Selling stocks after split with current price and make it as income loss in IT returns

POSTED BY JayaprakashReddy ON February 9, 2011 9:52 pm COMMENTS (4)

I heard this from my friends and I’m not sure about it, so asking this question here for experts views.

I’ve bought xyz company stock at price 100 of a quantity 1000 and that comes to Rs. 100000. After couple of months that stock price is at 110 and it is split to two now. Now I’ve 2000 shares at price 55. Now I sell 1000 shares at 55 which is Rs. 55000. So, in all I got 45000 loss (100000-55000). 

Is this valid? Can I show that I made loss of 45000 in this current financial year while submitting the IT returns?

4 replies on this article “Selling stocks after split with current price and make it as income loss in IT returns”

  1. bharat shah says:

    i like to add that for the bonus shares, the cost would be taken as zero, and date of acquiring would be date of allotment of bonus shares.

  2. ashal jauhari says:

    Dear Jayaprakash Reddy, The info given to you is wrong. In case of a Stock split, your purchase price also goet reduced to lower amount as per the ratio of split. For your given example, The purchase price ‘ll be now 50000 Rs. for those 1000 shares sold by you. As these shares were sold by you within less than 1Y holding period, the STCG amount of 5000 Rs. (55000-50000) ‘ll be taxable @ 15.45%.

    The case of bonus shares is different. For your given example, if the bonus is given @ 1:1, again you ae holding same 2000 shares but here bonus shares are alloted to you from the cos. cash reserve by converting it’s cash reserve into Eq. capital. In this case, the original share purchase price ‘ll be taken as Rs. 100 but for bonus shares, the purchase price ‘ll be ZERO. Thus you ‘ll be able to book a STCL of 45 RS. per share.

    Thanks

    Ashal

  3. Irshad says:

    Manish, This means we can actually calculate the way JayaprakashReddy asked? I too have bonus shares (which got split a year ago). So can i show them as loss?

  4. Its not that easy .

    This thing is applicable only if the bonus shares are held for a period of more than one year from the date of allotment.

    Manish

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