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Capital Gains Report
A stock market investment deals with buying shares of various companies. Returns are earned from the increase in value of these shares as well as the annual dividends received. The profit you earn from selling your assets like bonds, shares, mutual fund units, property etc., is called capital gains.
So how do you measure your capital gains, especially when you have an expansive portfolio with multiple stocks? The capital gains report will come to your help here.
What Kotak Securities offers?
Kotak Securities regularly sends you a statement which details your capital gains (or loss) from equity. Apart from that, you can also readily view your capital gains report any time you wish on the website. All you need to do is login with your trading account details and click on the ‘Equity Portfolio Tracker’ section.
Why Capital gains report?
- Snapshot of profit/loss
- Reflects performance of your portfolio
- Helps compute taxes
Read the philosophy of investing
What to read in capital gains report
The capital gains report can be quite detailed. However, you have the option to get a simple summary of the report. Nonetheless, here are some of the information you would find in the statement:
- Financial period:
At the top of the report, you will be asked to choose from amongst different financial periods – different quarter or the whole financial year. This tailors the report and helps you understand how much profit you made in that single period.
The different equity instruments you hold are divided on the basis of the transaction while it was purchased. This can be a market transaction – when you bought or sold from the market or an off-market transaction – when shares were transferred to you or by you to another demat account.
This section shows the profits or losses you have made due to the rise in the stock’s prices. This would be called an unrealised gain if the stock has not been sold yet. However, your capital gains report will only show the profits you have made by selling your stock. Unrealised gains are reported in the portfolio statement, and not the capital gains report.
- Short-term capital gain:
Your gains and losses are divided into three categories – intraday, less than 1 year, and more than 1 year. Any gain or loss you made in intra-day trading or by selling stocks within a year is considered as short-term capital gain/loss.
- Long-term capital gain:
Any gains or losses you have made by selling stock held for over a year is considered as long-term capital gain/loss. This distinction is required because they are both taxed in different ways by the government. Long-term capital gains is considered non-taxable income, while short-term capital gains is taxed.
- Speculation income:
Sometimes, a capital gains report also contains a section called speculation income. This deals with the amount you earned from intra-day trading. This is because, intra-day trading is usually considered as speculative trading. So the income is called as speculative income. It is usually considered a part of short-term capital gains.
There is another section in the capital gains report which mentions STT paid and STT non-paid gains. This deals with securities transaction tax – the amount paid to the government as tax for participating in the stock market. Your total taxable income is calculated once STT is deducted from your total capital gains.
Some things to keep in mind while reading capital gains report
You must pay tax on the profit earned from capital gains. This tax is called Capital Gains tax. Taxation, however, varies from asset to asset like equity and mutual funds. Check with your chartered accountant once for tax purposes.
The capital gains report usually comes handy while filing for your taxes. That said, it is always better to get an independent verification of your income and financial accounts by a chartered accountant for tax purposes.
- Brokerage report:
Brokerage report: The capital gains report only takes into consideration your share holdings through the trading account with the brokerage. In case you have another trading account with a separate brokerage, which are actively used for buying and selling shares, you may need another capital gains report from that brokerage. Use all the reports for tax computation
The government sometimes allows your income to be adjusted for inflation for tax purposes. This is called indexation. It helps reduce your net taxable income, especially on the long-run. While this is not application for equity gains, some bonds may be eligible. Check with your accountant or tax consultant for your eligibility.