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Filing LTCG on stocks in income tax returns to be tricky

The ITR form allows only consolidated figures instead of reporting each transaction separately.

, ET Bureau|
Jun 13, 2019, 09.30 AM IST
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Experts are saying that the income tax department may rectify this error before the tax filing starts.
Getting ready to file your tax returns? If you sold multiple equity investments during 2018-19, you might face trouble reporting long term capital gains (LTCG). The ITR form allows only consolidated figures instead of reporting each transaction separately. Filing aggregate values could result in mistakes because, unlike other assets like real estate, gold and debt investments, calculating the LTCG on equity investments is slightly more complex due to the grandfathering clause.

For all other assets, including STCG (short term capital gains) on equity, the ITR form auto-calculates the capital gains on the basis of the purchase price and the selling price keyed in by the assessee. In the case of LTCG on stocks and equity funds, the cost of acquisition (purchase price) has to be determined on the basis of the fair market value (FMV) and the actual purchase price of the stock, followed by the capital gains.

There won’t be a problem if you sold just one stock because you can directly key in the values from the capital gains statement. But if you have sold multiple stocks, FMV and selling price of each stock will be different. “In a scenario where the FMV is more than the purchase price of a few stocks, whereas less than the purchase price for other stocks, consolidated figures could result in mistakes in calculations,” says Karan Batra, a Delhi-based chartered accountant.

This lacuna exists only in the section meant for filing LTCG on equity. For STCG on equity investments, one can separately fill details of each transaction if more than one stock is sold. The same is the case with reporting STCG and LTCG on immovable property as well. LTCG on bonds and debentures requires consolidated figures but there is no scope for error as the calculations are simply based on the selling price and the original purchase price of the unit sold.

Experts are saying that the income tax department may rectify this error before the tax filing starts. “Tax filers should not rush as the ITR-2 form will most likely be changed. In place of consolidated figures, individual script comparison method might be introduced,” says Batra.
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