Case Study :
An individual is a professional trader with no other source of income. He earns 25 lakhs from F&O trading in a financial year. This will be classified under the header "Income from Business".
Now, in the same financial year, he also earns 5 lakhs by trading in equity shares with holding period of less than 1 year. Will this be clubbed with his business income, or can be classified as Short-Term Capital Gains?
What if the holding period of the same shares was more than 1 year? Will he be able to claim such income under Long Term Capital Gains and pay no tax over it?
I ask this because there is no other source of income for the individual other than from the stock market and I have been told that for such a case, all the income will be clubbed under "Income form Business".
Thanks.
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Capital Gains on Equity Shares Traded
Replies (2)
" I ask this because there is no other source of income for the individual other than from the stock market and I have been told that for such a case, all the income will be clubbed under "Income form Business"."
Yes, Correct. Unless you are able to prove that the specific shares were brought for investment purpose.
You need to refer to circular no. 6/2016 read with Circular no. 4/2016 of CBDT.
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