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How to view the long-term and short-term holdings separately?

The Console platform provides a Tags feature that can be used to distinguish securities as either long-term (held for more than 1 year) or short-term (held for less than 1 year). Once the securities have been tagged, filters on Console can be used to view them accordingly. To know the steps to add the tags, see How to add tags on Zerodha’s Console?

Although holdings can be viewed separately, they cannot be sold separately. Income-tax guidelines (WEB) require that the First-In-First-Out (FIFO) method be used to account for the purchase and sale of securities. This means that the securities purchased first will be considered sold first from the demat account.

While filing income tax returns, it is the responsibility of the investor to indicate whether the sale resulted in a short-term or long-term capital gain or loss. Although securities in a demat are not differentiated by purchase date, the IT department and Zerodha's P&L statements follow the FIFO method. Therefore, when determining the purchase price and capital gains or losses, the securities purchased first will be considered sold first.

Example Scenario

  1. The investor held 10 quantities of Infosys for two years.
  2. 15 additional quantities were purchased with an expectation of an upside, resulting in a total quantity of 25.
  3. 15 quantities were sold following the FIFO method.
  4. If the selling price is higher than the buying price, the first 10 quantities held for more than two years are subject to Long Term Capital Gain (LTCG).
  5. The P&L for the remaining 5 quantities sold will be evaluated based on the buying price of the recently purchased stock to determine short-term capital gains.

Did you know? Zerodha receives requests from clients inquiring whether they can change the order of consideration of the buying price when selling a stock or create custom short and long-term holdings for the same stock. However, as previously mentioned, Zerodha is unable to accommodate these requests as they must adhere to the income tax guidelines (WEB).