Short term capital gain intraday trading

Simple Interest Income Tax May 22, 1 Comment. Most of Indian Taxpayers irrespective of their earnings are indulged in Share trading because it is seen as a quickest way of earning handsome money.

Also trading becomes easy with the rapid development in technology. Thus it becomes necessary to know the taxation on the earning from share trading. Before going into the taxation part, first it is important to understand what type of share trading activity you are indulged in:.

Identifying of transactions as trading transaction or as investment is not an easy task. To alleviate this difficulty CBDT had issued Circular No. CBDT in its circular has taken views of the Hon. Supreme Court in CIT Central , Calcutta Vs. Associated Industrial Development Co. Holck Larsen ITR 67 and the Ruling made by the Authority for Advance Rulings in the case of Fidelity North Star Fund and others — ITR In the above case, Authority for Advance Ruling laid down the principles for deciding a transaction in shares, to be classified as trading activity or an investment activity.

The significant nature of transactions, the manner of maintaining books of accounts, the enormity and ratio between purchase and sales and the holding period would furnish a good guide to determine the nature of transactions.

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The circular also recognizes the possibility of tax payer to have two portfolios, i. When an assessee has two portfolios, he may have income under both heads, i.

In the light of this circular we shall understand how the income from share transactions is to be taxed as capital gain or business income. Seven Golden Rules of Share Trading.

If you do not frequently buy and sell shares than all the gains from share trading is to be assessed as capital gains and the dividend received shall be assessed as Income from other sources [currently exempt under section 10 34 ]. In case there is long term or short term losses, the same can be carried forward for 8 years.

The short term capital loss can be set-off either against short term or long term capital gains from any source but long term capital loss can only be set-off against long term capital gains from any sources. Also remember that long term capital losses occur for shares where STT is paid cannot be carried forward for future set-off.

Taxation – How much tax do you have to pay from your profits? and how do you manage your losses? | yfyrurusus.web.fc2.com

Remember, an investor cannot claim any expenses such as internet charges, rent etc. All the gains earned is net income of the investor and tax is payable on this amount.

Mutual Funds guide for Beginners. Normal Trader means a person who does trading in shares but not on day to day basis as intraday trader. Normal Traders buy shares, take delivery and then sell it to book profit or gain. Normal Trader can also be categorized as an Investor but there is one major difference between normal trader and an investor i.

Normal Trader holding period of shares is always short-term while holding period of shares in case of an investor could be long-term as well as short-term. Apart from this difference, both normal trader and an investor are same in all aspects.

Pay tax without pain on stock market gains | Business Line

Both take delivery before selling but a point to remember is that in case normal trader who shows shares under stock-in-trade shall always be assessed under the head of Income from Business even he takes delivery of shares. Taxation of the Normal Trader is also same as an Investor i. How to increase your Mutual Fund Return?

Income from Equity Trading – Business Income or Capital Gains?

Taxation on the profits earned from Intraday trade is the most asked question by any trader since income tax in this case is not clear as under which head it should go and what tax rate should be taken to ascertain the tax liability. Section 43 5 of the Income Tax Act, , defines Speculative transaction as a transaction in which a contract for purchase or sale of a commodity including stocks and shares is periodically or ultimately settled otherwise than by actual delivery or transfer of the commodity or scrip.

Any profit or gain earned from day trading is called Speculative Income either Speculative Profit or Speculative Loss. Any person, engaged in intraday trading is automatically treated as someone who is trading in shares as business, thus his income shall be assessed as Income earned from Business and Profession and tax rate shall be same as any other business activity.

Speculative losses can be carried forward for the next 4 years provided taxpayer has declared the same while filing the tax return and net off only against any speculative profits over the next 4 years. Top Money Doubling Schemes in India. Derivative trading embraces Futures and Options trading on the various stock, commodity and currency exchanges in India.

All derivatives trading activities done through recognized exchange are not considered as speculative income like in intraday trading. Hence any profit or loss arising from derivative trading is treated as arising from business activity. All you need to Know about Arbitrage Funds? Purchase and sale of shares where deliveries have not been affected i.

Intra-day trading cash segment of share market. You can find here articles on Taxation, Financial Planning, Investment and reviews on IPO and Insurance Schemes, financial services and products. May 22, at I have some share on which I have loss, i think this share will never get even break-even value. According to you article It seem that I will not able to get even tax benefit of loss. But some where I have read that I share are sold off-market.

Kindly let me know as such provision is available or not. Home Submit Articles Contact Advertise Privacy Policy. Simple Interest The More you Learn, The More you Earn. Home Investment Banking Mutual Funds Income Tax Insurance IPO Review Due Dates FD Rates Guest Blog. Share on Facebook Share. Taxation on Gold Jewellery and Ornaments Holdings Simplified Income Tax Return Forms for AY Notified Public Provident Fund PPF All in One.

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