Income Tax Return: How to enter LTCG details on multiple SIP transactions quickly

Making investment through Systematic Investment Plans (SIPs) in equity mutual funds (MFs) is considered as a comparatively less-risky route for making long-term investments in equities. However, after redeeming their investments, such investors face a daunting task of entering investment-wise details of long-term capital gain (LTCG) in their Income Tax Return (ITR).

Redemption, switch or change of plan of such MF units results in capital gains. If the transactions in the equity MF units are done within 1 year from the date of investment, such transactions result in short-term capital gain (STCG) or loss, and transactions after 1 year from the date of investment result in long-term capital gain (LTCG) or loss.

When the LTCG on transactions in equity MFs was tax-free, taxpayers investing in ELSS (equity-linked saving scheme) and other equity-oriented schemes had no problem in filing their ITR.

However, with the LTCG on equities becoming taxable, filing their return of income has become a headache for such investors, especially if investments are made through the SIP route.

While the declaration of STCG on equities and equity-oriented MF schemes has remained the same, a separate page named 112A has been inserted in ITR Forms (except ITR 1 and ITR 4) to fill details related to LTCG on equities and equity-oriented MF schemes.

Equity investors are supposed to enter investment-wise details of the redemption of stocks and/or units of equity MF schemes resulting in LTCG in the 112A page.

So, even the salaried investors can’t use ITR 1, if they redeem their investments made in ELSS or any other equity-oriented scheme.

Moreover, the ways of entries will be different for the investments made on or before January 31, 2018 and after that date.

The 112A page may be filled in two ways – either by downloading the CSV spreadsheet available in the page, filling and uploading it or by adding each entry separately in the page.

While entering hundreds of entries in the CSV spreadsheet as per the guidelines and uploading it may be a quicker way of filling the page, but the compatibility and preciseness of filling the fields often result in rejection of the sheet at the time of uploading.

Income Tax Return: Along with tax on gains, software compatibility issues bother equity, MF investors

So, it may be easier to enter individual details related to redemption of lump sum investments in the page instead of using the CSV spreadsheet.

However, for the MF investors investing through SIP route, entering investment-wise details for each scheme for each month needs both time and patience.

To reduce the number of entries and save time, investors may club the details of investments made before and after January 31, 2018 separately for each scheme which are redeemed on the same date.

For the investments made after January 31, 2018, entries to be made for ‘Cost of acquisition’, ‘Full Value of Consideration’ and ‘Expenditure wholly and exclusively in connection with transfer’.

So, like lump sum investments, full value of consideration for redemption of SIP investments made on a particular date may be calculated by adding the redemption values of investments made after January 31, 2018.

Similarly, total cost of acquisition may also be calculated by adding the corresponding SIP investment figures or multiplying the SIP amount with the number of corresponding investments. For example, if 24 installments of SIP amount of Rs 10,000 – invested after January 31, 2018 – are redeemed on March 15, 2021, the total cost of acquisition would be Rs 2,40,000 (excluding stamp duty).

In case there is no expenditure wholly and exclusively in connection with the transfer, the cost of acquisition and full value of consideration of the 24 installments of the SIP may be clubbed together and entered in the 112A page, instead of making 24 entries.

For the investments made on or before January 31, 2018, entries to be made in the 112A page, are – ‘ISIN Code’, ‘Name of the Share/Unit’ (which will be automatically taken by the system), ‘No. of Shares/Units’, ‘Sale-price per Share/Unit’, ‘Cost of acquisition’, ‘Fair Market Value per share/unit as on 31st January, 2018’ and ‘Expenditure wholly and exclusively in connection with transfer’. The system will calculate the ‘Full Value of Consideration’ by multiplying the number of shares/units with sale-price per share/unit.

So, for the same equity-oriented MF scheme units acquired through SIP on or before January 31, 2018 and redeemed on the same date, the only variable input installment-wise is the number of units, which vary with the date of investment as the markets fluctuate.

As the SIP amount remains fixed for each installment, the cost of acquisition will also be the same for each installment. So, for a given number of SIP installments redeemed on a same date, the total cost of acquisition may be obtained by multiplying the SIP amount with the number of installments. For example, for 100 installments made on or before January 31, 2018 with SIP amount of Rs 10,000, the total cost of acquisition will be Rs 10 lakh.

The total number of units redeemed on a particular day may be obtained by adding the units against the 100 SIPs and entered as a single transaction, as the sale-price per unit remains same for the particular scheme on the same day of redemption. Also, there will be no variation in the ISIN Code and in the Fair Market Value per share/unit as on January 31, 2018.

So, in case there is no expenditure wholly and exclusively in connection with the transfer, instead of making 100 entries, a single entry may be made for the units of the same equity-oriented MF scheme acquired on or before January 31, 2018 and redeemed on the same date, to save time.