Clarification needed on Liquidbees taxation

Taxation
1

There are many posts with different question about Liquidbees Taxation. Since I am not able to understand, creating this new post.

The dividend received is captured in AIS statement as DIVIDEND income, whereas in Zerodha TAX PL, its also captured in STCG. so while filing ITR how to handle this case. please help.

For Example : I bought 1000 shares of LIQUIDBEES on 1st jan 2023 with a buy value of Rs.1000.
On 28-03-2023 , I sold the same with sell value of Rs.999.99, but the quantities are 1006.

In between the dividend received is added to the units . total dividend added in quantity are 6.890.

in AIS the dividend income is captured as 6890 + tax deducted and in Zerodha Tax PL , under STCG - 6890 as Profit.

Above are sample numbers.

Please clarify how to declare this while filing ITR. Do I need to remove STCG profit of LIQUIDBEES ?

2

Hi @nmuthu

When you receive a unit of Liquid BEES in the form of a dividend, it is taxed under Income from other sources. When you sell these units, the amount on which tax is already paid as a dividend is treated as the cost of acquisition, and gains are then taxed under Income from Capital gains. We don’t have to pay tax on the same income doubly.

Hope this helps.

3

i am novice for financial terms. if possible could you please share with some example how it works and how we need to declare the same in ITR.

I am following Zerodha Tax P&L. under this this is treated as STCG, whereas in AIS its captured as dividend income.

4

until the FY in context, Debt stcg is considered as income that will be added to other income and taxed at regular slabs instead of special slab like 10%, 15%, 20% etc and no indexation benefit
So dividend from Equity shares or LB dividend in that sense is the same just like interest from FD.

When your FD matures, we dont tax the principal, nor the interest. The FD maybe rolling over longer tenure but banks report yearly interest paid out anyway and TDS it too, which we consider as income rec’d for that FY.

In the case of LB,
for 1000 units, cost of acquisition is 10L@inr 1000/-
Now, you got 7 units, so cost of acquisition = 0

But the dividend in cash terms has been paid as 7000 and tds at 10% is 700, so you got 6300 in a/c.

You add 7000 to your income and do your taxes.

Now, for 1007 units your cost of acq has become 10,07,000/-
Even with FIFO method, first 1000 units cost at 1000, and next 7 units are now bought at 7000.

so next time you sell 1000 at 1000, effective gain is 0 so no tax when selling.
Again, when 7 are sold, cost of acq is 1000, sold at 1000 so net gain is 0.

in short, when you sell units, you dont need to worry about taxation in the future period.

5

Thank You Chirag. yeah understand now.

So all we need to consider is the Dividends which we received and documented in AIS.
I am not sure is there any gap in zerodha’s Tax P&L for LIQUIDBEES, which they are bringing it under STCG when there is no gains. will followup with them. Thank You.

6

So zerodha tax PL is showing cost of acquisition has 0 for the units received in the form of dividend?
No. This can’t be right. Then there is double taxation.
Since I have never sold liquidbees, I never got such a case.
@ShubhS9 can you please confirm as to how it’s shown in tax PL in console?

7

Check properly, there will not be the dividend being reported and the cost is marked up.
Infact each sell at inr. 0.01 can add some loss that is also shown.

@Jason_Castelino I dont think so, my trx’s both STCG/LTCG are calculated ok. I dont know about his case.
For all trades, net gain is approx 0. When we buy high/sell low by 1-2p lfor the fill, that loss also accumulates.

@ShubhS9 There is one problem though, tax PNL sheet 2021-22 STCG(and LTCG) have individual breakdown of the taxes in EQ sheet while 22-23 everything is 0.
@Jason_Castelino Do you see this?

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Not sure what you are referring to. Are you saying there was trade wise charges and taxes break up? From what I remember, they never provided it that way.

9

Yes, in tax pnl, under Equity sheet.

You can see closed trades, and all the breakup in the excel sheet. Values are all 0,
but if you download FY2021-22, they are there. GST / stamp duty / STT in STCG section

10

I guess No. under “Equity” - Short Term Trades in TAX P&L, for LIQUIDBEES, the Realized P&L is showing Dividend as Realized Profit in STCG.

Even checked it in “Tradewise Exits from 2022-04-01” first tab in the TAX P&L, the dividends Buy value is 0 and sell value is at dividend quantity received amount which then showing as a realized profit.

Not sure If I am missing anything.

my understanding is that, if this is the case Zerodha shouldn’t report this dividend gain as a Realised profit in STCG or LTCG . I have raised another query to zerodha to check any gap in TAX P&L for LIQUIDBEES. once I get a response, will update here.

11

Will get back to you on this, Jason.

12

We’re working on adding the charges. For now, if you need the details of scripwise charges, you can create a ticket at support.zerodha.com.

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14

Since the LIQUIDBEES are treated as Equity in Zerodha Tax P&L, we need to remove/correct the entry manually in TAX P&L. so that it will not get added to STCG or LTCG. otherwise we will end up in double taxation.

Got a confirmation from Zerodha in below thread :

Thank You.

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