Long Term Capital Gains for Shares deposited as Margin

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  1. Madhankumar S

    Madhankumar S New Member


    A client having 10 lac worth shares in a particular company (assume X company shares). He is having 50 thousand shares worth of 10 lac. He is using that X company's value as a margin and he is trading and taking delivery on other company shares to earn profit ( lot of stock brokers are giving the margin facility to trade or delivery based on client's stock holding value). But he didn't do any trade in his X company last 3 years. So, it's (X company) comes under long term capital gain OR short term capital gain? kindly clarify the same.
    Last edited: Mar 13, 2015
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    From the facts of the case mentioned by you - what I understand is that you have deposited Shares of Company X with your Broker as a security to do Margin Trading on other shares/ futures.

    The shares of company X deposited by you with the broker wont be treated as sale as they have only been deposited as a security and not sold.

    The date of sale of these shares of Company X would be considered as the date on which they are officially sold on the Stock Exchange and the STT is paid on them.

    The computation of STCG/LTCG would be considered as on this date.
  3. king999maker

    king999maker Active Member

    for shares and mutual funds long term capital asset means period of holding is more than 12 months & they are exempted from tax if security transaction tax is paid when buying and selling & sale is made through recognised stock exchange

    no tax is payable in case of those shares if u satisfy above conditions
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