Selling Stocks without un-pledging

[ShubhS9]

@pankushri

I have been doing this for quite sometime now, just wanted to check if there is any catch.
Below is the steps i follow.

Intent is to keep for long term (5years)

1. Buy stocks say , 100 share of rs 100 each 100 *100 =10,000
2. Pledge 100 share

3.Hold stock for more than a year, hence LTCG , consider after a year stock trading at 140
4. Buy another 100 share for 140 rs

5. Next day sell 100 share.

Now based on first come basis my 1 year old stocks will be sold, and new 100 shares will be added.

Made profit of 40 rs per share, as long term capital gain

I do not need to unpledge before selling. Also no need to pledge after buying next 100 shares.

Is there anything i am missing ?

FIFO (First In First Out) method is followed for purpose of accounting and computing P&L. So when you sell shares, the shares that are not pledged will be debited from your holdings, and the shares that are pledged will have an average price of Rs. 140.

You don’t have to unpledge the shares or pledge them again in this scenario. Would suggest you check out this thread: Sell a pledged scrip - #4 by Nakul