Joint account taxation

General
1

Can we open a joint demat account where two investors investing different quantum of money say 10 and 15l for trading purpose? What happens to taxation for each individuals ? Is it double taxed. Need clarification

2

The Taxation will apply for the individual trading account to whom profit will transfer after selling shares or investment.

Example suppose A has trading and demat account, B also has trading account and connected to A’s Demat as (joint account) , either A or B invest some shares it will transferred to that demat,

As Taxation will be on Profit, once A or B sells investment the amount will get transferred, suppose A sells investment the profit will get transferred to A’s Trading account and he will only be applicable for taxation.

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3

So when A pays tax what happens to his portion of profit? Is it double taxed?

4

NO normal tax…

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5

Similar query:

I and my wife have a joint trading account with Zerodha, with the wife being the first holder and me being the second holder. Now if I transfer an amount into this trading account from my account first problem is that I have to move the amount to the account linked with my trading account ( that is the wife’s account) then I have to add funds from this bank account.

So in such a case-

  1. What will be the tax implication?
  2. Would my wife have to pay the tax on the amount I transfer into her bank account?
  3. Who would be liable to pay the tax on the profits?
  4. And can I invest in ELSS funds and take the deduction benefits?

Thanks!

6

Hi Parul,

Since the wife is the first holder, the trading account is the name of your wife, the profits generated will be by her,
so the taxes will have to be paid by her as per the tax slab she falls in. Invest in tax saver mutual funds/ELSS the benefit will be for the first/sole holder only.

Thanks,
Lindo

7

As per AlgoGeek’s post above it seems to be that the tax will be liable in whose account the profits are transferred. So whenever I do make the withdrawal of funds (from the trading account to the linked bank account and from there into my bank account) the tax should be liability should be on me for the profits hence made.

Can someone clear this out?

8

Hi Parul,

Since the trading account is in the name of your wife, the profit is generated in an account with her PAN, the profit will be generated by her and she is liable to pay taxes, this is what he meant. Only the Demat account will be a joint account, the shares/ holdings will be in joint names.

Cheers,
Lindo

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