NEW DELHI: In what comes as a relief to frequent stock traders, the Ministry of Finance has clarified that reports claiming that scrip-wise information would need to be filed in the Income Tax (I-T) returns for Assessment Year (AY) 2020-21 are “distorted and misleading”.
According to the ministry, there was no such requirement for traders who hold stock for less than one year, because the gains arising from such scrips are not classified as long term capital gains (LTCG).
“The gain from share trading in case of stock traders or day traders is generally categorised as short-term capital gains or business income... there is no requirement… for scrip wise reporting in (this) case”, an official statement pointed out.
The ministry also pointed out that scrip-wise information was necessary for those taking advantage of the exemption on LTCG introduced in the Finance Act 2018 for listed shares/specified units up to March 31, 2018.
It had also introduced a grandfathering mechanism for the computation of LTCG for these shares, for which scrip-wise information is necessary.
“The scrip wise details in the return of income for AY 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,” the ministry said. There is also no need for such information on shares which are “not eligible for grandfathering”, the ministry added.