Capital Gain Calculations for Shares (Stocks)

MProfit automatically creates capital gains reports after users import digital contract notes of stocks or manually enter buy/sell transactions. These include Intra-day Profit/Loss, Short Term Capital Gains and Long Term Capital Gains reports. Advanced reports showing unrealised capital gains as well as the holding periods for stocks are also available in MProfit and they help investors learn what their capital gains liabilities are before deciding to sell their shares. MProfit does have an advanced feature to allocate charges to the purchase value and sale value of each stock in contract notes and this reduces the capital gains tax liability for the investor.

Below is a detailed explanation about how MProfit handles these capital gains calculations.

  • MProfit follows the First In First Out (FIFO) method when computing capital gains
  • Buy and sell transactions of the same stock in the same contract note of the same date are considered as intra-day transactions
  • A capital gain/loss will be characterized as short term if the stocks are sold within one year from the date of purchase and long term if the stocks are sold after one year from the date of purchase

In addition, MProfit also adjusts capital gains calculations for corporate actions including Bonuses, Splits, Mergers and De-mergers for any stock. Capital gain calculations are adjusted automatically based on these corporate actions in accordance with the income tax rules effective on the date of the action.

Please read below for detailed information about how MProfit handles long term and short term capital gains calculations following each corporate action.

Bonus:

  • The new bonus shares are considered to be purchased at zero value and the effective date of the bonus is treated as the purchase date for capital gains calculations
  • The old shares are treated as the same value as they were before bonus, with no change in purchase price or date
  • Upon sale of shares of this company, first the previously held shares are sold in accordance with the FIFO method and only then are the bonus shares sold
  • If bonus shares are sold within one year of receiving the bonus, the gain/loss is treated as a short term capital gain

Split:

  • A split only leads to a change of the purchase price for capital gains calculations while the date of purchase remains the same
  • The new adjusted price will be used in capital gains calculations and is displayed in the capital gains reports as well as the closing balance report

Merger:

  • The new merged company will retain the old purchase date of the original company and the purchase price will be adjusted based on the merger ratio

De-merger:

  • The effective date of purchase for the new company will be the same as the original purchase date for the parent company from the perspective of capital gains calculations
  • The purchase price for each new company will be automatically adjusted in capital gains reports as per the allocated amount for each company following the de-merger

Comments

  1. vipul mehta says:

    CAN YOU SEND SOME DATA REGARDING THE SOFTWARE ?

    HOW TO IMPORT DATA FROM JAINAM SHARE CONSULTANTS ?

    I CAN GET PDF CONTRACT FROM THEIR WEB SITE ?

    CAN YOUR SOFTWARE WORK OUT PROFIT/LOSS REGARDING IT PURPOSE ?

    HOW MUCH IT WILL COST TO ME IF I WANT TO PURCHASE IT, OR USING IT ONLINE IN FUTURE ?

  2. You can import PDF or HTML contract notes of your broker. MProfit will provide various reports including profit/loss and capital gains reports
    The basic version starts from Rs.2500/- per year.
    Please send your contact number to support@mprofit.in so that we can call you and give you online demo
    Download free 30 day trial verison from our site http://www.mprofit.in/download/

  3. Does the software handle F&O transactions also. If yes, how?

  4. Yes, with MProfit Pro version, you can manage your F&O transactions. You can import digital contract notes of F&O transactions sent by your broker.
    Send an email to support@mprofit.in with your contact number so that our support team can call you and give you all information.

  5. Am interested in F&O and Intra day stock transaction highlights

  6. Please email your contact number to support@mprofit.in Our support team will call and provide information and demo

  7. Amar Vissamsetty says:

    Can you provide solution for off market purchase of locked in shares that are held in DP A/c with broker ?

  8. The separate capital gain report is not available for off-market transactions. It is included in the capital gains report.
    One option is to create separate portfolio for off-market transactions if you don’t want to include them in the same capital gain report.
    This may help. Do let us know if you want more information

  9. Manish N says:

    How one can have full capital gain report for last 3 years including FNO transactions and cash transactions,as you suggest to Import digital contract note,How one can update transaction of previous years.Is there any other alternative.. I am myself an Business Partner with an broker and intend to get reports of multiple clients of mine.
    My main issue is I cant get contract notes for Import for all clients.

  10. There are couple of options to upload past data in MProfit. You can request back-office file from the broker, which can be imported in MProfit
    If you have saved your past transactions in excel file, you can copy the same in MProfit sample file and import. We support import from backoffice files for many brokers. Evenif your broker is not listed, we can provide support for importing digital contract note or back-office file in MProfit in 2-3 days. Do send your contact number at support@mprofit.in and our support team can contact you

  11. HOW MUCH CAPITAL GAIN ON NEW IPO LISTING GAIN PROFIT?????

  12. If you sell thruough any exchange with STT paid within one year, it will be treated as short term capital gain with tax rate of 15%, if you sell after 1 year, it will treated as long term and there will not be any tax on it

  13. I can understand that the charges for 1 year is Rs.2500. But what i want to know whether you will give us the software or we would be giving the transaction details to you all the time? Also you need to have a net connection all the time or how it works? or is it like you given us the software but will be providing back office support in case of any doubt or difficulty ? Thanks

  14. MProfit is a desktop portfolio management & accounting software. Download a free version from our site http://www.mprofit.in
    Click here to see our video tutorials
    http://support.mprofit.in/forums/videos/
    If you need any additional help, call us at 022-40024149 or email us at support@mprofit.in

  15. Hiren3010 says:

    Dear Sir,

    I am using the Mprofit Investor Software since last few months. And I have found it extremely useful for managing my Investments.

    I want to draw your attention to an anomaly regarding Tax Implications/Calculations I have observed and hence writing you this email. Please correct me, if I am wrong.

    Here is the real example to explain the matter:
    Description:
    I have Kotak Securities and RKSV Securities Demat account in my name.
    I have bought 3600 shares of Future Consumer in the year of 2011 @ Rs.10 in Kotak Securities Ac
    Further I have bought 500 shares of Future Consumer in the year of 2016 @ Rs. 27 in RKSV Securities Ac
    I have sold the 500 shares of Future Consumer from RKSV Securities Ac @ 30 in 2017

    Anomaly:
    When I see the Capital Gain report or any other report for computing the profit/loss, it is showing that Future Consumer scrip bought @ Rs.10 (which was bought in Kotak Securities Ac) has been sold though the transaction is done from the RKSV Securities Ac.

    Basis:
    Please refer http://www.incometaxindia.gov.in/Communications/Circular/910110000000000355.htm, in which it is clearly clarified at Point no.5(b) that FIFO (First In First Out) method to be applied account wise when the Investor holds multiple demat account.

    Regards,

  16. Dear Hiren,

    Thank you for your kind words and we are happy that you find MProfit useful.

    Your viewpoint is absolutely correct that capital gain calculations should be done demat account-wise. We do have many clients who manage demat-wise capital gains using MProfit.

    There is no anomaly in MProfit. There are two ways to manage investment in MProfit. One is at global level (all brokers under one portfolio) and the other is managing each broker’s account separately. Most of the long-term investors would prefer to manage all brokers in one portfolio and those who trade frequently with multiple brokers, they do manage broker-wise portfolios in MProfit.

    Create each portfolio broker-wise to view consolidated view to get demat-account wise capital gains. To view the consolidated view of all broker-wise portfolios, you can create group of such portfolios. Here are some links on MProfit forum which explains the same query.
    http://support.mprofit.in/threads/can-i-get-broker-wise-capital-gains-report.190/#post-215
    http://support.mprofit.in/threads/cap-gains-and-multiple-broking-accounts.80/#post-83

  17. Sir, I have ITC shares purchased in 2005, If I sell now, do I have to pay capital gains tax.
    Most of the shares are more 5 to 10 years old. Please advise

  18. Dear M Sekar,

    If you sell your stocks through any stock exchange and if STT is paid, your capital gain will be long term in nature because your holding period is more than 1 year.
    You will not have to pay any capital gain tax

Speak Your Mind

*