Fire your tax related quieries and i would get it solved!!!

diosys · #1 28th July 2007, 10:26 AM

Hi all....

I thought a lot of our traderji members would be having taxing issues...Hence i am launching this thread for people who wish to seek some advice on issues pertaining to Income Tax or Service Tax....

I would try to solve them to the best of my ability and knowledge....

See Ya all....

swagat86 · #2 28th July 2007, 10:31 AM

I recently read abt a CBDT circular that gains from capital mrkts wud be considered business income and will be charged in the same way. Not CG anymore.

Am i ryt? Is it applicable from this FY? And if applied wat can be the implication to Trader/Investors?????????????

diosys · #3 28th July 2007, 10:49 AM

Quote:

Originally Posted by swagat86

I recently read abt a CBDT circular that gains from capital mrkts wud be considered business income and will be charged in the same way. Not CG anymore.

Am i ryt? Is it applicable from this FY? And if applied wat can be the implication to Trader/Investors?????????????

What you had read is true.....It is our beloveds FM way to increase litigation even more....It would now be a cat mouse game between the department and the assessee....

See first let me inform you that this circular has two basis distinctions....

One....You may be called a trader....You may so be called if you have done heavy buying and selling....bet it intra day or not....it does not matter....what matter is the intention with which the shares were bought....If they were bought with an intention to keep them for the long term then they would not be trader and be classified as investor....If you are a trader then the income is chargeable to tax in the head of business and tax payable @ 30%....But there may be a benefit in it.....

.....If you socks in hand which are lower than your cost then they would be valued at that and accordingly your closing stock would be less which would mean lower tax outgo...

Second...The opposite of trader is an investor...Here again the intention of purchasing is the key.....

One thing good that this circular has said is that a person can have two portfolios.....that he can be a trader in one set of shares and can be a investor for another set of shares....

and finally just for your information......CBDT circulars and not binding on the assessee but are binding on the department....therefore you can take out the beneficial portion from the circular and throw the rest away....

aharish_iitk · #4 28th July 2007, 05:18 PM

How are the losses or gains in the derivative market taxrd?

Thanks & Regards,

Harish Awasthi

swagat86 · #5 28th July 2007, 09:40 PM

Quote:

Originally Posted by diosys

What you had read is true.....It is our beloveds FM way to increase litigation even more....It would now be a cat mouse game between the department and the assessee....

See first let me inform you that this circular has two basis distinctions....

One....You may be called a trader....You may so be called if you have done heavy buying and selling....bet it intra day or not....it does not matter....what matter is the intention with which the shares were bought....If they were bought with an intention to keep them for the long term then they would not be trader and be classified as investor....If you are a trader then the income is chargeable to tax in the head of business and tax payable @ 30%....But there may be a benefit in it.....

.....If you socks in hand which are lower than your cost then they would be valued at that and accordingly your closing stock would be less which would mean lower tax outgo...

Second...The opposite of trader is an investor...Here again the intention of purchasing is the key.....

One thing good that this circular has said is that a person can have two portfolios.....that he can be a trader in one set of shares and can be a investor for another set of shares....

and finally just for your information......CBDT circulars and not binding on the assessee but are binding on the department....therefore you can take out the beneficial portion from the circular and throw the rest away....

thanks for that Info

Saint · #6 29th July 2007, 03:03 AM

Great going,Diosys!This thread will be of great help to many.....

All the best!
Saint

DWeeP · #7 29th July 2007, 07:31 AM

I still have physical shares of companies such as ril, l&t, sbi, etc in name of my father, aunts. I want them in demat form in my name...
Now what is the best way- do i open a separate demat account for each name and then transfer to my name via electronic transfer?
or fill direct transfer form ?
as all will be reflected in my demat acc and hence pan card but not in my bank acc as we r the family members holding the shares, so no money is to be paid but the transfer is to be taken as buy/sell. and i ll have to pay brokerage if i go for direct transfer.
what will be tax in each case? the shares are held for more than 3 yrs so no CGT ?
Something like gifting the shares...or anything else would reduce/eliminate tax?

srisrini · #8 29th July 2007, 09:18 AM

Sir,
Thanks for your endeavour to clear our doubts.

Well. Assuming that F&O trades are treated as "business" by the department, how the turnover for tax audit is to be calculated.

It seems that almost all traders doing F&O trades would be in the tax audit net atleast as far as the department goes.

Thks & Rgs.
Srisrini

diosys · #9 29th July 2007, 09:20 AM

Quote:

Originally Posted by aharish_iitk

How are the losses or gains in the derivative market taxrd?

Thanks & Regards,

Harish Awasthi

Dear Harish....

Taxing of Derivatives would be in the same manner as i have already described in my previous post....i.e. you would have to see if you are dealing in it regularly and with what intention....

Intention at the time of purchasing is the key to you being taxed in which head !!!

diosys · #10 29th July 2007, 09:29 AM

Quote:

Originally Posted by DWeeP

I still have physical shares of companies such as ril, l&t, sbi, etc in name of my father, aunts. I want them in demat form in my name...
Now what is the best way- do i open a separate demat account for each name and then transfer to my name via electronic transfer?
or fill direct transfer form ?
as all will be reflected in my demat acc and hence pan card but not in my bank acc as we r the family members holding the shares, so no money is to be paid but the transfer is to be taken as buy/sell. and i ll have to pay brokerage if i go for direct transfer.
what will be tax in each case? the shares are held for more than 3 yrs so no CGT ?
Something like gifting the shares...or anything else would reduce/eliminate tax?

Dear Dweep....

It does not matter how you transfer....there would be no tax impact on you relatives as there is no SALE.....In income tax to pay capital gain there has to be sale....it is gifting hence there is no capital gain....that is clear from there angle...

When you sell then the cost of the original purchaser becomes your cost....

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The Following 2 Users Say Thank You to diosys For This Useful Post:
balraj167 (18th August 2008), Saint (29th July 2008)