Scrip-wise reporting not needed for day trading, short term capital gains in ITR

The Income Tax Department on Saturday said that scrip-wise reporting is not required for day trading and short-term sale or purchase of listed shares for filing of income tax returns in assessment year 2020-21. "There is no requirement in the return of income for scrip wise reporting in case of short-term or business income arising from share transactions," the Central Board of Direct Taxes (CBDT) said in a statement.

The gain from share trading in case of stock traders or day traders is generally categorised as short-term capital gains because the holding period of shares in most cases is less than one year, a prerequisite for the gains to be categorised as long-term capital gains.

The Finance Act, 2018 allowed exemption to the gains made on the listed shares up to January 31, 2018 by introducing grandfathering mechanism for computation of long-term capital gains for these shares.

"The scrip wise details in the return of income for AY 2020-21 is required to be filled up only for the reporting of the long-term capital gains for these shares or units which are eligible for the benefit of grandfathering," CBDT said in a clarification.

"There was a report in certain section of media that stock traders/day traders are required to furnish scrip wise details in the return of income for AY 2020-21. The gain from share trading in case of stock traders or day traders is generally categorised as short-term capital gains or business income. This is because their holding period of shares/units in most of the cases is less than one year which is a prerequisite for the gains to be categorised as long-term capital gains. As there is no requirement in the return of income for scrip wise reporting in case of short-term/business income arising from share transactions, these reports are distorted and misleading," CBDT added.

Also read: ITR form: Govt extends deadlines for filing tax returns, other related compliances; check out details