STT Payment

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This query is : Resolved

Shrishailamallikarjun B K (Querist)

21 July 2008 Dear All,

STT Paid on Sale of Listed Securities(Shares)by an individual not being speculation business if it arises to short term capital gain STT paid on such sale of securities(shares)can we cliam as expenses incurred on sale of such shares.
And in the same way while of purchase of the same will STT paid added to the Purchase Cost of such purchases.

Please get me clear picture sicne if it is speculation business we can claim 88E Rebate up to A.Y 08-09. but if it is capital gain what will be the treatment of STT paid on such transaction.

Regards,

Mallikarjun

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)

21 July 2008 The cost of acquisition for the purpose of calculation of Capital Gains will be the gross value of purchase cost by including STT therein. Similarly, the sale consideration for the purpose of capital gains will be net of STT.

CA PRAMOD SARAOGI

CA PRAMOD SARAOGI (Expert)

21 July 2008 Speculative Transaction: - In a speculative transaction, the contract for sale or purchase is settled otherwise than by actual delivery or transfer of the commodity or scrips. The contract is squared up by paying out the differences which may be positive or negative. In such transactions, although the contract notes are issued for the full value of the purchased / sold scrip, the entries are made in the books of account only for the differences. The aggregate of both positive and negative differences is to be treated as “turnover” for section 44AB purposes. This view of ICAI does not appear to be the correct view – see Growmore Exports Ltd.v.Asstt.CIT [2001] 78 ITD 95/72 TTJ691 (Mum.).

Derivatives, futures and options: - In case of such transactions, the following shall be included in ‘turnover’ for section 44AB purposes: (i) total of favourable and unfavourable differences,(ii) premium received on sale of options; and (iii) difference in respect of reverse trades entered. Growmore Exports Ltd.v.Asstt.CIT [2001] 78 ITD 95/72 TTJ691 (Mum.).

Delivery based transactions: - In respect of delivery-based transactions (purchase/sale) of stock/any commodity, the total value of sales should be considered as turnover provided the stock/ commodity is held as stock-in-trade.

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