Kindly let me know with suitable examples whether brokerage, GST, STT and other charges are to be included/excluded in/from purchase/sale price of equity shares for computing capital gain (for shares both purchased before and after 31/01/2018). What is the purchase price for bonus shares for computation of capital gain? Note all these are non-speculative income.

Arun Bhowmik

As per the provision of section 48 of the Income-tax Act, 1961 (Act), following are eligible to be deducted from the full value of the consideration received to compute capital gains: a) expenditure incurred wholly and exclusively in connection with such transfer; b) cost of acquisition of the asset and the cost of any improvement thereto. Based on the above, cost of acquisition may include amount of brokerage, GST, and other charges incurred specifically in relation to such purchase of such capital assets. Similarly, any expenditure incurred wholly and exclusively in connection with the transfer of asset is also deductible from the full value of sale consideration to arrive at net sales consideration. However, as per proviso to section 48 of the Act, deduction in respect of any Securities Transaction Tax (STT) is not allowed while computing capital gains. Accordingly, brokerage, GST, and other charges paid while acquiring the capital asset can be included in the cost of asset and also deductible from the sale consideration if incurred at the time of sale of such asset. Any STT paid at time of acquisition or at time of sale is not included in cost/ deductible from the same consideration.


Sale price = (100*250) = ₹25,000; Less: Purchase Price = (100*200) + (100*200) * 0.01% + 40 = ₹20,042; Less: Expenses exclusively in relation to transfer = (₹25000*0.01%) + ₹40 = ₹42.5. Hence, net capital gains = ₹4915.5

Bonus shares: As per the provisions of section 55 of the Act, where an individual is allotted any additional financial asset without any payment (i.e. bonus shares), cost of acquisition shall be computed: a) If such shares were allotted before April 1, 2001: cost to the assessee or the Fair Market Value (FMV), as prescribed, of the asset on the April 1, 2001, at the option of the assessee; b) In any other case: nil

Accordingly, for the purpose of calculating capital gains, the cost of acquisition for the bonus shares would be considered as FMV (as prescribed) if allotted prior to April 1, 2001 and nil if allotted post April 1, 2001.

The writer is a practising chartered accountant

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