Please revisit the logic used to generate the Verified P&L report.
Consider the following sequence:
Transferred-in shares: Reliance Industries — Qty 500 at time T1
T2: Sell 100 @ 1225
T3: Sell 100 @ 1275
T4: Buy 50 @ 1250
T5: Buy 50 @ 1200
T6: Sell 25 @ 1245
T7: Sell 25 @ 1285
Now the key question: when a user sells more quantity than they have bought within the reporting period, which of these sell transactions are excluded from the Verified P&L?
If transferred-in shares are to be excluded, then logically, any sell transactions originating from those shares must also be excluded. Otherwise, the system effectively treats those sells as short positions—which is not possible in this context.
From the current behavior, it appears that no sell transactions are actually excluded. Instead, the system is simply ignoring the cost basis for the shortfall quantity, which results in inflated profits.
This raises a deeper concern: should Zerodha be presenting such figures in Verified P&L when similar treatment is not permitted in Tax P&L or Regular P&L due to compliance requirements?
Isn’t this effectively exposing users to the very risk it aims to prevent?
What exactly happens when the sold quantity exceeds the bought quantity within the Verified P&L reporting period? That is the crux of the issue—and it needs a clear, consistent answer.