Hi
My friend asked an interesting query.
[Background]
He purchased Kotak gold ETF in small quantities over the years from 2008 to 2017 using dmat account with reputed broker. its like very disciplined SIP, he invested regularly.
Now over the years Kotok gold ETF has undergone two splits. (22-07-2021 and 13-04-2015)
The broker website portfolio uses old price and new (After split) unit count for purchase price computation. Effectively his portfolio shows some 80-90% loss in Kotak gold ETF portfolio. (Reflected Purchase price is incorrect)
He raised queries with broker, visited local offices without luck. They can’t correct it on backend.
[Query]
OK… his query is when he will sell his ETFs or part of ETFs, how he will produce the authentic data for the capital gain calculation?
He cannot download portfolio transaction statement as it shows capital loss (purchase price is in reflected is correct).
[What he and me tried to do]
- In Mutual funds world, AMC has Authentic information so if broker has incorrect info, he can go to AMC website and find out information about capital gains.
But in ETF he could not find such option on Kotak MF AMC site.
- Some guy in Borkers branch office suggested in hush hush words, to modify the transitions manually on website. Which my friend is not ready as there more than 100 transactions, every truncation has to be manually changed. Which is highly error prone.
On the top of it, once you change manually, there are two issues,
- brokers website refuses to take responsibility of portfolio correctness its once manually modified, it means its not authentic information.
- what if there is one more split? It means he has to do the exercise again.
- Raised the tickets with different words to explain the problem, every time they closed with comment “it can’t be done at backend , customer is free to modify portfolio entries manually”.
[Help needed]
Splitting is not specific to my friends gold etf purchase, We suspect that there is something which brokers office is hiding, As we both don’t understand nuances of stock transactions , taxes etc, we cannot ask specific query to get what want.
Anyhow
What is the most painless way to handle this situation? How to get/generate correct capital gain information for tax purpose when ETF has undergone multiple splits during course of ownership
@Quicko ? Any one else who have experienced similar situation?
.
Can this scenario, including …
- broker’s incorrect portfolio report of the ETF holdings.
- lack of reports/transparency on AMC managing the ETF,
- broker’s unsatisfactory response to tweak the report manually
…be flagged/reported to SEBI using SCORES ?
Typically I tend to avoid any sort of friction, so it would be challenging for me to convince my friend to take it up.
Since this is not a unique situation, I was thinking there would be some generic solution available about how splits in an ETF are handled/documented in transaction history.
However if SCORES is the path forward, I would advise it up. Thanks a lot @CVS for the suggestion.
PS he confirmed it happened with a few old stocks also, which have undergone splits.
What he simply does is sell less than 1 L rupees in a year to avoid long term capital gains calculations.
So basically in the last two years he sold only stocks which have discrepancies in brokers’ websites portfolio view due to historical splits.