Dear Sir
We are registered in GST main business is grocery. during purchase and sale of share we have paid some expenses so suggest can we charge under capital account. During sale of stock profit charges under STCG ( capital account)
please suggest.
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Stock Buy Sale expense
Replies (1)
| Since the main business is grocery and share trading is not the primary business activity, here is the correct treatment: 1. Expenses on Share Purchase/Sale: Brokerage, STT, exchange transaction charges etc. paid on buying shares should be added to the cost of acquisition. Expenses paid on selling shares should be deducted from sale proceeds in capital gains computation. 2. Capital Gains Treatment: If shares are held as investments (not as stock-in-trade), profit on sale = Capital Gain. If held for less than 12 months: Short-Term Capital Gain (STCG) — taxable at 20% (as per Finance Act 2024 amendment) if on listed shares with STT paid. If held for more than 12 months: Long-Term Capital Gain (LTCG) — taxable at 12.5% above Rs. 1.25 lakh exemption (post Budget 2024 rules). 3. Stock-in-Trade vs Investment: If you are actively and regularly buying/selling shares with intent to profit, the IT officer may reclassify it as business income (not capital gain). Grocery + share trading should be maintained as a separate schedule in ITR-3 and the income head should be consistently maintained. 4. Accounting Entry: Shares purchased → debit Investments A/c (not trading account). Profit on sale → credit Capital Gains (shown separately from business P&L). Expenses → capital gains computation. 5. GST: Share trading by an individual/non-financial entity is exempt from GST — no GST output on share transaction profits. |
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