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Income tax for full time stock trader

23 December 2014

My query is as follow

I am Full time stock trader / investor and sub broker also

Last years my income is as follow

Got Brokerage Of rs 200000/-
Short Term Capital Gain 400000/-
Intraday / Fut Loss - 150000/-
Long Term capital Gain 300000/-

* while trading I have paid 60000/- of STT,
* investment I have took loan against shares for which i paid 150000/- interest in during financial year.

*Now my problem is how should i file my income tax return as ?
*what will be my tax liability ?
*can i treat my Interest on Loan against shares as expenses ?

I have rounded off figures for easy understating***

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2 Replies

Roshan Thomas (C.E.O ) (356 Points)
Replied 23 December 2014

Income from business - 50,000/-

Short Term Capital Gain - 4,00,000/-

Long Term Capital Gain - Exempt Income

Total Income = 4,50,000/- (if STT is not netted off here, then deduct proportionate STT as cost of acquisition out of 60,000, do not consider STT on long term capital gain)

Tax on Income (2,00,000 basic exemption)

STCG = 2,00,000 * 15% = 30,000

Normal Income = 50,000*10% = 1,000

Total tax = 31,000/-

Interest on loan taken against shares cannot be taken as expense. What is the purpose of the loan ? Is it to generate a taxable income, then such interest can be taken as expense

Akash (CA Final (2nd Group Pending)) (876 Points)
Replied 13 February 2015

No exemption of long term capital gain. It will be taxed as normal business income. Debit all purchases, brokerages, charges and credit sale in Profit and loss.You will also debit STT as expense in Profit and loss. Intraday will be differentiated to Income from speculative trading.