Tax inquiry: How to deal with investments in stocks that do not have a daily listing in the stock exchanges

I have been a stock investor for 20 years. Now I own shares in different companies worth 5.6 lakh in demat account. The daily list does not take place and is not removed from the demat account. My question is whether this investment can be treated as a long-term loss of deduction versus a long-term gain. Please kindly explain it according to the income tax rules.

J. Krishna Kumar

Capital gains only arise when the underlying assets are transferred. In your case you still own the stock and it hasn’t been sold. Thus, no capital loss can be claimed on these shares. Depreciation of investments cannot be claimed as a capital loss in exchange for a capital gain. Only actual realized loss can be compensated.

The Income Tax Act allows for long-term capital loss to begin against only long-term capital gains. Long-term capital loss cannot be offset against short-term capital gain or any other income. The eight-year unadjusted loss can be carried forward against the long-term capital gain.

Income Tax Notice of April 21 – Addition of New Rule (12AB) to Income Tax Rules, 1962. Refers to the notice which states among other things “If a person’s deposit into one or more savings bank accounts is $50,000 or more during In the previous year, the individual has to file returns.” Please explain how to arrive at the total amount to qualify for filing the return. Whether 50,000 pounds or more is the total amount deposited during the year together in each savings bank, the balance outstanding at the end of the year, or any other parameter for arriving at the minimum amount?

VK Ramachandra

One of the deposit conditions is when deposits of 50,000 pounds or more are made during the year into one or more bank savings accounts. Hence, if the total deposits made during the year in all bank savings accounts is $50,000 or more, there is a requirement to file a tax return. The benchmark is the total deposits made during the year and not the balance at the end of the year.

Partner writer, Deloitte India

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August 27 2022

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