Cost of Acquisition
The amount treated as having been paid for an asset, used as the base against which a capital gain is computed.
Formula
Capital Gain = Sale Consideration - Cost of Acquisition - Transfer Expenses
Unit
₹
In depth
The cost is usually what was paid, but several situations change it: bonus shares carry a nil cost, shares received as a gift or inheritance carry the previous owner's cost and holding period, and equity held before 31 January 2018 uses the grandfathering rule. Getting this wrong is the most common error in Indian capital gains filing, and it usually works against the taxpayer by inflating the gain. Brokerage paid on purchase is added to the cost, while securities transaction tax is not. Where a demerger has occurred, the original cost splits between the two companies by their net book values.
Worked example
Bonus shares received on a 1:1 issue have a cost of acquisition of nil. Selling 100 bonus shares at ₹300 produces a ₹30,000 gain, not the zero that the free receipt might suggest.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Cost of Acquisition” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.