Who pays? Value
Purchase of equity share (delivery based) or unit of business trust 0.1% Buyer Purchase Value
Sale of equity share (delivery based) or unit of business trust 0.1% Seller Sale Value
Purchase of equity mutual fund (delivery based) NIL Buyer Not Applicable
Sale of equity mutual fund (delivery based) 0.001% Seller Sale Value
Sale of equity share (intraday) and equity mutual fund (without actual delivery) 0.025% Seller Sale Value
Sale of Exchange Traded Funds (ETFs) 0.001% Seller Sale Value
Sale of Futures 0.01% Seller Sale Value
Sale of Options (option not exercised) 0.017% Seller Option Premium
Sale of Options (option is exercised) 0.125% Buyer Settlement Price
Sale of unlisted equity shares under an IPO which are later listed on a recognized stock exchange 0.2% Seller Sale Value

Income Tax on Securities with STT paid

The income tax rate for securities on which STT is paid is lower than the income tax rate for other assets. Here are the Income Tax rates for securities on which STT is paid.

Type of Security Period of Holding LTCG STCG
Equity Shares / Equity MF / ETF / ESOP / RSU 12 months 10% in excess of INR 1 lac 15%
Foreign Shares 24 months 10% without indexation slab rate

In the case of Equity Shares and Equity MF, the investor should calculate the cost of acquisition after applying the grandfathering rule. Read about how to calculate income tax on LTCG on sale of equity shares and equity mutual funds.

A trader having income from trading in securities and report such income as Business Income can claim STT as a valid business expense. STT paid on trading transactions is a direct expense related to trading income. The trader can report it as an expense in the P&L Account while filing ITR-3 on the Income Tax Website.

FAQs

How is STT charged on Intraday Trading?

STT is charged on the sell value of the transaction at 0.025%. Here is an example:
Trader buys 100 shares of HDFC at Rs.1000 each at 11:30 AM on Monday & sells them off at Rs.1006 at 2:00 PM. STT will be Rs.25.13 calculated as Rs.1006*100*0.025% = Rs.25.15

How is STT charged on F&O Trading?

STT is charged on the sell value of the transaction at 0.01%. Here is an example:
A trader sells 1 lot of NIFTY on at 9000. His total volume comes to Rs.9000*75 = Rs.6,75,000. STT on this trade will be calculated as Rs.6,75,000*0.01% = Rs.67.5

How is STT different from CTT?

STT is Securities Transaction Tax and CTT is Commodity Transaction Tax. STT is levied on trading in securities such as equity delivery, equity intraday, equity F&O, ETFs, Mutual Funds etc. CTT is levied on trading in non-agri commodity derivatives.

Income Tax on Unlisted Shares in India

What are Unlisted Shares?

A Stock that is not listed on a recognized stock exchange is an unlisted stock. A trader or investor who buys and sells unlisted stocks should file ITR and pay tax on the income. Sale of Unlisted Shares is a Capital Gains Income as per the Income Tax Act. The Income Tax treatment of unlisted shares is not the same as the listed share.

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Capital Gain on Sale of Unlisted Shares

Unlisted Stock is not listed on any recognised stock exchange. Thus, the Company does not pay STT i.e. Securities Transaction Tax on such shares. The period of holding is 24 months.

  1. Long Term Capital Gain (LTCG): If an investor sells an unlisted stock held for more than 24 months, gain or loss on such sales is a Capital Gain or Capital Loss.
  2. Short Term Capital Gain (STCG): If an investor sells an unlisted stock held for up to 24 months, gain or loss on such sale is a Short Term Capital Gain (STCG) or Short Term Capital Loss (STCL).

Income Tax on Unlisted Shares

Income Tax on Trading in unlisted shares is similar to the tax treatment of other capital assets. The following are the income tax rates on the sale of unlisted shares of a Domestic Company or Foreign Company.

  • LTCG – 20% with Indexation
  • STCG – taxed as per slab rates

Note: In the case of a Non-Resident, LTCG on Unlisted Stock is 10% without Indexation.

ITR Form, Due Date and Tax Audit Applicability for Unlisted Shares

  • ITR Form: Trader should file ITR 2 (ITR for Capital Gains Income) on Income Tax Website since income on the sale of unlisted stocks is a Capital Gains.
  • Due Date
    • Up to FY 2019-20
      31st July – for traders to whom Tax Audit is not applicable
      30th September – for traders to whom Tax Audit is applicable
    • FY 2020-21 Onwards
      31st July – for traders to whom Tax Audit is not applicable
      31st October – for traders to whom Tax Audit is applicable
  • Tax Audit: Since the income on the sale of unlisted stock is a Capital Gains Income, the applicability of tax audit under Section 44AB need not be determined.

Carry Forward Loss on Sale of Unlisted Shares

  • The investor can set off Short Term Capital Loss against both STCG and LTCG. They can carry forward the remaining loss for 8 years and set off against STCG and LTCG only.
  • The investor can set off Long Term Capital Loss against LTCG only. They can carry forward the remaining loss for 8 years and set off against LTCG only.

FAQs

How do I report income from sale of unlisted shares in the Income Tax Return?

You should file ITR-2 and report income from the sale of unlisted shares of a Domestic Company or Foreign Company as Capital Gains. You should pay income tax on it as per rates below:
– Long Term Capital Gain – 20% with indexation
– Short Term Capital Gain – slab rates
The assessee can set off LTCL with LTCG and STCL with both STCG and LTCG. The remaining loss can be carried forward for 8 years.

Can STT be paid on Unlisted Shares?

STT i.e. Securities Transaction Tax is the tax on the purchase and sale of securities listed on a recognised stock exchange in India. Thus, STT is not paid on Unlisted Shares. However, when a company offers shares to the public under IPO i.e. Initial Public Offering, such shares are later listed on the stock exchange. In such cases, STT is charged on the Unlisted Shares.

Income Tax on Foreign Shares

If a person resident in India has invested into shares listed in foreign countries, profit or loss on the sale of such shares should be reported in the ITR and the assessee must pay tax on this income. The tax treatment varies based on whether the shares are listed on a recognized stock exchange in India and whether STT on such shares is paid.

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Income Heads for Trading in Foreign Shares

Capital Gains Income from Foreign Shares

Income from the sale of foreign shares is a Capital Gains Income as per the Income Tax Act. Foreign Shares is not listed on any recognized stock exchange in India. The period of holding is 24 months.

  • Long Term Capital Gain (LTCG): If an investor sells an unlisted stock held for more than 24 months, gain or loss on such sales is a Long Term Capital Gain (LTCG) or Long Term Capital Loss (LTCL).
  • Short Term Capital Gain (STCG): If an investor sells an unlisted stock held for up to 24 months, gain or loss on such sale is a Short Term Capital Gain (STCG) or Short Term Capital Loss (STCL).

Other Income from Foreign Shares

  • Dividend Income – Dividend received from a Foreign Company is taxable income under the head Income From Other Sources at slab rates. If the assessee incurs the expense of remuneration or commission for the purpose of earning the dividend, he/she can claim it as an expense from dividend income.

Income Tax on Foreign Shares

Income Tax on Trading in shares of foreign countries is similar to the tax treatment of other capital assets. The following are the income tax rates on the sale of listed and unlisted foreign shares.

Type of Security Period of Holding Long Term Capital Gain

Short Term Capital Gain

Listed Foreign Share 24 months 20% with Indexation Slab Rates
Unlisted Foreign Share 24 months 20% with Indexation Slab Rates
  • Dividend Income on Foreign Shares is taxable at slab rates under the head ‘Income from Other Sources’.

Sale of Foreign Shares

  • Due Date
    • Up to FY 2019-20
      31st July – for traders to whom Tax Audit is not applicable
      30th September – for traders to whom Tax Audit is applicable
    • FY 2020-21 Onwards
      31st July – for traders to whom Tax Audit is not applicable
      31st October – for traders to whom Tax Audit is applicable
  • Tax Audit: Since the income on the sale of foreign shares is Capital Gains, the applicability of tax audit under Section 44AB need not be determined.
Check Tax Audit Applicability u/s 44AB
Check Income Tax Audit applicability u/s 44AB to file Tax Audit Report Form 3CB - 3CD with your Income Tax Return.
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Check Tax Audit Applicability u/s 44AB
Check Income Tax Audit applicability u/s 44AB to file Tax Audit Report Form 3CB - 3CD with your Income Tax Return.
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Carry Forward Loss for Sale of Foreign Shares

  • The investor can set off Short Term Capital Loss (STCL) against both Short Term Capital Gain (STCG) and Long Term Capital Gain (LTCG). They can carry forward the remaining loss for 8 years and set off against STCG and LTCG only.
  • The investor can set off Long Term Capital Loss (LTCL) against Long Term Capital Gain (LTCG) only. They can carry forward the remaining loss for 8 years and set off against LTCG only.

FAQs

How do I report income from sale of shares of Foreign Company in the Income Tax Return?

The investor should file ITR-2 and report income from the sale of Foreign Shares as Capital Gains.
(a) Listed Foreign Shares
LTCG – 20% without indexation
STCG – slab rates
(b) Unlisted Foreign Shares
LTCG – 20% with indexation
STCG – slab rates
The details of Foreign Shares should be reported in Schedule FA i.e. Schedule Foreign Assets of the ITR. The assessee can set off LTCL with LTCG and STCL with both STCG and LTCG. The remaining loss can be carried forward for 8 years.

I am an Indian Resident. Do I need to pay Income Tax on income from the sale of foreign shares?

A Resident as per the Income Tax Act should pay tax on global income i.e. income in India and outside India. Thus, you must report income from the sale of foreign shares as Capital Gains Income and pay income tax on it as per rates below:
– Long Term Capital Gain – 10% without Indexation on sale of listed foreign shares and 20% with indexation on sale of unlisted foreign shares
– Short Term Capital Gain – pay tax at slab rates

Income Tax on ETF (Exchange Traded Funds) in India

Exchange-Traded Funds were launched in India in the year 2002. There are advantages of investing in ETF over shares and mutual funds. An investor can spread the risk by investing in the equities of multiple companies instead of investing in equity shares of a single company having a higher risk. Investing in ETFs is beneficial over mutual funds due to reduced expenses and higher liquidity.

What is ETF?

ETF i.e. Exchange Traded Fund is a basket of stocks that reflects the composition of an index like BSE Sensex or CNX Nifty. Thus, it holds all the stocks in the same proportion as held by the underlying index. It is an Index Fund that is listed and traded on a stock exchange just like a stock. The trading value is based on the Net Asset Value (NAV) of the underlying asset. It is a mutual fund that the investor can buy and sell on the stock exchange, unlike the normal mutual funds that the investor can buy and sell from the AMC. Income Tax on ETFs (Exchange Traded Funds) in India is similar to the tax treatment of mutual funds.

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Types of Exchange Traded Funds (ETF)

The different types of ETFs can be classified on the basis of the securities in which they invest. Following are types of ETF:

  • Equity ETF – ETFs that invest in equity shares are and other equity-related instruments.
  • Debt ETF – ETFs that invest in fixed return securities like bonds and debentures.
  • Gold ETF – ETFs that invest in physical gold assets.
  • Currency ETF – ETFs that invest in currency instruments.

Income Heads for Income from ETFs

Capital Gain on Sale of ETF (Exchange Traded Funds)

  1. Equity ETFs – Since these ETFs invest in equity-oriented instruments, the treatment is the same as equity shares.
    • Long Term Capital Gain (LTCG): Any gain arising on the sale of equity ETF held for more than 12 months is considered as Long Term Capital Gain.
    • Short Term Capital Gain (STCG): Any gain arising on the sale of equity ETF held for less than 12 months is considered as Short Term Capital Gain.
  2. Other ETFs – ETFs such as Gold ETF, International ETF, Debt ETF, etc has tax treatment similar to other capital assets.
    • Long Term Capital Gain (LTCG): Any gain arising on the sale of other ETF held for more than 36 months is considered as Long Term Capital Gain.
    • Short Term Capital Gain (STCG): Any gain arising on the sale of other ETF held for less than 36 months is considered as Short Term Capital Gain.
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Other Income from ETF (Exchange Traded Funds)

  • Interest Income
  • Dividend Income
    • In most cases, the dividend is reinvested in the scheme. However, the ETF Fund may decide to distribute dividends to the investors.
    • Up to FY 2019-20 – Exempt Income.
    • FY 2020-21 onwards – Taxable Income under the head Income From Other Sources (IFOS) at slab rates.

Income Tax on ETF (Exchange Traded Funds)

Income Tax on Trading in ETFs is similar to the tax treatment of mutual funds. Following are the income tax rates:

Type of ETF Period of Holding Long Term Capital Gain Short Term Capital Gain
Equity ETF 12 months 10% in excess of INR 1,00,000 under Section 112A 15% under Sec 111A
Other ETF 36 months 20% with Indexation Slab Rates

ITR Form, Due Date and Tax Audit Applicability for ETF Investors

  • Due Date
    • Up to FY 2019-20
      31st July – for traders to whom Tax Audit is not applicable
      30th September – for traders to whom Tax Audit is applicable
    • FY 2020-21 Onwards
      31st July – for traders to whom Tax Audit is not applicable
      31st October – for traders to whom Tax Audit is applicable
FY 2019-20: Due Date to file Income Tax Return for non-audit cases has been extended to 10th January 2021 and for audit cases to 15th February 2021
Tip
FY 2019-20: Due Date to file Income Tax Return for non-audit cases has been extended to 10th January 2021 and for audit cases to 15th February 2021

Carry Forward Loss for sale of ETFs

Gain or Loss on sale of ETFs is a Capital Gain or Capital Loss. Here are the rules for set-off and carry forward of loss on sale of ETFs.

  • The investor can set off Short Term Capital Loss (STCL) against both Short Term Capital Gain (STCG) and Long Term Capital Gain (LTCG). Also, they can carry forward the remaining loss for 8 years and set off against STCG and LTCG only.
  • The investor can set off Long Term Capital Loss (LTCL) against Long Term Capital Gain (LTCG) only. Further, they can carry forward the remaining loss for 8 years and set off against LTCG only.
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FAQs

How do I report income from sale of ETFs in the Income Tax Return i.e. ITR?

Traders should file ITR-2 and report income from sale of ETFs as Capital Gains.
– Equity ETF – Tax on LTCG is 10% in excess of INR 1 lac and tax on STCG is 15%.
– Other ETF – Tax on LTCG is 20% with indexation and tax on STCG is as per slab rates.
The investor can set off LTCL with LTCG and STCL with both STCG and LTCG, remaining loss can be carried forward for 8 years

Is ETF a better investment option than Mutual Funds?

Yes. ETFs are better than Mutual Funds for the following reasons:
1. The investor can buy and sell an ETF directly on the stock exchange, unlike the normal mutual funds.
2. Fees and investments in ETFs are lower than Mutual Funds since there is no fund manager to make investment decisions on behalf of the investor.
3. ETFs do not have a lock-in period and investors can sell it anytime. Mutual Funds like ELSS of 3 years reduces the liquidity of investors.

In the case of Mutual Funds, it is managed by an experienced Fund Manager who makes investment decisions for the investors. No such decision-maker is available in the case of ETFs.

How are Gold ETFs different from Gold Mutual Funds?

Gold ETFs are funds that invest in physical gold assets. Thus, asset base of the ETF is 90 to 100% gold. They are traded on exchanges and offer better liquidity.
Gold funds are mutual funds that invest in gold ETFs and other related assets. They do not invest in physical gold but Gold ETFs.

What is ETF Fund?

ETF is a basket of stocks that reflects the composition of an index like BSE Sensex or CNX Nifty. It is an Index Fund that is listed and traded on a stock exchange just like a stock. Therefore, it is a mutual fund that the investor can buy and sell on the stock exchange. IT on ETFs in India is similar to the tax treatment of mutual funds.

Income Tax on Bonds & Debentures

Bonds are government securities issued by the government of India to borrow money from investors. A debenture is an interest bearing bond or unsecured loan issued by a Company. If you have invested in bonds or debentures, you need to file your ITR and pay tax on the income. Sale of Bonds and Debentures is considered to be a Capital Gains Income. As per the Income Tax Act, both Bonds and Debentures are considered as Securities.

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Types of Bonds in India include government bonds, taxable and tax-free bonds, sovereign gold bonds, capital gains bonds by NHAI & REC, IRFC tax-free bonds, etc. Types of Debentures in India include non-convertible and convertible debentures, secured and unsecured debentures, redeemable and irredeemable debentures, registered and bearer debentures. SEBI (Securities Exchange Board of India) has prescribed guidelines for public issue of debentures under ICDR Regulations.

Income Heads for Income from Bonds & Debentures

Capital Gains on Sale of Bonds & Debentures

Period of Holding means the time period for which the assessee held the capital asset. Period of holding is counted from the date of acquisition (purchase) of an asset to the date of transfer (sale) of assets.

The period of holding is used to determine the nature of income on the sale of the capital asset i.e. Long Term Capital Gain or Short Term Capital Gain. Eg: If the assessee sells listed bonds within 12 months from the date of purchase, it is considered as a Short Term Capital Gain (STCG).

Type of Asset Period of Holding Capital Gains
Listed Bonds & Debentures Less than 12 months Short Term Capital Gains
Listed Bonds & Debentures More than 12 months Long Term Capital Gains
Unlisted Bonds & Debentures Less than 36 months Short Term Capital Gains
Unlisted Bonds & Debentures More than 36 months Long Term Capital Gains

IFOS Income from Bonds & Debentures

Interest Income from Bonds and Debentures is taxable under the head ‘Income from Other Sources‘ i.e. IFOS. The Interest Income is taxed at slab rates. If the assessee has incurred an expense (like commission or fees or remuneration etc) to realize such Interest, it can be claimed as a deduction from the Interest Income.

Interest Income from Tax-free bonds is fully exempt. Tax-free bonds are the bonds issued by public undertakings like National Highway Authority of India, Rural Electrification Corporation, NTPC Limited and Indian Railways, Indian Renewable Energy Development Agency, Housing and Urban Development Corporation, Power Finance Corporation and Rural Electrification Limited.

Income Tax on Bonds & Debentures

Income Tax on Trading in Bonds & Debentures is similar to the tax treatment of other capital assets. Following are the income tax rates:

Income Tax on Sale of Bonds & Debentures

Type of Asset Capital Gains Tax Rate
Listed Bonds & Debentures Short Term Capital Gains Slab Rate
Listed Bonds & Debentures Long Term Capital Gains 10% without Indexation
Unlisted Bonds & Debentures Short Term Capital Gains Slab Rate
Unlisted Bonds & Debentures Long Term Capital Gains 20% without Indexation

Note: Assessee cannot take benefit of indexation for the Long Term Capital Gain (LTCG) on the sale of Bonds or Debentures. However, the indexation benefit is available on Capital Indexed Bonds (issued by the Government) and Sovereign Gold Bonds (issued by the RBI under the Sovereign Gold Bond Scheme, 2015).

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Income Tax on Other Income from Bonds & Debentures

Interest Income from Bonds & Debentures is taxed as per slab rates. Usually, the interest on bonds is taxable income. However, in the case of tax-free bonds, the interest income is exempt from tax.

An investor who invests in tax-free bonds should calculate the pre-tax yield before making the investment decision. To calculate the pre-tax yield, use this formula – ROI / (100-TR) * 100. (TR means Taxable Rate)

Example

Tax-Free Bonds has an interest rate of 5%. Let us assume that the investor falls in tax slab of 30%. Whether he/she invest in the tax-free bond?

Effective Tax Rate – 30% + 4% Cess = 31.2%
Calculate the pre-tax yield = 5% / (1-31.2%) = 7.16%

Thus, an investor who pays 31.2% tax, making an investment in a taxable bond with 7.16% interest is the same as investing in a tax-free bond with 5% interest.

Capital Gains Exemption under Section 54EC

An assessee who has sold Long Term Capital Asset like land or building or both can claim exemption by investing into NHAI or REC Bonds. The amount of exemption will be lower of:

  1. Cost of NHAI or REC Bonds
  2. Capital Gain on sale of land or building or both

ITR Form, Due Date and Tax Audit for Investors of Bonds & Debentures

  • ITR Form: Trader should file ITR-2 (ITR for Capital Gains Income) on Income Tax Website if income is treated as Capital Gains.
  • Due Date
    • Up to FY 2019-20
      31st July – for traders to whom Tax Audit is not applicable
      30th September – for traders to whom Tax Audit is applicable
    • FY 2020-21 Onwards
      31st July – for traders to whom Tax Audit is not applicable
      31st October – for traders to whom Tax Audit is applicable
FY 2019-20: Due Date to file Income Tax Return for both audit and non-audit cases has been extended to 30th November 2020
Tip
FY 2019-20: Due Date to file Income Tax Return for both audit and non-audit cases has been extended to 30th November 2020
  • Tax Audit: Since the income is treated as Capital Gains, the applicability of tax audit under Section 44AB need not be determined.

Carry Forward Loss from Sale of Bonds & Debentures

  • Short Term Capital Loss (STCL) can be set off against both Short Term Capital Gain (STCG) and Long Term Capital Gain (LTCG). Remaining loss can be carried forward for 8 years and set off against STCG and LTCG only.
  • Long Term Capital Loss (LTCL) can be set off against Long Term Capital Gain (LTCG) only. Remaining loss can be carried forward for 8 years and set off against LTCG only.

Example

For example, Mr. Rahul is a salaried individual and has invested in listed bonds and debentures in FY 2019-20. His total salary income for a year is INR 8,70,000. And has Short Term Capital Loss of Rs. 30000 and Long Term Capital Gain of INR 1,50,000.

Now in the above example, Rahul needs to file ITR-2 for FY 2019-20. And his total income and tax liability will be as follows:

Particulars Amount Amount
Salary Income   870000
Capital Gains    
Short Term Capital Loss 30000  
Long Term Capital Gain 150000  
Total Capital Gains after set-off of losses (taxed @10% without indexation)   120000
Total Taxable Income   990000
Tax at slab rate 86500  
Tax at special rate 12000  
Total Income Tax   98500
Health & Education Cess @4%   3940
Total Tax Liability   102440
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FAQs

How do I report income from sale of Bonds and Debentures in the Income Tax Return?

The investor should file ITR-2 and report income from the sale of Bonds and Debentures as Capital Gains.
– Listed Bonds & Debentures – Tax on LTCG is 10% without indexation and tax on STCG is as per slab rates.
– Unlisted Bonds & Debentures – Tax on LTCG is 20% without indexation and tax on STCG is as per slab rates.
The trader can set off LTCL with LTCG and STCL with both STCG and LTCG. The remaining loss can be carried forward for 8 years.

What is Income Tax on Capital Indexed Bonds issued by government and Sovereign Gold Bonds issued by RBI?

Tax on Interest on SGB Bond
It is taxable at slab rates under the head IFOS (Income from Other Sources). TDS on Interest is not applicable since they are government securities.

Tax Treatment on Sale or Redemption
A. Individual Investor
Capital Gain on Redemption of SG Bond by an individual investor is exempt from tax since the definition of transfer as per Section 47 of the Income Tax Act excludes such redemption.
If the individual investor transfers the SG Bond by selling it on the stock exchange, it is taxable as LTCG at the rate of 20% with indexation benefit.

B. Other Investors – The redemption or transfer of SG Bond in case of investors other than individuals is taxed at slab rates if STCG and at 20% with indexation benefit if LTCG.

Download Tax Profit and Loss report from HDFC Securities

HDFC Securities allows you to download your Profit and Loss Report online. It is the same as a Tax P&L report, and it is an essential document to calculate taxes on trading income. Traders have a “Trading Statement” that consists of a list of transactions undertaken by the person in various segments during a specific period. It consists of details such as:

  1. Date
  2. Time
  3. Script Name
  4. Purchase price
  5. Sale price
  6. Segment
  7. Quantity, etc.

These details then help determine the Income Tax on Trading.

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Steps to download Profit and Loss Report from HDFC Securities

  1. Log in to your HDFC Securities platform

    You can do it from here

  2. Click on Portfolio

    Next, choose Profit and Loss statement

  3. Select the Financial year, asset type and other necessary filters

    Click on Submit

  4. Click on the PDF button on the top right

    Now, your statement downloads

  5. The PDF will be downloaded on your PC

    Finally, this is what it will look like:

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FAQs

Is tax audit compulsory for F&O loss?

Tax Audit is required when the turnover of a taxpayer exceeds Rs. 1 cr in a particular Financial year. Additionally, it is also applicable if the net profit from such transactions is less than 6% / 8% of the turnover. Additionally, a tax Audit report can only be filed by a CA.

Is Trading Turnover same as Contract Turnover?

No. Contract Turnover is the sum of the purchase value and sales value. It is not considered for income tax purposes. Trading Turnover or Business Turnover is the absolute profit i.e. sum of positive and negative differences. Hence, this turnover is considered to determine the applicability of the tax audit and the applicable ITR form. Therefore, Trading Turnover is different from Contract Turnover.

How to download Ledger from HDFC Securities?

To download Ledger from HDFC Securities, Go to My reports > Ledger. You can view and download your ledger from there.

Download Tax Profit and Loss report from Axis Direct

Axis Direct allows you to download your Profit and Loss Report online. It is the same as a Tax P&L report, and it is an essential document to calculate taxes on trading income. Traders have a “Trading Statement” that consists of a list of transactions undertaken by the person in various segments during a specific period. It consists of details such as:

  1. Date
  2. Time
  3. Script Name
  4. Purchase price
  5. Sale price
  6. Segment
  7. Quantity, etc.

These details then help determine the Income Tax on Trading.

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Steps to download Profit and Loss Report from Axis Direct

  1. Log into your Axis Direct account

    You can do it here.

  2. Select Portfolio

    From your dashboard, under equity and derivatives

  3. Select Portfolio again

    Once the Portfolio site opens

  4. Select Reports

    Choose P&L statement

  5. Select necessary filters

    Click on Go

  6. Scroll down and click on the PDF or Excel button

    This is to to download the P&L statement

  7. The statement will be downloaded on your PC

    You can view it from there.

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Invested in Intraday?
Need to file your ITR? Let us help you out!
[Rated 4.8 stars by customers like you]

FAQs

Is tax audit compulsory for F&O loss?

Tax Audit is required when the turnover of a taxpayer exceeds Rs. 1 cr in a particular Financial year. It is also applicable if the net profit from such transactions is less than 6% / 8% of the turnover. Additionally, a tax Audit report can only be filed by a CA.

Is Trading Turnover same as Contract Turnover?

No. Contract Turnover is the sum of the purchase value and sales value. It is not considered for income tax purposes. Trading Turnover or Business Turnover is the absolute profit i.e. sum of positive and negative differences. This turnover is considered to determine the applicability of the tax audit and the applicable ITR form. Therefore, Trading Turnover is different from Contract Turnover.

How to download Ledger from Axis Direct?

To download Ledger from Axis Direct, Go to My reports > Ledger. You can view and download your ledger from there.

How to File ITR for ICICI Direct?

An ICICI Direct Trader has to file ITR based on the income they have from trading in equity, mutual funds, or derivatives. ICICI Direct provides a Tax P&L Report to all its traders aggregating the trading transactions done during the financial year. Using the Tax P&L Report, the trader can determine which ITR Form to file and also determine the applicability of the Tax Audit. If you are an ICICI Direct Trader and looking to file your ITR (Income Tax Return), you can refer to the detailed process below.

Tax P&L Statement Tabs Explained

ICICI Direct does not provide a consolidated Tax P&L Statement. Hence, you will have to manually download the tax statements for different segments. However, the information mentioned in these statements are explained below:

  • Trade Date – The date on which the trade was made
  • Exchange – An exchange gain or loss is caused by a change in the exchange rate used such as when an invoice is entered in at one rate and paid at another, this will generate an exchange gain or loss
  • Credit/Debit – Debit is an accounting entry that either increases an asset or expense account, or decreases a liability or equity account. It is positioned to the left in an accounting entry. Credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account
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Which ITR Form is Applicable for ICICI Direct?

To file ITR is an annual process for ICICI Direct traders. Based on the income situation, the taxpayer needs to file the prescribed ITR Form. The taxpayer should report incomes, calculate and pay taxes, claim TDS Credits, and request a refund for the overpayment of taxes while filing their ITR. The income tax department has notified ITR Forms based on different income situations. To know which ITR Form is applicable to you, use the below calculator. 

Check which ITR Form to file?
Income Tax Return Forms to file depends on your Income Source, Residential Status, and other financial situation. Know which ITR Form you should file.
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Check which ITR Form to file?
Income Tax Return Forms to file depends on your Income Source, Residential Status, and other financial situation. Know which ITR Form you should file.
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Taxpayers having income from trading need to file ITR-2 or ITR-3 based on the nature of income from trading. In the case of Capital Gains Income, file ITR-2 and in case of Business Income, file ITR-3.

Due Date for Filing ITR for ICICI Direct

Income Tax Return(ITR) filing is done after the completion of a financial year. Due dates for ITR filing are as per section 139 of the income tax act. Due dates for different category of taxpayers are as follows:

Category

Due Date

Individuals to whom audit is not applicable

31st July of the Assessment Year

Companies

30th September of the Assessment Year

Individuals to whom audit is applicable

30th September of the Assessment Year

Individuals/ HUF who are partners in a firm and firm’s accounts are subject to audit

30th September of the Assessment Year

The above due dates can be extended by the IT Department via order.

Tax Audit Applicability for ITR filing of ICICI Direct

Stock Traders trade in shares, securities, commodities and currency through online trading platforms. Income from trading in Equity Intraday, Equity F&O, Commodity Trading and Currency Trading is considered as a Business Income. Thus, it is important to determine the applicability of Tax Audit as per the provisions of Income Tax Act.

Check Tax Audit Applicability u/s 44AB
Check Income Tax Audit applicability u/s 44AB to file Tax Audit Report Form 3CB - 3CD with your Income Tax Return.
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Check Tax Audit Applicability u/s 44AB
Check Income Tax Audit applicability u/s 44AB to file Tax Audit Report Form 3CB - 3CD with your Income Tax Return.
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The limit for turnover under Section 44AB is Rs. 1 Cr. Under Budget 2020, the turnover limit under Section 44AB has been increased from Rs. 1 Cr to Rs. 5 Cr if the following conditions are satisfied:

  1. Cash Payments do not exceed 5% of the Total Payments in the financial year
    AND
  2. Cash Receipts do not exceed 5% of the Total Receipts in the financial year

Calculation of Trading Turnover

Any person having income from trading in shares and securities should report it as income from business and profession. To determine the applicability of Tax Audit as per the Income Tax Act, we should calculate Trading Turnover for such income. It is important to note that tax liability does not depend on Turnover. The trading turnover should be calculated only when the share trading income is considered as a business income and not when it is considered as capital gains income.

FAQs

How to download the Tax P&L Statement from the ICICI direct portal?

You can download the Tax P&L Statement from the ICICI Direct portal after logging into the portal and navigating through My Account > Statements > Consolidated Portfolio Statement from the dashboard.

Is Trading Turnover the same as Contract Turnover?

No. Trading Turnover is different than Contract Turnover.
Contract Turnover is the sum of the purchase value and sales value. It is not considered for income tax purposes. Trading Turnover or Business Turnover is the absolute profit i.e. sum of positive and negative differences. This turnover is considered to determine the applicability of the tax audit and the applicable ITR form.

I am a trader. Which ITR Form do I need to file for my Income Tax Return?

Taxpayers having income from trading need to file ITR-2 or ITR-3 based on the nature of income from trading. In the case of Capital Gains Income, file ITR-2 and in case of Business Income, file ITR-3.