ITR-ready capital gains statement

Overview

The ITR-ready capital gains statement is a formatted report generated by Zerodha through Zerodha Console that translates the raw trade history into the structured data required to complete Schedule CG (Capital Gains) and the business income schedules of Indian Income Tax Return forms. It is built on the same FIFO computation engine as the Tax P&L statement but is specifically designed to match the schedule-level input fields in ITR-2 (for salaried and capital gains taxpayers) and ITR-3 (for taxpayers with business or professional income, including F&O traders).

The statement is available at no additional charge to all Zerodha clients and is updated annually to reflect the current year’s ITR form structure as notified by the Central Board of Direct Taxes (CBDT).

Purpose and design philosophy

The gap between a broker’s trade data and an ITR form is not trivial. The income tax schedules require:

• Capital gains categorised by asset class (listed equity, listed ETFs, unlisted equity, debt mutual funds, equity mutual funds, REITs, InvITs).
• Gains further split by holding period (short-term vs long-term).
• Separate treatment of grandfathered LTCG on equity (with FMV as of 31 January 2018 as adjusted cost).
• F&O income reported as business income under a separate schedule (Schedule BP).
• Intraday equity income reported as speculative business income (Schedule BP).
• Turnover computation for F&O (required to determine audit applicability under Section 44AB).

The ITR-ready capital gains statement performs all of these computations and presents the results in a format that a client (or their chartered accountant) can directly enter into the ITR portal or import into tax-filing software such as ClearTax or Tax2Win.

Structure of the ITR-ready capital gains statement

Section A: Short-term capital gains (STCG)

A1 – STCG on listed equity and equity mutual funds (Section 111A)

For each closed position where:

• The security is listed equity, equity ETF, or equity-oriented mutual fund in demat form.
• The holding period is 12 months or less.
• STT was paid on the sell leg.

Fields provided:

• Full value of consideration (total sale proceeds)
• Cost of acquisition (FIFO-computed purchase cost)
• Net STCG / STCG loss

A2 – STCG on other assets

For debt mutual funds, non-equity ETFs, or any listed security not covered under Section 111A taxed at slab rates.

Section B: Long-term capital gains (LTCG)

B1 – LTCG on listed equity and equity mutual funds (Section 112A)

For each closed position where:

• The security is listed equity, equity ETF, or equity-oriented mutual fund in demat form.
• Holding period exceeds 12 months.
• STT was paid on the sell leg.

For each position, the statement shows:

• Sale consideration
• Actual cost of acquisition
• FMV as of 31 January 2018 (grandfathering amount, where applicable)
• Deemed cost (higher of actual cost or FMV, subject to the “grandfathering cap” – the lower of actual sale price or FMV if sale price is below FMV)
• Net LTCG

The LTCG exemption threshold (Rs 1.25 lakh per financial year after Finance Act, 2024) is noted but not deducted in the statement, as the exemption is applied in the ITR form itself.

B2 – LTCG on other assets

Long-term gains on debt instruments, REITs, InvITs (where holding periods differ from equity), and unlisted securities (if any appear in the Zerodha demat account).

Section C: F&O income (business income)

This section presents the profit or loss from futures and options trading as non-speculative business income:

• Total profit from squared-off futures positions
• Total loss from squared-off futures positions
• Total premium received on sold options
• Total premium paid on purchased options
• Net F&O profit or loss

Turnover for tax audit purposes is separately stated, calculated as:

• Absolute sum of all profits and losses on squared-off F&O positions (treating each as positive regardless of direction)
• Plus premium received on options sold (not netted against premium paid)

This is the correct method under CBDT’s guidance for computing F&O turnover for Section 44AB purposes.

Section D: Intraday equity income (speculative business income)

• Total intraday profits
• Total intraday losses
• Net intraday P&L

Speculative business income is a distinct head from capital gains and non-speculative business income; losses under this head have restricted carry-forward rules (four years, offsettable only against speculative gains).

Section E: Charges deductible as business expenses (for F&O/intraday traders)

For taxpayers declaring F&O or intraday income as business income, certain trading costs are deductible:

• Brokerage paid
• Exchange transaction charges
• SEBI turnover fees
• DP charges (where attributable to business trades)
• STT/CTT (deductible only as business expense, not from capital gains)

The statement lists total charges by category, allowing the taxpayer and their CA to claim the appropriate deductions.

How to download the ITR-ready capital gains statement

1. Log in to Zerodha Console at console.zerodha.com.
2. Navigate to Reports > Tax P&L (the ITR-ready capital gains statement is accessible from the same section, often as a separate “Download for ITR” or “ITR format” option).
3. Select the financial year.
4. Click the appropriate download button for the ITR-formatted version (PDF for manual entry, or Excel for import into tax software).

Some versions of the report provide schedule-level summaries formatted to match the specific boxes in the ITR form, with explicit labels such as “Enter in Schedule CG, B3(iv): Rs XX,XXX.”

Relationship to the Tax P&L statement

The ITR-ready capital gains statement and the Tax P&L statement are closely related:

• Both use the same FIFO computation engine and the same underlying trade data.
• The Tax P&L statement is broader (includes informational data not directly entered in the ITR, such as dividend income details and the full position-by-position breakdown).
• The ITR-ready capital gains statement is a subset of the Tax P&L, reorganised into ITR schedule format.

Most clients use both: the Tax P&L for overall review and verification with their CA, and the ITR-ready statement for the actual data entry in the ITR.

FIFO and grandfathering computation

The FIFO engine applies across all purchases of a given ISIN in the account:

1. Buys are queued from oldest to newest by trade date.
2. Sells consume lots from the front of the queue.
3. Each consumed lot generates a realized gain or loss, classified by holding period.
4. For lots acquired before 31 January 2018, the FMV on that date is fetched from exchange closing price data and compared to the actual acquisition cost; the higher of the two is used as the deemed cost (subject to the grandfathering cap if the actual sale price is below FMV).

The grandfathering cap prevents a taxpayer from claiming a cost higher than the actual sale proceeds: if a share was bought at Rs 100, had an FMV of Rs 150 on 31 January 2018, but is sold for Rs 120, the deemed cost is capped at Rs 120, resulting in nil gain (rather than a Rs 30 loss that the investor did not actually incur).

AIS reconciliation

Before filing, the ITR-ready statement should be cross-referenced with the Annual Information Statement (AIS) on the income tax portal (incometax.gov.in). The AIS aggregates data reported by brokers, depositories, and other financial institutions. Common sources of discrepancy:

• AIS shows higher capital gains. This can occur if off-market credits (ESOP vesting, gifts) were sold, and the AIS captures the sale but not the off-market acquisition (zero cost assumed by AIS).
• AIS omits some transactions. The AIS lags; data for the final months of the financial year may not appear until the AIS is updated mid-year.
• AIS includes mutual fund redemptions not in Console. Non-demat mutual fund redemptions reported by fund houses appear in the AIS but not in the Zerodha statement.

Discrepancies should be resolved before filing to avoid automatic mismatch adjustments under Section 143(1)(a).

Changes in tax rates (Finance Act, 2024)

The Finance Act, 2024 (effective 23 July 2024) changed the applicable rates:

For FY 2024-25 (AY 2025-26), the ITR-ready capital gains statement applies the old rate to gains realised before 23 July 2024 and the new rate to gains realised on or after that date. This bifurcation is handled automatically by the statement’s computation engine.

Common filing errors involving the statement

Not including MF demat redemptions. If mutual fund units held in demat form through Zerodha were redeemed, these appear in the statement. If non-demat MF units were also redeemed (held through other fund houses), those capital gains must be added manually from the CAMS/KFintech consolidated statement.

Treating short-term losses as adjustable against salary. STCG under Section 111A losses can be set off against STCG gains in the same year but not against salary or interest income. The ITR form enforces this restriction.

Ignoring F&O losses in set-off. F&O (non-speculative business) losses can be set off against any income head except salary in the same year and carried forward for eight years. The ITR-ready statement helps ensure these losses are not missed.

Retention

The ITR-ready capital gains statement, as a document supporting a filed return, should be retained for six years from the end of the assessment year (in line with Section 149 of the Income Tax Act).

Related reports

• Console Tax P&L statement – the parent report from which this statement derives.
• Console Tradebook – raw trade data underlying the computation.
• Annual Global Statement – broker’s annual summary including charges deductible as business expenses.
• ITR-2 – ITR form for capital gains taxpayers (no business income).
• ITR-3 – ITR form for taxpayers with business or professional income (including F&O traders).

References

1. Income Tax Act, 1961, Sections 111A, 112, 112A – STCG and LTCG provisions.
2. Finance Act, 2018 – Grandfathering provisions for LTCG on listed equity.
3. Finance Act, 2024 – Revised LTCG/STCG rates effective 23 July 2024.
4. CBDT Circular on F&O turnover computation (reiterated in ICAI guidance notes on tax audit).
5. Income Tax Act, 1961, Section 44AB – Tax audit threshold.
6. Zerodha Support, “ITR filing using Zerodha’s tax reports” – support.zerodha.com.
7. Central Board of Direct Taxes (CBDT), Notification on ITR forms for AY 2025-26 – incometax.gov.in.