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STT deduction from salary income

Nomula Sreenivasarao (DGM -Accounts) (163 Points)

21 April 2010

Dear all,

My friend having salary income of 200000( after all deductions), he has also doing shares trading often(not daily basis). and he has no loss/profit from shares bussiness. He paid 2000/- as securities transaction tax in the whole year.

Cane he claim the STT. from salary income. Is there any exemption for STT from income. Please tell me.

Regards,

N.Sreenivaas

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6 Replies

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 21 April 2010

No STT can't be claimed as deduction with salary income.

regards,

ratan

Nomula Sreenivasarao (DGM -Accounts) (163 Points)
Replied 21 April 2010

Dear Ratan,

It can claim from shares bussiness income.

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 21 April 2010

The income from share transaction can occur in following forms

1. Share trading

2. Speculative trade

3. F & O transactions

4. Capital Gains

Allowance of STT for First three types (1, 2 & 3)

From Assessment Year Asst Year 2009-10 (FY 2008-09 ) , Securities Transaction Tax (STT) is defined as an expense u/s 36(xv) of the I T Act

(xv) an amount equal to the securities transaction tax paid by the assessee in respect of the taxable securities transactions entered into in the course of his business during the previous year, if the income arising from such taxable securities transactions is included in the income computed under the head Profits and gains of business or profession.

Therefore , for share trading income, or speculative income, or Futures & Options trades , STT is an expense and deductible.

Can You Deduct STT from Capital Gains?

However , if you are selling the shares as investments , the STT can not be deducted as cost of acquisition . This is provided under the proviso to section 48 which is regarding cost of acquisition

Proviso to section 48

Provided also that no deduction shall be allowed in computing the income chargeable under the head Capital gains in respect of any sum paid on account of securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004

Thumb rule is that STT is cost for all kinds of transactions except capital gains.

regards,

ratan