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Calculation of capital gain tax on sale of shares

Sanket (individual) (25 Points)

09 March 2014

I need a guidance on following scenario.

I have bought 100 shares of company 'X' in December 2013 at the rate of Rs. 100 .

I bough 100 more shares of company 'X' in Januraty 2014 at the rate of Rs. 110

I sold 100 shares of Company 'X' in February 2014 at the rate of Rs. 125. I am still holding on 100 shares of Company 'X'. For calculating short term tax, can I consider sale of shares aginst 100 shares bought in Januray 2014 at the rate if Rs. 110 or I must consider the sale against 100 shares bought in December 2013 at the rate of Rs.100? Or Is it upto investor to consider sale of shares against any lot of availabe shares?

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3 Replies

SURESHAN K (Auditor) (189 Points)
Replied 09 March 2014

FIFO method(Fist-in-First-Out) to be adopted for determining cost of acquisition and period of holding. Relevant section is extracted below:

Section 45(2A) Where any person has had at any time during previous year any beneficial interest in any securities, then, any profits or gains arising from transfer made by the depository or participant of such beneficial interest in respect of securities shall be chargeable to income-tax as the income of the beneficial owner of the previous year in which such transfer took place and shall not be regarded as income of the depository who is deemed to be the registered owner of securities by virtue of sub-section (1) of section 10 of the Depositories Act, 1996, and for the purposes of—

(i) section 48; and

(ii) proviso to clause (42A) of section 2,

the cost of acquisition and the period of holding of any securities shall be determined on the basis of the first-in-first-out method.

Sanket (individual) (25 Points)
Replied 09 March 2014

Originally posted by : SURESHAN K
	FIFO method(Fist-in-First-Out) to be adopted for determining cost of acquisition and period of holding. Relevant section is extracted below: Section 45(2A) Where any person has had at any time during previous year any beneficial interest in any securities, then, any profits or gains arising from transfer made by the depository or participant of such beneficial interest in respect of securities shall be chargeable to income-tax as the income of the beneficial owner of the previous year in which such transfer took place and shall not be regarded as income of the depository who is deemed to be the registered owner of securities by virtue of sub-section (1) of section 10 of the Depositories Act, 1996, and for the purposes of— (i) section 48; and (ii) proviso to clause (42A) of section 2, the cost of acquisition and the period of holding of any securities shall be determined on the basis of the first-in-first-out method.