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Tax on income from share trading business

Manish Rathod (Student) (78 Points)

14 April 2011

Is it true that income from share trading business is taxed at flat 30% and not individual tax slabs? Would it be better if i do it under a concern like M/s ABC Enterprises?

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12 Replies

(Guest)

it will be taxed as per tax slab....

1 Like

M. N. JHA (CA) (8316 Points)
Replied 14 April 2011

Share trading Business means ????????

In Equity as Investment

Intraday

trading in future and option

because all have taxed different rate and ruels

and who say flat rate of 30% ???

Anumanchipalli Sathikonda (Tax Consultant) (1349 Points)
Replied 14 April 2011

Mr.Shahid Afridi

The courts have taken different view regarding the income derived from frequent purchase and sale of shares.

Some courts have said that the income is busines income and other courts have held that the income is to be taxed under the head 'Income from Capital Gains'

i am herewith attaching the judgements.

Best wishes

Sathikonda

Attached File : 25 case laws regarding purchase and sale of shares.zip downloaded: 453 times

2 Like

Manish Rathod (Student) (78 Points)
Replied 14 April 2011

@ GN Jha

By Share trading business i meant F&O and cash market trading with a profit motive. tax rate would have been flat 30% for p'ship firm.....i was not sure for proprietory....now i know that it would be as per slabs

@ Sathikonda

thanks a lot for sharing the relevant case laws

M. N. JHA (CA) (8316 Points)
Replied 14 April 2011

@ sahid it will taxable as per slab rate in ur case

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 14 April 2011

Originally posted by : Shahid Afridi
	@ GN Jha By Share trading business i meant F&O and cash market trading with a profit motive. tax rate would have been flat 30% for p'ship firm.....i was not sure for proprietory....now i know that it would be as per slabs @ Sathikonda thanks a lot for sharing the relevant case laws

for partnership firm and company ...every income is taxed @ 30% whats new in this ?

share trading business generally known as activity conducted by individual and HUF.

Anumanchipalli Sathikonda (Tax Consultant) (1349 Points)
Replied 15 April 2011

Dear friends

I am attaching a pdf file which contains another case law on the subject being discussed.

Best Wishes

Sathikonda

Attached File : 30 ramesh babu rao shares stcg.pdf downloaded: 290 times

CA Shiv (Business Controller) (2987 Points)
Replied 15 April 2011

Well there is no such case law ( latest one) or in the IT act to decide about the nature of the transaction.

You have mentioned that it is a share trading business. SO you need to check the volume of trading.
if its done regularly than it is business income and 30% wil be applicable.

IF it is done occasionally than it is STCG.

SIDHARTH DHIR (senior articled assistant) (623 Points)
Replied 15 April 2011

F&O trade is a business income.... shares trade Cap Gain

Commodity currency trade business income

Anumanchipalli Sathikonda (Tax Consultant) (1349 Points)
Replied 15 April 2011

Mr.Shivang

Business income cannot be subjected to flat rate of tax. It should be taxed on slab rate in the case of an individual. If the assessee is a firm or a company the rate of tax is 30%. Hope I have clarified the matter. Your answer is incomplete for the reason you have not mentioned the status of the assesee.

Untill the matter is settled by the Supreme Court we have to follow the judgement of jurisdictional High Court.

Best Wishes

Sathikonda

Kamal Kothari (CWA) (169 Points)
Replied 16 April 2011

Normal rates of tax will apply and not flat rate.

seena mv (Article Assistant) (56 Points)
Replied 29 June 2012

Intraday Trading or Trading in Shares is taxable under the head business income,Actually it is the purchase of shares made with the motive of earning profit.

If a person holding the shares for a considerable period of time to accumulate wealth (dividend) it comes under capital gain & the holding period is exceeding 12 months then no tax levied provided STT is paid,otherwise tax is levied @ 15% on his net capital gain.