Understanding the Annual Information Statement for Securities and Mutual Funds

Understanding the Annual Information Statement: Sale of Securities and Mutual Fund Units

The Annual Information Statement (AIS), recently implemented under the Income Tax framework, encompasses 50 distinct information categories, one of which is Sale of Securities and Units of Mutual Funds.

Preparation of Information by Depositories and Registrars

The information regarding sales of securities is compiled and reported by depositories and Registrars and Transfer Agents (RTAs) according to the following rules:

User-Initiated Transactions: Only debit transactions initiated by users are reported.
Minors’ Accounts: For transactions involving minors, information about their legal or natural guardians is included.
Estimated Sale Consideration: The estimated sale consideration for debit transactions is determined by taking the best available price of the asset as reported by the entity (e.g., the end-of-day price).
Security Classification: Securities are classified into specified categories to ascertain:
- The type of asset (short-term or long-term).
- The applicable tax rate.

Classification of Assets

Assets held for more than the specified minimum period (detailed below) are categorized as Long-Term Capital Assets. All other assets are classified as Short-Term Capital Assets.

Description of Security Class	Minimum Period of Holding
Listed Equity Share	12 months
Listed Preference Share	12 months
Listed Debenture	12 months
Zero Coupon Bond	12 months
Listed Capital Indexed Bond	12 months
Units of UTI	12 months
Units of Equity Oriented Mutual Fund	12 months
Other Listed Securities (excl. units)	12 months
Unit of Business Trust	36 months
Other Units	36 months

Credit Transactions and Cost of Acquisition

Credit transactions are identified using the First In First Out (FIFO) method. The estimated cost of acquisition for these transactions is determined as follows:

Particulars	Estimated Cost of Acquisition
In the case of OFF market credits	NIL
In all other scenarios	Best available price with the reporting entity

Sources of Information in the Annual Information Statement

The following table outlines the sources of information within the AIS under the category of Sale of Securities and Units of Mutual Funds:

Particulars	Description of Information
Sale of Listed Equity Share (Depository)	Estimated sale consideration based on the best available price (end-of-day price) with the depository.
Sale of Listed Preference Share (Depository)	Estimated sale consideration follows similar guidelines.
Sale of Listed Debenture (Depository)	Reported as per best available price.
Sale of Zero Coupon Bond (Depository)	Based on estimated available price.
Sale of Listed Capital Indexed Bond (Depository)	Determined similarly to other securities.
Sale of Units of UTI (Depository)	Estimated sale consideration as above.
Sale of Units of Equity Oriented Mutual Fund (Depository)	Reported as best available price.
Sale of Unit of Business Trust (Depository)	In accordance with depository guidelines.
Sale of Other Units (Depository)	Based on reporting standards.
Sale of Other Listed Securities (Depository)	Following best price practices.
Buy Back of Shares	Reported correspondingly.
Sale of Unit of Equity Oriented Mutual Fund (RTA)	Sale consideration based on the best available price from RTA.
Sale of Unit of UTI (RTA)	Estimated similarly as above.
Sale of Other Unit (RTA)	Followed according to best available norms.

Processing of the Annual Information Statement

The following details will be de-duplicated in the AIS:

Information from both the RTA and Depository regarding mutual fund transactions.
Data reported by the company and depository for share buybacks.