What is Off-market Credit Transactions in AIS on Income Tax Portal

By | May 16, 2024
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(Last Updated On: May 16, 2024)

What is Off-market Credit Transactions in AIS on Income Tax Portal

In the context of the Annual Information Statement (AIS) and income tax in India, off-market credit transactions refer to the movement of shares into your demat account through transactions that don’t involve a stock exchange. Here’s a breakdown:

Off-Market Transactions:

  • These transactions occur directly between two parties, bypassing the stock exchange and clearing corporation. Examples include:
    • Receiving shares as a gift
    • Transfer of shares from another demat account (within the same or different depository)
    • Inheriting shares

Credit Transaction:

  • In AIS, a credit transaction signifies a movement of shares into your demat account.
  • When you receive shares through a gift, transfer from another account, or inherit them, it’s considered a credit to your holdings.

AIS Reporting:

  • Similar to off-market debits, the depository (NSDL or CDSL) reports details of these credit transactions to the Income Tax Department.
  • The transaction value is usually based on the end-of-day price of the security on the date of transfer. In some cases, the actual consideration paid might also be reported if available.

Why are Off-Market Credits Reported?

  • The Income Tax Department tracks these transactions to identify potential tax implications.
    • Receiving gifted shares might have tax consequences depending on the relationship between the giver and receiver.
    • Inherited shares might be subject to capital gains tax when you eventually sell them.

What to Consider:

  • If you’re expecting an off-market credit transaction, understand the potential tax implications beforehand.
  • Maintain proper records (gift deeds, transfer documents, inheritance documents) to justify the transaction if needed by the Income Tax Department.

Additional Notes:

  • Off-market debit transactions (transferring shares out) are also reported in the AIS.
  • The specific tax treatment of off-market transactions can vary depending on the circumstances. It’s always recommended to consult a tax professional for complex situations.