Do you want to maximize your returns from the stock market and understand how to properly account for your profits? Are you looking to navigate the often-complex world of capital gains taxation, especially when dealing with a popular brokerage like Zerodha? You've come to the right place!
This comprehensive guide will walk you through everything you need to know about getting capital gains from Zerodha, from understanding what they are to calculating and reporting them for tax purposes. Let's dive in!
Understanding Capital Gains in the Context of Zerodha
Before we get into the "how-to," let's clarify what capital gains are. Simply put, a capital gain is the profit you make when you sell an asset (like stocks, mutual funds, or real estate) for a price higher than what you originally paid for it. In the context of Zerodha, this primarily refers to profits from selling shares or mutual fund units held in your Demat account.
The Indian Income Tax Act categorizes capital gains into two main types based on the holding period of the asset:
- Short-Term Capital Gains (STCG): These are gains from selling assets held for a short duration. For equity shares and equity-oriented mutual funds, if you sell them within 12 months from the date of purchase, the profit is considered STCG.
- Long-Term Capital Gains (LTCG): These are gains from selling assets held for a longer duration. For equity shares and equity-oriented mutual funds, if you sell them after 12 months from the date of purchase, the profit is considered LTCG.
The distinction is crucial because the tax rates and exemptions for STCG and LTCG are different.
 |
| How To Get Capital Gains From Zerodha |
Step 1: Understanding Your Zerodha Transactions for Capital Gains
The first step in "getting" capital gains from Zerodha isn't about withdrawing money, but rather understanding the transactions that lead to these gains. Zerodha provides excellent tools to help you track your trades and investments.
Sub-heading 1.1: Navigating Zerodha Console for Reports
Your primary hub for all financial reports, including those relevant for capital gains, is the Zerodha Console.
- Log in to Console: Open your web browser and go to
console.zerodha.com - Explore the Dashboard: Once logged in, you'll see your dashboard. Take a moment to familiarize yourself with the various sections.
Sub-heading 1.2: Identifying Capital Gains Applicability on Holdings
Zerodha's Kite platform (both app and web) and Console allow you to check the capital gains applicability on your current holdings. This is a great way to see if your investments are nearing the long-term holding period.
Tip: Read aloud to improve understanding.
On Kite App:
- Tap on Portfolio.
- Select the stock you want to check.
- Tap on View breakdown. Here, you'll see details like the date of purchase, quantity, price, age (number of days since purchase), and its Profit & Loss (P&L) since purchase.
On Kite Web:
- Click on Holdings.
- Click on the Options icon (usually a three-dot menu).
- Select View breakdown. You'll find similar information as on the app.
On Console:
- Click on Portfolio.
- Click on Holdings.
- Click on the Options icon.
- Select View breakdown/tags.
This breakdown will help you understand if a sale would result in STCG or LTCG based on the holding period (less than 365 days for STCG, more than 365 days for LTCG).
Step 2: Generating Your Capital Gains Report (Tax P&L) from Zerodha
This is the most crucial step for calculating and reporting your capital gains. Zerodha provides a consolidated "Tax P&L" report, which is essential for tax filing.
Sub-heading 2.1: Accessing the Tax P&L Report
Follow these steps to download your Tax P&L (Profit & Loss) statement from Zerodha Console:
- Login to Zerodha Console: If you aren't already, log in to
console.zerodha.com/dashboard - Navigate to Reports: In the top navigation bar, click on Reports.
- Select Tax P&L: From the dropdown menu, select Tax P&L.
Sub-heading 2.2: Selecting the Financial Year and Quarters
Once you're on the Tax P&L page:
- Choose Financial Year: Select the relevant Financial Year (FY) for which you want the report. For instance, if you're filing taxes for income earned between April 1, 2024, and March 31, 2025, you would select "2024-2025."
- Select Quarter Range: Choose the quarter range. For a full financial year, select Q1 to Q4.
- View Report: Click on the blue arrow or "View" button to generate the report.
Sub-heading 2.3: Downloading the Report
After the Tax P&L report loads on your screen, you'll see a summary of your capital gains and losses across different segments.
- Download Trade-wise Report: Look for an option that says "Download trade-wise Tax P&L report for all segments" and click on it. This will typically download an Excel spreadsheet (.xlsx) to your computer.
This downloaded report is your capital gains statement from Zerodha. It contains detailed information on all your buy and sell transactions, classified as short-term or long-term, along with the calculated gains or losses for each. It also often includes a provision for "grandfathering" for LTCG on equity shares and equity mutual funds acquired on or before January 31, 2018.
Step 3: Understanding Your Downloaded Tax P&L Report
The Excel sheet you just downloaded is a treasure trove of information. It's crucial to understand its components to correctly calculate your capital gains tax liability.
Tip: Skim once, study twice.
Sub-heading 3.1: Key Sections of the Tax P&L Statement
The Zerodha Tax P&L statement usually includes the following key sections:
- Equity Delivery (STCG & LTCG): This section details your profits and losses from selling shares that you held for more than one day (delivery trades). It's further broken down into Short-Term Capital Gains/Losses and Long-Term Capital Gains/Losses.
- Equity Intraday: This covers profits/losses from buying and selling shares on the same day. These are considered speculative business income and are taxed differently from capital gains.
- Futures & Options (F&O): Profits/losses from F&O trading are generally considered non-speculative business income.
- Mutual Funds (Equity & Debt): This section will show capital gains/losses from your mutual fund investments.
- Commodity & Currency: If you trade in these segments, their P&L will also be included.
- Other Debits & Credits: This might include charges not part of your contract notes, like DP charges, annual maintenance charges, etc.
- Dividend Income: Dividends received are also reported here and are taxed under "Income from Other Sources."
Sub-heading 3.2: Interpreting STCG and LTCG in Detail
Pay close attention to the "Equity Delivery" section.
- Short-Term Capital Gains (STCG): The report will clearly show the total STCG you've made. For financial year 2024-25, STCG on equity and equity-oriented mutual funds are taxed at 15% (if sold before July 23, 2024) or 20% (if sold on or after July 23, 2024) if Security Transaction Tax (STT) is paid.
- Long-Term Capital Gains (LTCG): The report will show your total LTCG. For financial year 2024-25, LTCG on equity and equity-oriented mutual funds exceeding ₹1,25,000 in a financial year are taxed at 10% (if sold before July 23, 2024) or 12.5% (if sold on or after July 23, 2024). The first ₹1,25,000 of LTCG is exempt from tax. The report will also account for the "grandfathering" provision for assets bought before January 31, 2018.
Step 4: Calculating Your Capital Gains Tax Liability
Once you have your Tax P&L report, you can calculate your tax liability. Remember, this is a self-assessment process, and it's always advisable to consult a tax professional if you have complex transactions.
Sub-heading 4.1: Aggregating Gains and Losses
Sum up your STCG and LTCG separately from the report.
 |
- For STCG: Add up all positive STCG values and subtract any STCL (Short-Term Capital Losses).
- For LTCG: Add up all positive LTCG values and subtract any LTCL (Long-Term Capital Losses).
Sub-heading 4.2: Applying Tax Rates and Exemptions
Now, apply the relevant tax rates:
- STCG Tax: For equity and equity-oriented mutual funds where STT is paid, your net STCG will be taxed at 15% (for sales before July 23, 2024) or 20% (for sales on or after July 23, 2024).
- LTCG Tax: For equity and equity-oriented mutual funds where STT is paid, the first ₹1,25,000 of your net LTCG is exempt from tax. Any LTCG above ₹1,25,000 will be taxed at 10% (for sales before July 23, 2024) or 12.5% (for sales on or after July 23, 2024).
Sub-heading 4.3: Understanding Tax Loss Harvesting (and Set-off Rules)
This is a smart strategy to reduce your tax burden.
- Offsetting Losses: You can offset capital losses against capital gains.
- Short-Term Capital Loss (STCL): Can be set off against both Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG).
- Long-Term Capital Loss (LTCL): Can only be set off against Long-Term Capital Gains (LTCG).
- Carrying Forward Losses: If your losses exceed your gains in a financial year, you can carry forward the unadjusted losses for up to 8 assessment years. However, to claim this benefit, you must file your Income Tax Return (ITR) on time.
Important Note: The ₹1,25,000 LTCG exemption is applied before setting off any Long-Term Capital Loss (LTCL). This means the first ₹1,25,000 of LTCG is exempt regardless of your losses, and only the LTCG exceeding this threshold can be set off against LTCL.
QuickTip: Repetition reinforces learning.
Step 5: Filing Your Income Tax Return (ITR)
The final step is to report your capital gains in your Income Tax Return (ITR).
Sub-heading 5.1: Choosing the Correct ITR Form
The ITR form you need to file depends on your income sources:
- ITR-2: If your income primarily comes from salary, house property, capital gains (from stocks, mutual funds, etc.), and other sources, and you do not have income from business or profession. Most equity investors using Zerodha will fall under ITR-2 for capital gains.
- ITR-3: If you have income from business or profession, which includes intraday trading and Futures & Options (F&O) trading.
Sub-heading 5.2: Utilizing Zerodha's Integrations for Easy Filing
Zerodha has partnered with tax filing platforms like ClearTax and Quicko to simplify the process.
- Login to the Tax Filing Portal: Go to the website of your chosen tax filing platform (e.g., cleartax.in or quicko.com).
- Select "Capital Gain Income": Navigate to the section for capital gains.
- Upload Zerodha P&L Report: These platforms often have a direct upload option for your Zerodha Tax P&L statement. You simply upload the Excel file you downloaded from Console. The platform will automatically parse the data and populate the relevant fields in your ITR form. This significantly reduces manual entry and errors.
- Review and File: Carefully review the auto-populated data. Once satisfied, proceed to file your ITR.
Sub-heading 5.3: Manual Filing (If Preferred)
If you prefer to file manually or use other software, you will need to:
- Open the downloaded Tax P&L report.
- Manually enter the STCG and LTCG details (scrip-wise or aggregated, as required by the ITR form) into the respective schedules (e.g., Schedule CG for Capital Gains).
- Ensure all details, including purchase price, sale price, dates, and calculated gains/losses, are accurate.
10 Related FAQ Questions
How to check capital gains applicability on current Zerodha holdings?
You can check this on Kite app (Portfolio -> Select Stock -> View breakdown), Kite web (Holdings -> Options -> View breakdown), or Console (Portfolio -> Holdings -> Options -> View breakdown/tags). This shows the holding period and P&L.
How to download the capital gains statement (Tax P&L) from Zerodha?
Log in to Zerodha Console, go to "Reports," then select "Tax P&L." Choose the financial year and quarters, and then click on "Download trade-wise Tax P&L report for all segments."
How to distinguish between Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG) for Zerodha trades?
For equity shares and equity-oriented mutual funds, if the holding period is less than 12 months, it's STCG. If it's more than 12 months, it's LTCG. The Zerodha Tax P&L report explicitly classifies these for you.
Tip: Don’t skip — flow matters.
How to calculate capital gains tax for equity investments on Zerodha?
For STCG, the net gain is typically taxed at 15% (before July 23, 2024) or 20% (on or after July 23, 2024) if STT is paid. For LTCG exceeding ₹1,25,000, it's taxed at 10% (before July 23, 2024) or 12.5% (on or after July 23, 2024) if STT is paid, with the first ₹1,25,000 being exempt.
How to utilize capital losses to reduce tax liability from Zerodha gains?
Short-Term Capital Losses (STCL) can be set off against both STCG and LTCG. Long-Term Capital Losses (LTCL) can only be set off against LTCG. Unadjusted losses can be carried forward for 8 assessment years if you file your ITR on time.
How to find out which ITR form to use for filing taxes with Zerodha income?
Generally, if you only have income from salary, house property, and capital gains from stocks/mutual funds (delivery-based), you'll file ITR-2. If you also have intraday or F&O trading income, which is considered business income, you'll need to file ITR-3.
How to upload Zerodha's Tax P&L report for ITR filing on platforms like ClearTax?
After downloading the Excel report from Zerodha Console, log in to ClearTax (or a similar platform), navigate to the Capital Gains section, and look for an option to "Upload Zerodha P&L report." Select the downloaded Excel file, and the platform will automatically import the data.
How to account for the "grandfathering clause" for LTCG on Zerodha?
Zerodha's Tax P&L report automatically calculates LTCG with the grandfathering provision for equity shares and equity mutual funds purchased on or before January 31, 2018. This means the cost of acquisition is considered as the higher of the actual purchase price or the closing price on January 31, 2018.
How to retrieve historical capital gains data from Zerodha beyond the current financial year?
You can select previous financial years on the "Tax P&L" page within Zerodha Console to download reports for those periods. Zerodha retains historical data for tax purposes.
How to verify the accuracy of the capital gains report from Zerodha?
While Zerodha strives for accuracy, it's always advisable to cross-check the P&L report data with your contract notes, tradebook, and funds statement, all of which are available on the Zerodha Console.
 |
💡 This page may contain affiliate links — we may earn a small commission at no extra cost to you.
