Query regarding short term capital gains (for shares)

Tax queries 845 views 6 replies

vishnu

SWE

30 Points Joined April 2009

Dear all,

I have a query regarding calculation of short term capital gains for shares.I googled a lot but couldnt get any clear explanation for the kind of scenario I am looking for. I am not an financial or accounting professional.

(Transactions for a share of company X between 1April 2007 - 31st March 2008)

October 1st 2007 - Bought 2000 shares of a company X for value Rs 100 each -

Total cost value - Rs 2,00,000

Feb 1st 2008 - Sold 1000 shares for the same company X at value Rs 50 each -

Total sale value - Rs 50,000

closing balance as on March 31st 2008 - 1000 shares of x = (can any one fil the closing balance please)

(Transactions for the same company X between 1April 2008 - 31st March 2009)

Opening value as on 1 April 2008 - 1000 shares of X = (can any one fil the opening balance please)

July 1st 2008 - Sold 1000 shares for the same company X at value Rs 30 each -

Total sale value - Rs 30,000

My Queries

1. How is tax calculated for both the years ?

2. This is how i thought tax is calculated. Is it right?

In financial year 2007-2008 I have lost Rs 50,000

In financial year 2008-2009 i have lost Rs 70,000

Is my calculation correct.?

3. Or should i calculate like this.

In financial year 2007- 2008 my closing balance for share X is 1000 shares at 1.50,000

Is it profit i have to show when i actually incurred loss.

In financial year 2008-2009 my closing balance for share X is 0 shares at loss of 1,20,000

So should i pay taxes fo financial year 2007-2008 when i actually got a loss ?

Please clarify in detail ?

Thanks and regards,

Vishnu.

Replies (6)

CA Anisha Ray

Service

289 Points Joined February 2009

Dear Vishnu,

Following will be the treatment:-

Purchase October 2007 - Sold on Feb 2008 - Holding Period of shares is less than one Year, so it is a Short Term Capital loss. U will show a loss of 30,000 in Books as well as in Tax.

Closing Stock will be continued to be valued at cost , i.e. 1000 Shares * 100 = Rs. 100,000/-

U sold the remaining shares on July 08 again holding period is less than 1 year from the date of Purchase, so it will be a short term capital loss of Rs. 70,000/-

Ur Second Option is correct.

Hope, Ur querry is answered.

Armaan

Student

181 Points Joined February 2009

Anisha ji has answered you rightly.

Further i would like to add if you have sold them through recognised stock exchange then the tax rate is 15% under sectiion otherwise the normal slab rate applicable to you.

Aditya Maheshwari

CA in Practice

35867 Points Joined June 2009

Anisha ji has answered you rightly except that

Purchase October 2007 - Sold on Feb 2008 - Holding Period of shares is less than one Year, so it is a Short Term Capital loss. U will show a loss of 50,000 and not Rs. 30,000 in Books as well as in Tax.