Capital Gains P/L Report from Brokerage Houses

#1
My brokerage house provides me one such report. But it is mainly a LIFO kind of a report where the selling price of last bought shares of a particular scrip are taken into account for calculation.

For Eg: Scrip A - Bought 100 shares in 2010 for Rs10
Scrip A - bought 200 shares in July 2013 Rs20
Scrip A - sold 100 shares in Aug 2013 Rs23

so, in the report the p/l is calculated as (100 * 23) - (100 * 20)
whereas it should have been (100 * 23) - (100 * 10)

I have ended up in manually calculating the whole P/L. Though the ledger shows the expected P/L. I have contacted my brokerage house but I was told that in the reports it would always be LIFO but the actual calculation would be FIFO.

Is it the same case with your brokerage houses too? If that is the case, it is such a tedious job to do the whole calculation. I spent ~1 hour for that whole calculation. What is your say about this?
 

Mr.G

Well-Known Member
#2
My brokerage house provides me one such report. But it is mainly a LIFO kind of a report where the selling price of last bought shares of a particular scrip are taken into account for calculation.

For Eg: Scrip A - Bought 100 shares in 2010 for Rs10
Scrip A - bought 200 shares in July 2013 Rs20
Scrip A - sold 100 shares in Aug 2013 Rs23

so, in the report the p/l is calculated as (100 * 23) - (100 * 20)
whereas it should have been (100 * 23) - (100 * 10)

I have ended up in manually calculating the whole P/L. Though the ledger shows the expected P/L. I have contacted my brokerage house but I was told that in the reports it would always be LIFO but the actual calculation would be FIFO.

Is it the same case with your brokerage houses too? If that is the case, it is such a tedious job to do the whole calculation. I spent ~1 hour for that whole calculation. What is your say about this?
What is your CA doing? Sleeping?
 

Mr.G

Well-Known Member
#4
oh no.. i havent shown to the CA yet.... i wanted to have a clarity for myself b4 i visit him..
Rather you show it to him. How would it seem that a person makes himself/herself a stock portfolio and doesnt even take advice from me even though im their CFA?
 
#5
your brokerage house statement is correct.....
short term capital gains are given first piriority.. so there is no confusion..
so, in that case, we would end up calculating all the whole long+short term gains P/L manually? the example I have stated is a simple one.. the actual one is more complicated....

what i am more interested to know is, is this how it is calculated everywhere, at all the brokerage houses?
 

Mr.G

Well-Known Member
#7
Sir,

Profit from market is of two types:-

Short term capital gains and long term capital gains.

you sold 100 share at 23 rupees... the period between purchase and sale is to be calculated on LIFO basis...

your brokerage house statement is correct.....

short term capital gains are given first priority.. so there is no confusion..

as i am studying CA and CS, my opinion can be correct...
Long term and short term gains are calculated separately. There is no need to give priority as both are taxed separately.

Intraday, short term and long term gains are taxed at different rates. Calculated net profit for each separately. How would giving short term gain any priority help?

FIFO is the default accounting method used by the IT dep. But if you wish to use LIFO then you will have to get written proof from your broker that LIFO was used instead of FIFO. LIFO usually results in less tax to be paid, depending on your stock inventory.
 
#8
Long term and short term gains are calculated separately. There is no need to give priority as both are taxed separately.

Intraday, short term and long term gains are taxed at different rates. Calculated net profit for each separately. How would giving short term gain any priority help?

FIFO is the default accounting method used by the IT dep. But if you wish to use LIFO then you will have to get written proof from your broker that LIFO was used instead of FIFO. LIFO usually results in less tax to be paid, depending on your stock inventory.
i agree with you completely...in my case, by using LIFO calculation, i will end up paying short term tax where as it infact is FIFO and long term profit....
 

Mr.G

Well-Known Member
#10
as I said earlier, only the report shows LIFO but my ledger and account shows FIFO.... was wondering why is that so?
LIFO is better for calculating cash flow with respect for matching costs and revenue.

FIFO ends up in a lower tax due to lower cost of goods sold.

That CA CS guy is amazing, Im a fund manager.
 

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