1. When Investment In shares by a indivisual is treated as Speculation Income? 2. Is the indivisual has his own option of claiming it as STCG or Speculation Income? 3. If an indivisual investor both take delivery & make intraday purchase & sale of shares whether he is taxable under both the head or which is benificial to him. 4.please tell me the date & no of such CBDT circular.
Investment in shares by an individual can never be considered as speculation income. However if the individual is a day trader, i.e. he purchases and sells shares without taking delivery thereof then such income would be a speculation income.
Whether the income from purchase sell of shares is chargeable as STCG or business income depends on a number of factors. Recently, the CBDT has come out with a circular regarding this classification.
1. Purchase and sell of share on the same day without taking delivery would be treated as speculation income. 2. If the individual is engaged in delivery based trading the income shall be taxable as STCG(if held for less than 1yr.) or as Business Income (Non-speculative). It depends mainly on the intention of the individual and whether the shares has been purchased as stock in trade or for investment purpose.CBDT circular no.4/2007 dated 15-06-2007 lays down guidelines for distinction between shares held as stock in trade or as investment.
3. Intraday purchase and sale would be regarded as speculative income. DElivery based trading will be taxable under STCG or PGBP based on the above guidelines.