Now Reading: Brokerage deductible on capital gains, STT not: tax expert
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Brokerage deductible on capital gains, STT not: tax expert
Brokerage paid to transfer a capital asset can generally be deducted when computing capital gains, but Securities Transaction Tax (STT) cannot, according to tax and investments expert Nishant Shanker. The deduction for…
Brokerage paid to transfer a capital asset can generally be deducted when computing capital gains, but Securities Transaction Tax (STT) cannot, according to tax and investments expert Nishant Shanker. The deduction for brokerage falls under Section 72 of the Income Tax Act, 2025, while STT is specifically excluded even though both may appear on the same transaction statement.
Interest on a loan taken to acquire an investment requires separate treatment and cannot automatically be treated as a transfer expense. Taxpayers must check whether the interest is deductible under another provision to avoid claiming a double tax benefit. The treatment depends on the nature of the investment and how the funds were used.
Indian Opinion Analysis
The distinction matters because many investors lump all transaction-related charges together. The Income Tax Act, 2025, continues the approach of the earlier Act in allowing only expenses that are wholly and exclusively for the transfer. Loan interest is treated as a financing cost, not a transfer cost, so it must be examined under the head of income from other sources or under business income, depending on the taxpayer's profile. The key test for any deduction is whether the expense is directly linked to the sale, not to the acquisition or holding of the asset. Investors filing returns for FY 2025-26 should segregate their contract notes accordingly before claiming deductions.
Source: livemint.com
This brief was synthesised by AI from the source linked above.
