Section 45(2A) - Transfer of securities by depositories

• Where any person holds any securities, he is considered to be the beneficial owner of such securities and not the registered owner as the registered owner of securities is the depository. 

• If any securities are transferred by the depository or participant in which a person has beneficial interest, then any profits or gains arising from transfer of such securities shall be chargeable to tax as income of the beneficial owner of the PY in which such transfer takes place.

• This is applicable for calculation of capital gains as per section 48 and computation of period of holding as per section 2(42A) of the Act. 

• The cost of acquisition and period of holding of such securities shall be determined on the basis of FIFO method. 

• In this regard, CBDT has clarified the following : 

• FIFO method shall only be applied in respect of Dematerialized holdings because the securities held in physical form can not be construed to have been sold as they continue to remain in the possession of investor and are identified separately. 

• If an investor has multiple accounts, then FIFO method will be applied account wise. 

• If physical securities are dematerialized then for computing FIFO, their date of entry in the demat account shall be considered regardless of the actual date of purchase of such securities. 

• The date of broker note shall be treated as the date of transfer for computing capital gains.