Accounting treatment of Share purchases and GST

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This discussion clarifies the accounting treatment for purchasing and selling shares of listed companies. It explains that all expenses, including brokerage, stock exchange charges, and GST, should be included in the cost of shares for capital gains calculations. The method of recording these costs may differ depending on whether share trading is treated as an investment or a business activity.

Manoj Kumar Bora

Manoj Kumar Bora (Querist)
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28 September 2020 Dear Sir, When we purchase and sales of shares of listed company from brokers. Brokers issue a contract notes/bill for purchase/sales of shares. In this contract note included name of company, rate of shares & net purchase/sales amount and brokerage & expenses of stock exchanges/transaction charges such as STT, Turnover charges, sebi charges & GST Exps. My query is what is accounting treatment as per income tax & how to pass the entry in accounts. The cost included in purchase of stocks, brokerage & expenses of stock exchanges/transaction charges such as STT, Turnover charges, sebi charges & GST Exps or only stocks purchase Exps. Please explain in above issue. Thanks & Regards

Manoj

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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28 September 2020 The cost included in purchase of stocks, brokerage & expenses of stock exchanges/transaction charges such as STT, Turnover charges, sebi charges & GST Exps.
While calculation of capital gains on sale all these expenses are considered as cost.

CA PARTH SHAH

CA PARTH SHAH (Expert)
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12 October 2020 It all depends on how are you treating the transaction.

If you will show capital gains in ITR, you should value you stocks inclusive of brokerage & GST.

If you will show trading of shares as your business, then pass entries of brokerages and other cost seperately in tally.

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