If I have added One Lakh Rupees in my Demat account and bought some share worth the same amount. If I sold the shares after few months and with a profit of Rs 50,000. The total money(150,000) is still in my demat account and not transferred into my saving account.
Do I still need to pay tax in this scenario? When are gains called released - when the stocks are sold with gains, or when the gains are transferred to saving account?
Yes.
It Dept will look at the statement of the Funds for that FY and if there are gains showing , you will have to pay the tax.
When are gains called released - when the stocks are sold with gains, or when the gains are transferred to saving account?
Tax liability arises on the sale of an asset (stocks) and when there is gain. Your balance with a broker is as good as cash at bank.
Income Tax is applicable when stocks are sold and not when the gains are transferred to your savings account. And also the Income Tax Department have your trading activity data through AIR statements. So always report gains from trading in the year you sell the stocks while filing ITR.
Hope this helps. 