filing returns. However, instead of easing compliance, it has often increased the burden on taxpayers mostly because details related to equity transactions in the statement are inaccurate. To make matters worse, the onus of fixing the errors lies with the taxpayers.
Experts said the cost of acquisition, or purchase price, of equities is being reported incorrectly this year. “The cost of acquisition of equity assets bought before February 2018 is taken as the FMV (fair market value) as on 31 January 2018 due to the grandfathering provisions," said Deepak Kakkar, a Delhi-based chartered accountant and senior manager, Jaikumar Tejwani & Co LLP. Long-term capital gains (LTCG) on equity are grandfathered till 31 January 2018, which means gains accrued up to this date are exempt from the 10% LTCG tax.
Due to this provision, in many cases, the purchase cost of shares or equity mutual funds (MFs) is being shown as the FMV of the capital asset as on 31 January. This leads to inaccuracies as the taxpayer has to consider the original cost of acquisition to calculate the extent of gains that are exempted and consequently, determine the taxable capital gains basis the FMV of the stocks or MFs as on 31 January 2018. Apart from the errors arising due to the grandfathering clause, reporting errors are also happening at intermediaries’ end, as per Sujit Bangar, founder, Taxbuddy.com.
“It is common to see mismatches in data reported by the broker and the depository," he said. Markets follow T+1 and T+2 settlement cycles for stocks and MF redemptions, respectively. Due to this, for equity assets sold during the year, the broker or asset management company (AMC) will report the price on the day of the sale, whereas NSDL (National
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