Stock trading income tax

1094 views 5 replies

shankar mazumder

stock trader

49 Points Joined March 2017

i do not have any other source of income except for stock market and I am below 60 years. For FY 16-17, I have Rs20,000 as intraday profit, F&O profit Rs 40,000 and Rs5,60,000 as short term capital gain Question: 1. Will I get the basic IT exemption of 0-2,50,000? Yes / No 2. intraday profit + F&O profit = 60,000, hence 2,50,000 - 60,0000 is 1,90,000 of short term capital gain get exempted from income tax. 3. Now Rs 5,60,000 - Rs 1,90,000 = Rs3,70,000 gets taxed at 15%? or it gets taxed in lower rate of 2,50,000-5,00,000 Lacs Income tax slab? 4. Can I invest Rs 1,50,000 under section 80C and get additional income tax deduction and pay lower taxs on the above mentioned Rs 3,70,000? 5. On top of this if I have a long term capital gain from real estate for 7,20,000 for which I have bought CG Bond of 7,20,000, is that enough? does this 7,20,000 gets clubed with any of the above mentioned heads?

Replies (5)

Studentsca

CA Practice

3577 Points Joined September 2012

Answers to your questions 1. Yes you are eligible for basic exemption limit of Rs. 2,50,000. Intraday trading profit and F & O profit is taxable as Income from Business & Profession.It is not treated as capital gain so no question of short term or long term. 3. STCG Rs. 5,60,000/- and not 3,70,000/- will be taxed at flat rate of 15%. 4. Deduction us 80C will be available against business income and not STCG. 5. If you have invested the sum in capital gain bonds then you can claim exemption us 54 and it will not be taxed or clubbed with other income.

shankar mazumder

stock trader

49 Points Joined March 2017

On real esate LT gain, I understood clearly.

I was given to understand that there are 2 different ways to file the IT return - as a trader or as an investor.

Definition: F&O+Intraday+Stock = Trader, Only stocks = Investor

If I file IT return as a trader and show everything as business or professional income then all my gains (stocks, f&o & intraday) are clubbed together and I can also take the advantage of IT slab (0-2.5, 2.5-5L etc) as well. I can also carry forward by losses to be offset in next 8 years.

If I file my return as investor that I will have to simply pay uniformly 15% on all STCG (stocks) and there is no slab or exemption. Kindly clarify

Studentsca

CA Practice

3577 Points Joined September 2012

You can show yourself as a stock trader and in that case income from shares would be your business income. On the positive side you get 1. Lower rate of tax, 2. Utilization of deduction us 80C 3. Benefit of showing expenses incurred and lowering your tax liability. However on the negative side you lose exemption of income from Long term capital gain us 10(38). So if most of your annual income is from Stcg and F&O and intraday then you can show those income as business income.

shankar mazumder

stock trader

49 Points Joined March 2017

Thanks for your earlier replies. In continuation to my questions. -

The long term gain made on real estate was a personal property and is not related to my business or profession as trading.

Hence can I file ITR 2 separately for long term gain from the real estate transaction and the exemption details.

And separately fill ITR4 to file my short term gains (stocks, F&O & intraday) and carry forward losses to take advantage during the next fiscal year. Kindly reply

Studentsca

CA Practice

3577 Points Joined September 2012

No that is not possible. You can file only 1-ITR form. Since you have income from Intra day and F&O that is considered as business income you have to file ITR-4. If you intend to show income from stock trading as business income as business income then it will go under that head along with Intraday. Else it will go under Capital Gain head. However since you going to income from stocks as business income even if there was no Intraday you would still have to File ITR-4.