Comment on Zerodha - your tax aide while you trade

SP commented on 16 Jul 2015, 02:11 PM

Hello Nitin

I am new to Zerodha and would like to congratulate you for developing such an awesome platform and for your initiative in creating such a rich information resource. The clarity of your answers is to be truly appreciated. Obviously it comes from a deeply understanding of the issues involved.

I am from Kolkata and am considering opening an account with Zerodha shortly.

I have a few questions for you –

1) Does Zerodha provide a certified copy of P/L at the end of a FY for taxation purposes?

2) If you do, then what is basis for treating ST income in case of a share that has been bought and sold multiple times in a FY – is it treated as STCG or business income? If as STCG, is it found acceptable by the IT department? Also is all income from other shares which may be purely LT risk being categorised as business income?

2) How does one distinguish between stocks-in-trade and for investment within a single demat/trading account? The IT circular referred to above considers frequency of trade as important in determining the investment as trading or LT investment without quantifying the frequency? Such vagueness prevents many (myself included) in arriving at a clear stance on trading/investment. The max. no. of litigation in tax cases involves this issue. To my mind, if frequency is to be considered, then one might as well quantify it.

If you can shed light on these issues, it would be greatly appreciated.

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