I use 2 DEMAT Accounts to BUY stocks for tax saving 💰

The Reason- FIFO.

First in, First out. The stocks that you buy first are sold first.

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Example-

1. I bought 1500 shares of Tata Motors in April 2020 at Rs 75 from Demat Account 1. Total amount invested- Rs 1,12,500.

2. I bought 1500 shares of Tata Motors in Jan 2021 at Rs 275 from Demat Account 2. Total amount invested- Rs 4,12,500.

3. In Feb 2022, I needed money so I decided to sell 1500 shares of Tata Motors at Rs 475. Total value of shares sold- Rs 7,12,500.

If I had bought all 3000 shares from a single DEMAT account, the shares that I bought first are sold first.

So, my long term capital gain would have been-

1. 1500 shares x Rs 475 (-) 1500 shares x Rs 75= Rs 6,00,000

Now since I used a different DEMAT account to buy shares in a separate LOT, so my actual long term gain is

2. 1500 shares x Rs 475 (-) 1500 shares x Rs 275= Rs 3,00,000

I will pay tax on Rs 3 Lacs instead of Rs 6 lac, even if I include the 1 lac tax exemption on LTCG, I will save Rs 30K in taxes.

That is a round trip to Dubai 😎

Here is the link to the 1998 circular- This 1998 circular says it’s account wise- [ Ссылка ]
As per various tax experts: While calculation of capital gains, tax is assessed at PAN and respective ISIN level. The IT department will apply FIFO at ISIN level. So cross check this with your CA once as well.

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