The income tax department has clarified that scrip-wise details of sale and purchase of shares are required to be filled in the income tax returns for 2020-21 assessment year (AY) only by those who opted for exemption of long term capital gains tax.
It completely denied reports that stock or day traders are required to furnish scrip wise details in the return of income for the assessment year (AY) 2020-21.
The exemption cited above was allowed under the grandfathering clause of the Finance Act, 2018 to the gains made on listed shares up to January 31 2018. Grandfathering refers to an exemption that allows persons or entities to continue with activities or operations that were approved before the implementation of new rules.
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The Budget for 2018-19 had imposed a tax of 10 per cent on long term capital gains exceeding Rs one lakh.
The Central Board of Direct Taxes (CBDT) clarified that the scrip-wise details in the return of income for the assessment year 2020-21 is required to be filled up only for the reporting of the long-term capital gains for these shares/units which are eligible for the benefit of grandfathering.
As the grandfathering is to be allowed by comparing different values (such as cost, sale price and market price as on 31.01.2018) for each share/unit, there is a need to capture the scrip wise details for computing capital gains of these shares/units, it said.
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.
Also, if the above calculation is not made scrip wise and taxpayer is allowed to enter the total figures only, there will be no way for the income tax authorities to check the correctness of the claim and therefore many returns will require to be audited, which may lead to unnecessary grievances/rectifications at a later stage, CBDT said.
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