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Things to keep in mind: Zerodha Tax PNL Report

You can download the Tax P&L Report from Zerodha Console.

How to Download Tax Profit & Loss report from Zerodha?
Step-by-step guide to download Tax P&L from Zerodha Console
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How to Download Tax Profit & Loss report from Zerodha?
Step-by-step guide to download Tax P&L from Zerodha Console
Read More

The report includes details of segment wise trading – scrip name, buy value, sell value, buy price, sell price, realized profit, and trading expenses.
This Tax P&L Report can be used to prepare P&L A/C to report it in the Income Tax Return.

However, the trader must take care of the following things where the treatment as per Income Tax may differ.

  • Expenses

    The Tax P&L Report covers transfer expenses that are directly related to trading transactions.

    In the case of Capital Gains from Equity Delivery and Equity MF/ETF, you can only deduct transfer expenses such as brokerage, turnover fees, transaction charges, GST, stamp duty, etc.

    In the case of Intraday and F&O, you can also claim other expenses – such as internet expense, legal fee, subscription expenses, depreciation, etc which are not covered in Tax P&L Report.
What Expenses Can a Trader claim when filing Income Tax Return?
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What Expenses Can a Trader claim when filing Income Tax Return?
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  • Buy Back Gains

    When a company buys back shares issued by it from an existing shareholder, it results in capital gains for the shareholder. Such buyback gains would be included in the Tax P&L Report.
    As per a recent amendment in Budget 2019, the gains from buy-back are exempt in the hands of the individual since the company is now liable to pay the buyback tax under Section 115QA. This amendment is applicable to all the buybacks after 5th July 2019. Therefore, buyback gains before 5th July 2019 are taxable for the trader and the ones after 5th July 2019 are exempt.

    If such buyback gains have been included under Capital Gains in Zerodha, you can omit the buyback gains and report them under Exempt Income in the ITR.
Section 115QA - Tax on Buyback of Shares
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Section 115QA - Tax on Buyback of Shares
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  • Calculation of Long Term Capital Gains under Section 112A

    LTCG on the sale of securities (on which STT is paid), bought on or before 31st Jan 2018 should be calculated using the Grandfathering Rule. As per this rule, the Cost of Acquisition is computed after considering the FMV as on 31st Jan 2018 as per Section 112A.
    Zerodha provides the FMV as on 31st Jan 2018 and the taxable Long Term Capital Gains in the ‘Tradewise Exit-Entry’ tab of the Tradewise Tax P&L Report. Thus, the LTCG should be calculated as per the grandfathering rule using the FMV of each trade in the Tradewise Tax P&L Report.
Section 112A – Tradewise details of LTCG (Nightmare for Traders)
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Section 112A – Tradewise details of LTCG (Nightmare for Traders)
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  • Transfer In/Out

    If you moved your portfolio from another broker to Zerodha or vice versa, your brokers will have partial data (either buy-side or sell-side depending on transfer in or out). Most brokers including Zerodha let traders enter such missing data. However, there are high chances of missing out Capital Gains arising out of such transfers.
  • Devolvement

    Devolvement means that the option contract will get converted into a futures contract of the same underlying. As per the Zerodha Support thread, the RMS team (at their discretion) can square-off of open positions upon Failure to produce the margin. Any gains/losses arising from such trades will be included in the Tax PnL report – marked as “DEVOLVED”
  • Reversals

    As per the Zerodha thread, Reversal trades are alleged to be non-genuine trades. All reversals will be included in Tax PnL report – marked as “REVERSALS”. In most cases, reversals are punched in on a cost basis & hence do not carry any tax consequences. However, sometimes the reversals for short deliveries are not entered on a cost basis, the gain or loss in such cases must be included under Capital Gains in the Income Tax Return.

All of the above conditions are considered when you file your Tax Return using Quicko. However, reporting may vary depending on your specific situation, hence it’s always advisable to consult a tax professional when in doubt.

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Krishnanunny Mangalasseri says: (Awaiting Approval)

2020-11-20 12:09:36

I am a salaried person and a trader (started last year only) as well. Two CAs I consulted said they need dates of the trades (both intraday and short term). Tax P&L report from Zerodha don't provide the dates. What is the alternative to this?

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says: (Awaiting Approval)

2020-11-20 14:40:20

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Krishnanunny Mangalasseri says: (Awaiting Approval)

2020-11-20 12:09:34

I am a salaried person and a trader (started last year only) as well. Two CAs I consulted said they need dates of the trades (both intraday and short term). Tax P&L report from Zerodha don't provide the dates. What is the alternative to this?

Reply

Naveen Kumar Ch. says: (Awaiting Approval)

2020-11-20 10:21:25

How to download script wise trading data for a complete financial year for the purpose of filing income tax returns.

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Joel says: (Awaiting Approval)

2020-11-20 08:43:38

I am a student, started trading since September 2020, with capital of 1lakh which i took from my father, my question is do i need to fill for ITR, if yes specify in details please.

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Kunal says:

2020-10-29 07:32:06

I know that we can show brokerage and STT charges as business expenses if we show trading as business, but I want to know if I can show GST, Exchange Transaction Charges, Sebi Turnover fees, Stamp Duty charges and Exchange penalty charges for margin shortfall as Business expenses?

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Aakash Lalchandani says:

2020-10-29 13:04:46

Hey Kunal, Any expense incurred for trading can be claimed as a valid business expense in P&L Account if trading is considered as a Business Income. However, the Income Tax Act does not allow claiming an expense paid in the form of a penalty. Any expense charged by the broker in the form of a penalty cannot be claimed as a business expense. You can read about what expenses can a trader claim.

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Nihal says:

2020-10-29 05:44:41

How does Quicko report the data to the ITD? As per my understanding, apart from reporting transactions with regards to Capital Gains involving grandfathering, there is no requirement to report scripwise or tradewise data.

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Nireka Dalwadi says:

2020-10-29 11:28:51

Hey Nihal, Quicko reports trade-wise data to Income Tax Department when grandfathering is involved in Capital Gains. All the other data which consist of gains/losses, turnover, and profits are aggregated and reported to the ITD as per the Income Tax utilities. Every year during the Income Tax filing season, the ITD continuously updates these utilities to ease and improve the compliances. In AY 2020-21 the ITD made it not mandatory to report scrip-wise for shares/units which are NOT eligible for Grandfathering.

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Shashwat says:

2020-10-29 05:24:27

So is schedule 112A applicable only for LTCG? and when reporting STCG only total net share values can be entered?

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Nireka Dalwadi says:

2020-10-29 11:09:49

Hi Shashwat, u/s 112A, the taxpayer needs to report the sale of equity share or unit of equity oriented fund or unit of a business trust on which STT is paid under section 112A. Sec 112A is applicable FY 2018-19 (AY 2019-20) onwards to levy 10% income tax on only Long Term Capital Gains on the sale of equity shares, equity mutual funds and units of business trust in above of INR 1 lakh for the FY. When reporting LTCG on shares (where STT is paid) bought on or before 31st Jan 2018 should be calculated as per the grandfathering rule using the FMV. You can find the FMV as ‘Tradewise Exit-Entry’ tab of the Tradewise Tax P&L Report. When reporting LTCG u/s 112A, earlier it was also mandatory to report ISIN - which most brokers did not provide. So to ease the compliance of taxpayers ITD allows you to put ISIN as INNOTAVAILAB. Read more about Section 112A

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