Wash Sale Rule in India

#1
Is there any Wash Sale tax rules in India.

For eg. You buy 2 stocks, both for Rs. 100.
Now after a few months, one goes up to 110 & the other goes down to 90.
Now you plant to book profits - so you sell off that stock - so your capital gains come to Rs. 10 & you need to pay tax on it. So avoid taxes, you sell off the other also to book Rs. 10 loss. So essentially you have 0 capital gains & no tax liability. However, you also rebuy the 90 Rs stock soon. So essentially you avoided tax on your profits without lossing much more than the brokerage.

In the US, such a sale is called as a Wash Sale. Any rebuying done within a month is considered as a Wash Sale & you aren't allowed to use it to show Capital loss in your tax returns.

Is there any such rule in India?
 
#3
yes any profit or loss resulted after taking delivery& sold within a year is termed as shortterm capital gain &offsetted for income tax purposes
I am not sure if I expressed my question correctly. I know that profit or loss within a year is a short term gains or loss. But my questions asks something more than that.
 

rkkarnani

Well-Known Member
#4
Is there any Wash Sale tax rules in India.

For eg. You buy 2 stocks, both for Rs. 100.
Now after a few months, one goes up to 110 & the other goes down to 90.
Now you plant to book profits - so you sell off that stock - so your capital gains come to Rs. 10 & you need to pay tax on it. So avoid taxes, you sell off the other also to book Rs. 10 loss. So essentially you have 0 capital gains & no tax liability. However, you also rebuy the 90 Rs stock soon. So essentially you avoided tax on your profits without lossing much more than the brokerage.

In the US, such a sale is called as a Wash Sale. Any rebuying done within a month is considered as a Wash Sale & you aren't allowed to use it to show Capital loss in your tax returns.

Is there any such rule in India?
Dont know about wash sale, but if you buy say Relaince at 900 and get dividend of Rs.30.00 and then sell it Ex-dividend at 880/- , here in India, your Dividend is Tax Free and you book a Loss of Rs.20.00 in share, this is called dividend stripping, and it is not allowed if the Buy and Sell takes place within a specified time limit... probably one month.
 

magnet

Active Member
#5
Dont know about wash sale, but if you buy say Relaince at 900 and get dividend of Rs.30.00 and then sell it Ex-dividend at 880/- , here in India, your Dividend is Tax Free and you book a Loss of Rs.20.00 in share, this is called dividend stripping, and it is not allowed if the Buy and Sell takes place within a specified time limit... probably one month.
I dont think their is any restriction that u cant sell share.On contrary it takes almost a month to get the dividend and on record date the share price gets adjusted .

As mentioned on another forum wash sale return is not an Indian concept.Share losses cant be carried to next financial year especiallySTCL
 

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