New Delhi: The Central Board of Direct Taxes (CBDT) on Saturday clarified that there is no need to provide scrip-wise details of daily trading and short term sale and purchase of shares in the income tax return for FY 2019-20.
CBDT said the gain accruing from trading of shares in case of daily traders is usually categorised as short-term capital gains or business income.
The Board clarified that this is because their holding period of shares, in most cases, is less than a year, and it will only be categorised as long term gains if the holding period is more than a year.
“There is no requirement in the return of income for scrip wise reporting in case of short-term or business income arising from share transactions,” the Board said in a statement.
Scrip wise details in Income Tax Return forms
In 2018, the government allowed exemption on the gains made on the listed shares, specified units up to January 31, 2018. It was done by introducing a grandfathering mechanism under the Finance Act of 2018 for computation of long-term capital gains for these shares.
The CBDT clarified that the scrip-wise details in the ITR for AY 2020-21 is required to be filled up only for the reporting of the long-term capital gains for these shares and units which are eligible for the benefit of grandfathering.
Grandfathering is a mechanism which permits users to continue with some activity or business despite change in the rules.
The CBDT said capturing the scrip wise details for computing capital gains of these shares in the ITR form is necessary as grandfathering is allowed by comparing different values such as cost, sale price and market price of a share as on January 31, 2018.
The CBDT, which is the apex body to administer direct taxes in the country, says scrip wise details of those shares in the ITR forms are not required which are not eligible for grandfathering.
“Without this reporting requirement, there may be situations where taxpayers may not claim or wrongly claim the benefit of grandfathering due to lack of understanding of the provisions,” the CBDT said in a statement.
The CBDT said if a taxpayer, who wants to avail the benefit of grandfathering, does not fill the scrip wise details in his ITR form or gives total figures then it will not be possible for tax authorities to check the claims made in the income tax return (ITR) form.
The Board said if scrip wise long-term gain is available, it can be cross-verified by the income tax department with stock exchange, brokerage companies, etc and there will be no need to subject these income tax returns to further audits or scrutiny.
The Board said, in some countries, including the USA, taxpayers are required to provide scrip-wise information for reporting capital gains.
Read: How long will India be kept out of decision-making: PM Modi
