individual trading in shares & stocks
This query is : Resolved
26 August 2010
An individual is trading in shares & stocks...both intraday as well as delivery based (holding for 2-5 days).
how will his taxable income be calculated?
1) capital gain, or
2) Speculation business
In both the above cases what will be treatment of STT paid during the year, and STT/ brokerage paid on the shares held as stock in trade as on 31st march.
If both (1) & (2), then will he be maintaining separate books for each kindo transaction.
how will his taxable income be calculated?
1) capital gain, or
2) Speculation business
In both the above cases what will be treatment of STT paid during the year, and STT/ brokerage paid on the shares held as stock in trade as on 31st march.
If both (1) & (2), then will he be maintaining separate books for each kindo transaction.
26 August 2010
Looking towards the period of holding the delivery trade would be business income non speculative. Explanation to section 73 is only applicable in case of companies not individuals.
Intra day trading is speculative business income.
Intra day trading is speculative business income.
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26 August 2010
thanx, but a few more querries.
If it is non-speculative, then won't it come under capital gain as STCG? and what about STT and valuation of closing stock?
If it is non-speculative, then won't it come under capital gain as STCG? and what about STT and valuation of closing stock?
26 August 2010
Your respective queries are answered here
1. Intra day trading is considered as speculative business income.
2. In delivery trade you have mentioned that the perios of holding is 2 - 5 days. So looking into your period of holding the ITO will tax your income as income from business and not income from capital gains.
There is a circular to determine whether share trading income would be business or capital gains and one of the conditions to be checked is the period of holding.
3. In case of valuation of closing stock of shares the valuation could be done as cost or market value whichever is lower. From F. Y. 2008 - 09 STT is an allowable expenses from business income but not for capital gains. So cost of shares can be inclusive of share trading charges and STT.
1. Intra day trading is considered as speculative business income.
2. In delivery trade you have mentioned that the perios of holding is 2 - 5 days. So looking into your period of holding the ITO will tax your income as income from business and not income from capital gains.
There is a circular to determine whether share trading income would be business or capital gains and one of the conditions to be checked is the period of holding.
3. In case of valuation of closing stock of shares the valuation could be done as cost or market value whichever is lower. From F. Y. 2008 - 09 STT is an allowable expenses from business income but not for capital gains. So cost of shares can be inclusive of share trading charges and STT.
26 August 2010
thanx.
"STT paid is deductible from business income", isn't it?
So, STT is deductible on paid basis na!
that's STT paid during the year,
or , it is to be allowable on accrual basis?
plz reply again. Also plz provide the IT circular no& detail u have referred above.
"STT paid is deductible from business income", isn't it?
So, STT is deductible on paid basis na!
that's STT paid during the year,
or , it is to be allowable on accrual basis?
plz reply again. Also plz provide the IT circular no& detail u have referred above.
26 August 2010
Refer circular no. 4/2007 from here
https://law.incometaxindia.gov.in/DIT/File_opener.aspx?page=CIR&schT=&csId=1265ffc5-f116-4812-94a9-4e854b3ca5bb&crn=&yr=2007&sch=&title=Taxmann%20-%20Direct%20Tax%20Laws
and STT as per section 36(1)(xv)
(xv) an amount equal to the securities transaction tax paid by the assessee in respect of the taxable securities transactions entered into in the course of his business during the previous year, if the income arising from such taxable securities transactions is included in the income computed under the head “Profits and gains of business or profession”.
Explanation.—For the purposes of this clause, the expressions “securities transaction tax” and “taxable securities transaction” shall have the meanings respectively assigned to them under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004).
https://law.incometaxindia.gov.in/DIT/File_opener.aspx?page=CIR&schT=&csId=1265ffc5-f116-4812-94a9-4e854b3ca5bb&crn=&yr=2007&sch=&title=Taxmann%20-%20Direct%20Tax%20Laws
and STT as per section 36(1)(xv)
(xv) an amount equal to the securities transaction tax paid by the assessee in respect of the taxable securities transactions entered into in the course of his business during the previous year, if the income arising from such taxable securities transactions is included in the income computed under the head “Profits and gains of business or profession”.
Explanation.—For the purposes of this clause, the expressions “securities transaction tax” and “taxable securities transaction” shall have the meanings respectively assigned to them under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004).
26 August 2010
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