Short term capital gain on shares

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HIREN BHATELIA

SPECIAL ASSISTANT

23 Points Posted on 09 April 2016

Short Term Capital Gains Tax on shares was fixed at 15% flat which intended to provide relief for investment in shares. However, while it provides concession to those falling in higher tax slabs of 20-30%, it punishes those in the lowest 10% tax slab. Recently, an option is provided to the assesses to treat profit on shares as business income which hitherto depended on concurrence of the assessing officer. In this context, my query is : 1. What should an individual with Salary and Interest Income only, besides occassional short term profit on sale of shares, do? Should he prefer to treat STCG on sale of shares as business income? If yes, what about the return form to be used by him? 2. If he prefers to do so, what about the long term capital gains on shares? Is it necessary to give similar treatment to LTCG on shares too?

Replies (2)

Tribhuvan Aditya Singh

Student as well as Self-employed

3853 Points Posted on 09 April 2016

i haven't heard of any such option as you say it. and in your case, i would not suggest to treat it as pgbp income. so far as ltcg on shares is concerned, it is exempt income. so no question to treat it under any particular head other than CG unless set off of stcl or ltcl is required.

HIREN BHATELIA

SPECIAL ASSISTANT

23 Points Posted on 10 April 2016

It appeared in the Economic Times website on 31.03.16. Quote "The Central Board of Direct Taxes (CBDT) issued circular No. 6/2016 on 29.2.2016 setting down certain guidelines to be followed by income tax officers in deciding whether profit/loss from sale of listed shares/securities would be treated as capital gains or business income. Several circulars and instructions have been issued previously regarding this matter however, this time the board has given the tax payer the option to decide the nature of his income arising on account of sale of listed shares/securities. The basic idea of issuing the circular is to halt the increasing litigation in this regard." Link: https://economictimes.indiatimes.com/wealth/tax/Taxation-of-income-from-sale-of-listed-shares-CBDT-circular-to-reduce-disputes/articleshow/51627307.cms (Note: Mine is the hypotetical query based on the above guidelines for academic purpose, I myself do not have any such income from shares)