Here's how you determine date of sale/purchase of shares

There are two ways in which shares are dealt with by the investors and the situation for both the conditions has to be considered. One is the normal way of dealing in shares whereby the entire transaction takes place through the stock exchange and the purchase and sale takes place in a routine transaction. The other way of dealing with the transaction is through an off market deal where the stock exchange is not involved as a platform and the buyer and the seller complete the transaction on their own. The position for both these type of transactions need to be considered if someone has to ensure that they are looking at the overall coverage of the issue.

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Stock exchange route

When shares are bought on the stock exchange then the date for the purchase would be the date of purchase by the broker on behalf of the investor. So if the shares are bought on 3 January by the broker then this would be considered as the purchase date even though the shares would have come in the demat account after a few days. On the other hand when there is a sale of the shares by an investor through the stock exchange then again the date of the brokers note for the sale of the shares would be considered as the sale date. This would be the case only when the transaction is followed up by the delivery of the shares.  This makes the situation clear as the date on which the transactions are actually undertaken on the stock exchanges become the date for the workings even though the entire process would have been completed several days later when the shares actually move from the demat account.

Off market transaction

There can also be a situation where the investor has bought or sold the shares in an off market trade which means that the stock exchange is not involved here. The two parties who are involved in the deal actually complete the transaction at the agreed price and hence this is an important situation to consider.  In this case the date of contract of sale as declared by the parties would be considered as the actual date of the purchase and sale. Thus the individual has to see the date on which the contract would have been executed and then use this for their different calculations. There is once again a condition that would be present here when these details are to be used. The condition is that the contract has to be followed by the actual deliver of the shares and the transfer deeds.  This is vital as just a contract would not enable the investor to claim that the date for the purpose of calculation of the tax should be considered as the one mentioned here. The completion of the transaction is the proof that this is genuine and follow up action has taken place after the initial agreement.