capital gain

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khushboo nangalia (Querist)

10 June 2009 Whether service tax paid, STT paid, transaction charges, stamp duty etc paid on purchase and sale of shares will be added to the cost or reduced from sale consideration at the time of calculation of capital gain. Further if these are not allowed as deduction from capital gain then whether the same will be allowed under Business income or not

CA Devin

CA Devin (Expert)

10 June 2009 STT, stamp duty etc. wii neither be added to the cost nor they will be deducted from the sale. It should be shown separately in P&L A/c.

These expenses will be disallowed if you are showing these shares as investment. If you are showing shares as Stock-in-trade than these expenses will be allowed under business & profession, otherwise it will be disallowed

Ratan Sharma

Ratan Sharma (Expert)

10 June 2009 Hi Khushboo, Expenses which are directly attributable to the purchase of shares can be added to purchase cost and expenses which are directly attributable to sales can be reduced from sale price of shares. If you have incurred service tax etc. due to the purchase of shares can be added to the purchase cost for the purpose of computation of capital gain. Sec. 48(1) specify that the expenditure incurred wholly and exclusively in connection with such transfer shall be deducted from the sale price.

Radheyshyam Falod

Radheyshyam Falod (Expert)

10 June 2009 All service tax paid, transaction charges, stamp duty etc paid on purchase and sale of shares will be added to the cost or reduced from sale consideration at the time of calculation of capital gain except STT paid. STT paid to not allowed for the purpose of calculation of capital gains.

If you show shares are held as stock in trade then all the above expenses including STT (w. e. f. 01.04.2008) will be allowed as a deduction for the purpose of computing business income.

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