Recently started positional trading and facing a silly!! challenge. I am not sure everyone faces the same?
Say as investor I own 10 shares of Infy bought at various dates - 1 Jan 2015, 1 Jan 2016, 1 Jan 2020. I want to keep these 10 shares for next 10 years.
Now I see a position trading opportunity to buy 2 shares of Infy and sell those 2 shares only for a 10% gain in 2 months.
How do I manage the profit/loss report considering::
Shares are sold on FIFO basis?
I do not want to keep the P&L report for 10 years.
Is it possible to sell the last set/order of shares rather then the one from 1 Jan 2015?
I hope I have been able to explain the issue.
Regards
Humsa
If you want to achieve this while only having a single Demat account, then an idea that I can think of accomplishing this is by converting your initially bought shares into physical form. This is a very roundabout way for doing what you desire (aka sell the last set/order of shares) and involves a lot of overhead costs (Rs 150 per certificate + Rs 100 courier charges for the re-materialization request) and isn’t very efficient (as transfer of securities in physical mode is no longer allowed and they will have to mandatorily be dematerialized if one wants to sell).
A simpler way would be as suggested in the above answer (aka having multiple demat accounts) as that is allowed by law as well ( Circular : No. 768, dated 24-6-1998) -
When actually operating an account of dematerialised stock by applying FIFO system, certain other issues can arise. For instance, an investor can hold part of his holdings of a security in physical form and the remaining in dematerialised form. Further, he may hold his dematerialised holdings in more than one account with one or more depositories. In such a situation, there can be doubts whether the FIFO system is to be applied globally on the entire holdings of physical and dematerialised holdings or not. In this connection, it is clarified that :
(a) FIFO method will be applied only in respect of the dematerialised holdings because in case of sale of dematerialised securities, the securities held in physical form cannot be construed to have been sold as they continue to remain in possesÂsion of the investor and are identified separately.
(b) 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.
(c) If in an existing account of dematerialised stock, old physical stock is dematerialised and entered at a later date, under the FIFO method, the basis for determining the movement out of the account is the date of entry into the account.
Everyone does face the same, though I wouldn’t consider keeping records (especially now that they are all electronic — this was not the case when I started buying shares, all those records are just on paper!) such a difficult thing.
A more serious issue that you will face, and one which is peculiar to Zerodha’s way of reporting transactions, is the issue of untangling STT amounts paid per trade. I have described this issue in this other comment. If you do positional trades with Zerodha where LTCG is involved, then this is going to be a real pain when reporting your taxes in the year of sale.
(Which is why @Prayag qualified it as impractical.)
By the way, @Hum_Sa , even if you do one of these things (have a different demat account, or go via the paper route) you will still be required to keep the records for your original purchases for reporting taxes when you sell those original shares 10 years later. And this is the case even if, in some magical (and currently non-existent) way, you are able to just sell the most recent two shares that you bought.