Can we use average cost of stock as cost of aquistion for LTCG Purpose in ITR

Hello Sir,

My father have made LTCG gain in FY 2020-21 by selling of Stocks. He has purchased those stocks in several years in small quantities. My question is how to provide script wise detail in ITR .

Can we use the average cost of each stock as Cost of acquistion and date of last purchase as date of purchase ? Will Income tax deptt verify the purchase cost with actual price of stock on that date ?

For Eg, he has purchased 100 shares of Reliance with last purchase of 10 shares in Jan 2019 , and sold all Hundred in Feb 2021 . Can I declare purchase date of all 100 shares as Jan 2019 and use average cost of 100 shares for LTCG calculation ?

Please advise

Hey @deepkalra

It is always suggested to report the actual scrip-wise data because there are benefits attached to it such as Indexation and Grandfathering. CBDT introduced the grandfathering rule to ensure that long term capital gains up to 31st January 2018 are not taxed. The grandfathering is allowed by comparing different values such as cost, sale price, and market price for each share/unit (as of January 31st, 2018). In this process, there is a need to capture the scrip-wise details for computing capital gains of these shares/units. You might save taxes on LTCG by claiming these benefits.

Hope this helps!

@Quicko hello Quicko. My question was can we use average purchase cost as of cost of aquistion for LTCG calculation for each script. For eg . I have purchased 100 shares of reliance in 10 times ( 10 share each time) at different prices and sold all 100 1 year after my last purchase .

Will I have to report 10 transactions with different purchase prices for single script or can I just use single average cost for all 100.

I hope you understand the question now

Hi @deepkalra,

In the case of LTCG, the FMV of shares as of 31.01.2018 is compared with the actual buy price. That is why it is always suggested to report all the transactions separately to calculate LTCG and taxes accurately. However, If the shares were purchased after 31.01.2018 you can use a single average cost for all the shares provided the capital gains amount is correctly calculated.

For section 112A of LTCG, I have this question. Could you kindly clarify?

  • I am not eligible for grandfathering because bought my first share in 2019
  • I have sold e.g. shares of 3 different companies (Reliance, HUL, Tata) in 2021 (LTCG because held more than 1 year)
  • Is it ok, if I just show the combined buy and sell value of these 3 different companies in one row of schedule 112A in ITR?
  • Or is it mandatory to show in 3 different rows for each company shares?

Your timely response would be much appreciated.

As you can see from this image of Schedule 112A, you have to fill in the ISIN code of the scrip in each row. Since each company has a different ISIN, you won’t be able to combine the three companies’ information into one row of this schedule.

No. After 2018 cut off date we can combine everything in one row.
The new portal does not ask any isin information if you choose after 2018 option.

So please sum it up all and mention in one row.

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Indeed. The instructions for filling ITR2 this year mention this exemption (search for 112A). What I said earlier is outdated information from last year.

@ZeroIndian @ksksat Thanks

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