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Tax Liability on Joint Trading Accounts

Rizzo (Employed) (24 Points)

29 April 2010

Hi All,

Can someone let me know, how to treat the Income Tax liability on the Income from Trading in Listed Shares, Futures & Options. My 2 friends are having a Joint Trading & Demat Account with a broker, in which they trade in the stock markets.

But in the contract notes only First Holder Name would appear, in that case its only First Holder liable to pay tax or both?

Thanks

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7 Replies

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 29 April 2010

Yes the person in whose name contract note is generated and whose PAN is shown in the contract note should show the income. Also this is a very strange case where persons are having joint trading account as people have joint bank account, joint demat account, etc but not joint trading account

sudhir rawal (B.COM/PCC/ARTICLE/'O'LEVEL) (314 Points)
Replied 29 April 2010

in your case one demat cannot be having two holder at one time thier must be one nominee in your this query

and

when the all the income is in the name of first holder then the first holder will liable to pay tax

Aditya Khaitan (Manager Accounts & Tax) (40 Points)
Replied 30 April 2010

Originally posted by : sudhir rawal
	in your case one demat cannot be having two holder at one time thier must be one nominee in your this query and when the all the income is in the name of first holder then the first holder will liable to pay tax

I agree with Mr. Sudhir.....

1 Like

prm.. (Individual) (95 Points)
Replied 06 February 2011

I have read somewhere that income from joint trading is treated as income of BOI, body of individuals, don't know whether I am right or wrong. But then if I want to do trading in joint with some one whats the process??

how can I do trading by forming a BOI ?( body of individuals

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 06 February 2011

joint accounts means nothing but normal accounts, 1st holder is sole, and balance are-co owners,

all profits and gains / taxes are routed to 1st holder only.

for BOI/AOP/Partnership accounts, one have to apply fresh pan in pattern of execution, and open account accordingly.

1 Like

prm.. (Individual) (95 Points)
Replied 06 February 2011

"For BOI/AOP/Partnership accounts, one have to apply fresh pan in pattern of execution, and open account accordingly"

Please tell me the process to apply PAN and once I receive PAN , how to tell broker that we want to open account in name of AOP. Further demat will be opened in name of AOP or individual ??

I spoke to brokers but they are not having enough knowledge for the same and even their account opening forms dont have such facility.