Scrip-wise details of listed shares sold by taxpayers are sought in the ITR (income tax return) for assessment year (AY) 2020-21 only for assessing the long term capital gains, which are eligible for a tax concession, Central Board of Direct Taxes (CBDT) said on Friday.
In 2018, the government had introduced a long-term capital gains tax on listed shares from 1 April that year but allowed relief on capital gains made till the end of January that year (called grandfathering). Those who sold listed shares need to report the transaction details for claiming the benefit of this concession, CBDT said in a statement.
“As the grandfathering is to be allowed by comparing different values (such as cost, sale price and market price as on 31 January 2018) for each share/units, there is a need to capture the scrip wise details for computing capital gains of these shares/units,” CBDT said. Such scrip wise details are not required in income tax return forms for AY 2020-21 in cases where the grandfathering concession is not eligible, CBDT said.
ITR-2 form, which individuals other than businessmen or professionals have to use, demands finer details of share sales such as international securities identification number (ISIN), share name, quantity, sale and purchase price as well as fair market value at the end of January 2018, in all cases. Taxpayers have time till the end of November to file tax returns for AY2020-21.
“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,” said CBDT. Also, if scrip-wise calculation is not made and the 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, the statement said.
It also said that these details will help the authorities to verify the genuineness of the claim which will avoid the need for audits or scrutiny.
“The main intent behind requiring scrip wise detail is to facilitate the taxpayer incorrectly computing the long-term capital gains on these shares/units,” the statement said, adding that reporting scrip-wise details for computing capital gains was a global practice.
The department also clarified that there was no such requirement in the case of short-term capital gains.