As the income tax filing deadline for 2025 approaches, individuals with Demat accounts must pay close attention to how they report investment-related income.
Whether you hold shares, mutual funds, ETFs, or bonds in your Demat account, not all your holdings are tax-free; certain earnings are taxable under the Income Tax Act, 1961. The income tax department has set the deadline for filing ITR this year as September 15, 2025. Here are some important points to keep in mind for Demat account holders before filing their ITR this year. Choose The Correct ITR Form: Use ITR-1: If you have no capital gains and only dividend/interest income. Use ITR-2: If you have capital gains, but no business income. Use ITR-3: If you are engaged in trading as a business. Validate Your Demat Account On The I-T Portal: You need to log in to the Income Tax e-filing portal and validate your Demat account. This helps integrate your investment data into your tax profile. Capital Gains Are Taxable: Any profits made from the sale of securities, including stocks, mutual funds, bonds, and debentures, are taxable. These fall under Short-Term Capital Gains (STCG) or Long-Term Capital Gains (LTCG), depending on the holding period. KYC Links You To IT Records: Once your Demat account is opened and KYC is completed (linked with PAN and Aadhaar), all transactions become visible to the Income Tax Department through Form 26AS. Collect Necessary Statements: Download your account statement from your broker or bank, and also get a transaction report from your depository participant (NSDL or CDSL) for accurate reporting. Declare All Income, Even If TDS Is Deducted: Do not assume that TDS covers your tax obligations. All income must be reported, and any additional tax liability must be paid before filing your return. Understand Short-Term Capital Gains (STCG): Profits made on securities sold within one year of purchase are classified as STCG, taxed at a flat 15 per cent, even if your total annual income is below the exemption limit. Know The Tax On Long-Term Capital Gains (LTCG): If securities are held for more than 12 months, any gains exceeding Rs 1 lakh are taxed at 10 per cent without indexation. Dividend Income Is Also Taxable: Dividends received from companies are taxed as per your income tax slab. If your dividend exceeds Rs 5,000 annually and your PAN is provided, the company deducts 10 per cent TDS. Without PAN, it's 20 per cent.
