Off-market debit and credit transactions in your AIS are share transfers made outside the stock exchange, such as gifts, transfers between your own demat accounts, or private deals. They show up in your Annual Information Statement, so you need to understand and reconcile them while filing your ITR to avoid mismatches that can trigger a notice.
Off-Market Debit and Credit Transactions in AIS: Understanding and Dealing with Them While Filing ITR
What Are Off-Market Transactions?
Off-market transactions are transfers of shares or securities that occur outside a stock exchange — directly between two parties through demat accounts. The income tax department now reports 57 types of financial transactions in the Annual Information Statement (AIS), including off-market debit transactions (Report No. 33) and off-market credit transactions (Report No. 34).
Key Differences in a Table
Aspect | Off-Market Debit Transaction | Off-Market Credit Transaction |
|---|---|---|
Definition | Shares moving out of your demat account | Shares moving into your demat account |
Direction | You transfer/gift shares to someone else | You receive shares from someone else |
Examples | Gifting shares, transferring between demat accounts, inheritance (outgoing) | Receiving gifted shares, inheritance (incoming), ESOPs from employer |
Reported By | Depository (NSDL/CDSL) | Depository and RTAs |
Transaction Value | Based on end-of-day price of security | Based on end-of-day price of security |
Common Examples of Off-Market Transactions
Off-Market Debit Transactions
- Gifting shares to family/friends
- Transferring shares between two demat accounts (same or different depositories)
- Inheritance of shares (when you’re the transferor)
- Sending shares back to employer or spouse
Off-Market Credit Transactions
- Receiving shares as a gift from relatives
- Inheritance of shares (when you’re the recipient)
- ESOPs/RSUs from your employer
- Bonus shares allotted by companies
- Mutual fund portfolio transfers from family members
Where Do These Appear in AIS?
Off-market transactions appear in two sections of AIS:
AIS Section | Type of Transaction | Tax Implication |
|---|---|---|
TIS (Taxpayer Information Summary) | Gifts, inheritance, transfers without sale | Generally informational only — not taxable when received |
Sale of Securities Section | Sale/transfers with consideration, bonus shares with zero cost | May have tax implications — must be reviewed and reported in ITR |
Tax Treatment of Off-Market Transactions
1. Gifted or Inherited Shares
- Not taxable when received from a relative
- When you sell them later, capital gains apply
- Cost of acquisition = Cost to the previous owner
- Holding period counts from the original owner’s purchase date
2. Bonus Shares
- Under Section 55(2)(aa)(i), cost = ₹0
- Entire sale value (minus expenses) is taxable as capital gains
- Holding period determines whether it’s LTCG or STCG
3. Other Off-Market Transfers
- Tax treatment varies depending on circumstances
- Maintain proper records (gift deeds, transfer documents) to justify transactions
How to Deal with Off-Market Transactions While Filing ITR
Step-by-Step Checklist
(a) Verify with Your Records
- Cross-check AIS entries with demat statements, contract notes, and broker reports
- Confirm whether the transaction was a gift, inheritance, or actual sale
(b) Correct Classification
- Determine whether the gain is short-term or long-term based on the actual holding period, not just what AIS shows
- For gifted shares, holding period starts from the original owner’s purchase date
(c) Report Accurately in ITR
- File the return with correct figures even if AIS reflects differently
- For TIS entries (gifts/inheritance without sale): safely ignore when filing ITR
- For Sale of Securities entries: report capital gains correctly in ITR
(d) Keep Documents Ready
- Maintain proof of purchase and sale to support reporting if the tax department raises a query
- Keep gift deeds, transfer documents, and demat statements
Common AIS Mismatches and How to Handle Them
Problem: AIS Shows Short-Term Gain, But You Held for More Than a Year
- Solution: Don’t blindly accept AIS version
- Use your demat statements or broker contract notes
- Check the actual purchase date and cost
- Recalculate the gain correctly in your ITR
Problem: Bonus Shares Show Zero Acquisition Cost
- Solution: Recognize this is correct under Section 55(2)(aa)(i)
- Entire sale value (minus expenses) is taxable as capital gains
- Report in the “Sale of Securities” section of ITR
Problem: Off-Market Transfer Between Spouses
- Solution: If no units were sold, this may be a transfer without capital gains
- Document the transfer purpose (gift between relatives)
- Consult a tax professional if value exchanged between accounts
Important Points to Remember
- Depositories report these transactions to the income tax department
- Transaction value is typically based on end-of-day price on transfer date
- Actual consideration paid might also be reported if available
- Off-market transactions are not always accurate in AIS — reconcile with actual records
- If planning off-market debit transactions, understand potential tax implications beforehand
Frequently Asked Questions (FAQ)
What are off-market transactions in the AIS?
Off-market transactions are transfers of shares or securities done outside the stock exchange, such as gifts, inheritance, or moving shares between demat accounts, which are reported in your Annual Information Statement.
Why do off-market transactions appear in my AIS?
Depositories report off-market debits and credits to the tax department, so they appear in your AIS to give a complete picture of your securities movements during the year.
Do off-market transactions mean I owe tax?
Not always. A transfer between your own accounts or a genuine gift may not create taxable income, but a sale can trigger capital gains. You must classify each correctly while filing.
How do I handle off-market transactions while filing ITR?
Review each off-market entry in your AIS, identify whether it is a transfer, gift, or sale, and report any resulting capital gains correctly so your return matches the AIS and avoids a mismatch notice.
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