Income Tax Filing 2025: Demat account holders, the deadline for filing income tax this year is drawing near, so if you still have to file your ITR, here are the top 10 things to keep in mind – from which type of income, to which form to fill.
Individuals open a demat account to track and manage their investments in company shares, mutual funds and bonds, among other securities. Although this account is usually opened at a bank, you can also open a demat account with an online brokerage.
Notably, all income earned through the sale of your securities, such as dividend income, interest income, short-term capital gains (STGC) and long-term capital gains (LTCG) are taxable as per the Income Tax Act, 1961. Notably, the funds or holdings in a demat account are not directly taxable.
Here are the top 10 things that taxpayers with a demat account should keep in mind while filing ITR this year:
- Profit earned from the sale of bonds, debentures, mutual funds, stocks and other securities is taxable under the Income Tax Act.
- Once the demat account is opened, completion of KYC (with linked PAN and Aadhaar) will immediately notify the Income Tax Department, and your transactions will be reflected in your Form 26AS.
- To declare your income from your demat account, get the account statement from your bank or broker, and transaction statement from your Depository Participant (DP) i.e. NSDL or CDSL.
- You also need to log in to your IT filing account and validate your demat account to add it to your income tax return.
- STGC is the profit earned from the sale of a stock, ETF or mutual fund within one year of the purchase of any of the above securities.
- Securities Transaction Tax (STT) is levied at the rate of 15 per cent on all STCG Demat account gains, even if your total income is below the exemption level.
- Profits earned on securities held for a period of more than 12 months are treated as LTCG, where any profit in excess of Rs 1 lakh is taxed at the rate of 10 per cent of the amount earned.
- Apart from these, you can also earn dividend income, which is the amount paid by companies to you in exchange for their shares. There is no separate tax on this and is usually taxable as per your applicable tax slab. Usually, companies deduct 10 per cent on dividends exceeding ₹ 5,000 (if PAN number is provided) and 20 per cent without PAN number.
- Apart from this, there is also interest income which is received from debt securities or bonds held in the demat account.
- You have to declare your demat account income while filing ITR and for this you can use ITR-1 form (if there is no capital gain), ITR-2 form (if you do not have business income) or ITR-3 form (if trading is your business).
