Last Chance: Get 10% OFF on CAclubindia Pro Subscriptions. Subscribe Now!

Income from Intra Day Trading with Loan

581 views 1 replies

Ragh

ceo

25 Points Posted on 06 January 2014

Hi,

I have a query like,

If I am an Intraday Trader trading mainly in MCX and the investment for trading is raised as a loan and the profit made from trading (mainly intraday) is utilised in paying off the loan with principal and interest (assuming all the net profit made is paid back to the loan), will the profit be taxed or not? Will i get any exemptions for utilising the profit to pay off my loan?

EX:-

Loan raised - 100000/-

Investment in trading account - 100000/-

net profit by year end is 30000/-

Rs 30000/- paid off towards loan as interest and principal repayment, will i have to pay tax for Rs 30000/-

Replies (1)

Stranger

5531 Points Posted on 07 January 2014

Respected Sir,

Only education loan interest, repayment of housing loan principal & interest on housing loan is allowed u/s-80E, 80C & 24(b) of The Income Tax Act, 1961 respectively. So repayment of loan (including interest) taken for investment purpose is not allowed under the Act. Besides, as far as my knowledge is concerned, the taxability of such profit depends on whether it’s a business profit or capital profit. If it’s like future options, etc (which I m not sure as u said u r in intraday trading, i.e., same day trading) it will be treated as business income and fully taxable u/h “PGBP”. But if it’s like shares then you will be taxed u/h “capital gain”, except if it is LTCG on equity based shares listed in RSE & STT has been paid accordingly. I would like to advise you to take a second opinion from experts & other reliable sources as well.