Capital gain calculation if I hold the same share in 2 different accounts

Taxation
1

I have a doubt regarding capital gain calculation.
I have demat accounts with 2 different brokers having 2 demat accounts
I bought a 100 shares of company A 2 years back with first broker.
Then I bought 200 shares of the same company with second broker 6 months back.
If I now sell 100 shares which I am holding at the second broker, what sort of capital gain tax should I pay?
STCG, as the holding with the selling broker is only 6 months old?
LTCG, as the shares bought with first broker is to considered first as per FIFO rule?

2

@Shaj_Mohamed : based on Pan no it will be FIFO irrespective of broker or demat accounts.

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3

Following. Interesting question!

4

Thanks for reply
Any reference you have?

5

There isn’t a set rule on this.

FIFO demat account wise can be done. @TAXIQ.IN ?

6

Scenario 1: You can choose to classify one demat account for investments and another for holding stock for your share trading business.

In this case, gains/losses from your investment account will be of capital nature and from your business stock account will be in the nature of business profit/loss.

Scenario 2: Alternatively, you can maintain both demat accounts as investment accounts.

a.In this case FIFO applies and you’ve made LTCG on shares bought with the first broker.
b.If you choose to apply FIFO independently in both investment demat accounts and are following it on a consistent basis while accounting for your capital gains then you can defend your treatment in case the IT department scrutinizes your books in any given year.

2.a. would be the fair treatment. however, 2.b. is defendable if consistently followed.

Check with your accountant for details. Cheers.

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(2A) Where any person has had at any time during previous year any beneficial interest in any securities, then, any profits or gains arising from transfer made by the depository or participant of such beneficial interest in respect of securities shall be chargeable to income-tax as the income of the beneficial owner of the previous year in which such transfer took place and shall not be regarded as income of the depository who is deemed to be the registered owner of securities by virtue of sub-section (1) of section 10 of the Depositories Act, 1996, and for the purposes of—

(i) [section 48](javascript:ShowMainContent(‘Act’, ‘CMSID’, ‘102120000000074965’, ‘’);); and

(ii) proviso to clause (42A) of [section 2](javascript:ShowMainContent(‘Act’, ‘CMSID’, ‘102120000000075598’, ‘’);),

the cost of acquisition and the period of holding of any securities shall be determined on the basis of the first-in-first-out method.

Explanation.—For the purposes of this sub-section, the expressions “beneficial owner”, “depository” and “security” shall have the meanings respectively assigned to them in clauses (a), (e) and (l) of sub-section (1) of section 2 of the Depositories Act, 1996.

The above section mentions that any profits or gains arising from transfer made by the depository or participant of such beneficial interest in respect of securities means FIFO has to be DP wise only. So irrespective of share you buy from or sell from any broker capital gain and period of holding should considered on FIFO basis from DEMAT.

8

FIFO applies account wise. i.e. shares bought in account 1 cannot be considered as sellable in account 2. The circular by IT department describes this clearly.
https://incometaxindia.gov.in/communications/circular/910110000000000355.htm

Item 5b in the above circular says
" In the depository system, the investor can open and hold multiple accounts. In such a case, where an investor has more than one security account, FIFO method will be applied accountwise. This is because in case where a particular account of an investor is debited for sale of securities, the securities lying in his other account cannot be construed to have been sold as they continue to remain in that account."

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