ITR
Delivery shares: investment or trading income
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Facts
For listed shares, CBDT Circular 6/2016 lets you choose to treat them as investment (capital gains) or stock in trade (business), but the choice must be followed consistently in later years.
Provisions and law
- CBDT Circular No. 6 of 2016 (shares as stock in trade or investment)Taxpayer may treat listed shares as investment or stock in trade, but must follow the choice consistently
- Sec 28, Income-tax Act 1961 (now Sec 26, Income-tax Act 2025)Profits and gains of business or profession are taxable
Analysis
Shares held for more than 12 months are generally accepted as investment if you choose so. Example: you hold delivery shares as investment and also trade F&O; report the shares under capital gains and F&O under business in ITR-3. Changing the treatment year to year invites scrutiny.
Conclusion
- Decide how you treat delivery shares
- Apply the same treatment every year
- Report capital gains and F&O in the right schedules
- Keep a note of your chosen treatment
A Savvy can do this for you
Business or professional income return, ITR-3 (including F&O and intraday)
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