How to calculate gross profit

#1
I have an trading account with one of the brokerage houses. I am not a day trader. So, I have purchased/sold my shares on a long term / short term gains/losses.

I have a few questions in my mind.

The brokerage house charges me as:

Brokerage
STT
Service Tax
Other Charges - Del From
Other Charges - Del To

never understood what the last two are.

When the short+long term gains report for a particular FY is generated, the purchase and sell values are mentioned as actual bought price +/- brokerage.

For Eg: I bought a share @ 283 and including brokerage it is bought @ 283.85
Sold the same @ 296 and deducting brokerage it is sold @ 295.11
So, the gross profit per share is 13 and the net profit is 11.26

What should be short term tax be levied upon? on the gross profit of 13 or net profit of 11.26?
 

Mr.G

Well-Known Member
#2
Tax is levied on net profit.
 

mastermind007

Well-Known Member
#3
I have an trading account with one of the brokerage houses. I am not a day trader. So, I have purchased/sold my shares on a long term / short term gains/losses.

I have a few questions in my mind.

The brokerage house charges me as:

Brokerage
STT
Service Tax
Other Charges - Del From
Other Charges - Del To

never understood what the last two are.

When the short+long term gains report for a particular FY is generated, the purchase and sell values are mentioned as actual bought price +/- brokerage.

For Eg: I bought a share @ 283 and including brokerage it is bought @ 283.85
Sold the same @ 296 and deducting brokerage it is sold @ 295.11
So, the gross profit per share is 13 and the net profit is 11.26

What should be short term tax be levied upon? on the gross profit of 13 or net profit of 11.26?
Get your broker to break down the costs for you. Send them email in writing and follow it up if they fail to reply. The application form you signed also will have a page that defines all the costs on it.
 
#4
mastermind007,

My brokerage house does send me the reports.. they are mainly the contract notes which mentions the gross total, brokerage, net, STT, service tax levied.

The other reports that are available is the short+long term capital gains tax which mentions the net bought value (actual price + brokerage) and the net sold value and thus the short/long term P/L is calculated. For the last FY, I had given this report to my CA with other needed documents.

I was wondering if short term tax that was levied on my overall profit, i.e the net profit, was in fact right or wrong.

What other costs are you referring to?
 

Mr.G

Well-Known Member
#6
thank you for the info. Where can I find this information officially? I mean, any official documents which states thus?
Legally the only profit that can be taxed is profit after expenses. It's illogical to tax someone's profit before they deduct their expenses from it. Ask your CA he will confirm this. And if he cannot confirm then I suggest you change your CA.
 
#7
so, what are the expenses? i have calculated my net profit as gross +brokerage.

My queries :
1) When we say expenses, do I have to include STT, ST, Other charges like stamp duty? All these charges are directly debited by the brokerage house.

2) My short+long term capital gains profit/loss statement shows the net profit/loss as gross profit+brokerage. Can I use this report for my IT calculation?
 

Mr.G

Well-Known Member
#8
so, what are the expenses? i have calculated my net profit as gross +brokerage.

My queries :
1) When we say expenses, do I have to include STT, ST, Other charges like stamp duty? All these charges are directly debited by the brokerage house.

2) My short+long term capital gains profit/loss statement shows the net profit/loss as gross profit+brokerage. Can I use this report for my IT calculation?
1) ST and all are debited directly and wont be included in calculation. Why are you asking all of this here?! Is your CA dim or something?! Your paying him/her right?! Make the CA do all the work!

2) Brokerage statement IS the document you will give to IT. You must calculate net by deducting brokerage from gross profit.
 
#9
thank you for the clarifications, Mr.G.

Yes, I am paying my CA. But, I wanted to double check the whole thing. Not that I don't trust him or something, but wanted to make sure this is how is. Like, double confirmation.

I have one last query. In the example, that I have stated in the beginning of the post, the tax is applicable on 11.36 and not on 13.Am i right?
 

Mr.G

Well-Known Member
#10
thank you for the clarifications, Mr.G.

Yes, I am paying my CA. But, I wanted to double check the whole thing. Not that I don't trust him or something, but wanted to make sure this is how is. Like, double confirmation.

I have one last query. In the example, that I have stated in the beginning of the post, the tax is applicable on 11.36 and not on 13.Am i right?
Tax is on 11.36.
 

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