clarification regarding short term capital gains on intraday trading

smartboy1jan1982 · #1 3rd August 2007, 08:48 PM

hello everyone.i am new to traderji and want to start intraday trading in equities.i have a query about short term capital gains. as i understand about brokerage ,stt,stamp duty,on intraday trading is that these all charges are automaticaly paid by the brokerage firm from our trading account after every transaction.what about the short term capital gains on profit made by me on intaday trading in stocks.how and when would i have to pay the short term capital gains. as i am a student and have never filed any income tax return , i am not able to figure out fully that how will i be taxed by the income tax department.since i would be strictly doing intrady trading and have no other source of income like salary or anyything else, will i be treated as a businessman or trader and would have to pay only income tax on the profits arising through online intraday trading or would i have to pay short term capital gains only at the rate of 10 percent.how would i compute my income tax.please expain me in detail as i am new to trading and taxes. thanks in advance for your time and help. eagery awaiting your response.

patodiasunil · #2 8th August 2007, 04:51 PM

intraday income is considered as speculation income & will be taxed @35% and not 10%.

you will have to fill income tax returns & pay your taxes.

girlie999 · #3 9th August 2007, 05:15 PM

hi everybody......i am new to traderji and trading as well, i'v been a silent reader all the while with traderji.I have started trading with IPO's only to start off and i'd like to know wat tax would be applicable for gains with IPO's.Thanks.

aca_trader · #4 9th August 2007, 08:58 PM

Quote:

Originally Posted by girlie999

hi everybody......i am new to traderji and trading as well, i'v been a silent reader all the while with traderji.I have started trading with IPO's only to start off and i'd like to know wat tax would be applicable for gains with IPO's.Thanks.

If you sell them within one year, Short Term Capital Gain would be applicable otherwise Long Term Capital Gain would be applicable. Rates for STCG on sell of securities is 10% while for LTCG it's NIL provided the transaction takes place on a recognised stock exchange.

Best Regards,
--Ashish

ryanraghu · #5 19th August 2007, 09:33 PM

Hi Ashish,
Are you sure whether it is 10% or 35% for the short term capital gains.
If u are doing Intraday trading (cash or derivatives) then you are taxed at 35 of the profit that you earn...This is what I understand.

Can someone pls clarify the same.

Cheers,
Raghu

Quote:

Originally Posted by aca_trader

If you sell them within one year, Short Term Capital Gain would be applicable otherwise Long Term Capital Gain would be applicable. Rates for STCG on sell of securities is 10% while for LTCG it's NIL provided the transaction takes place on a recognised stock exchange.

Best Regards,
--Ashish

funfun1968 · #6 24th October 2007, 05:12 PM

Quote:

Originally Posted by ryanraghu

Hi Ashish,
Are you sure whether it is 10% or 35% for the short term capital gains.
If u are doing Intraday trading (cash or derivatives) then you are taxed at 35 of the profit that you earn...This is what I understand.

Can someone pls clarify the same.

Cheers,
Raghu

Dear Raghu
From reading discussions I conclude that: Tax is 10% for short term sell (less than 1 year, but greater than 1 day) on (gain-loss). Is it correct?

aca_trader · #7 24th October 2007, 06:51 PM

Quote:

Originally Posted by funfun1968

Dear Raghu
From reading discussions I conclude that: Tax is 10% for short term sell (less than 1 year, but greater than 1 day) on (gain-loss). Is it correct?

There are several factors which must be taken into account while determining if a person is involved in trading or investment. Further, a person may have both trading and investment portfolio. Hence, the first aspect to be judged is the nature of INcome. If it's classified as "Profits or Gains from Business or Profession (Trading)" then the income will be taxed as per the tax-slab of the individual. While period of holding is an important criteria, just because the trade was not squared-off intraday won't classify it as investment.

On the other hand, if the activity is classified as Investment, then the income is taxable as Capital Gains. In this scenario, the period of holding affect the rate of tax. The Rate is 10% if holding period is less than 1 yrs while it's NIL if the investments are sold after 1 year from the date of acquisition.

Best Regards,
--Ashish

aca_trader · #8 24th October 2007, 06:53 PM

Quote:

Originally Posted by ryanraghu

Hi Ashish,
Are you sure whether it is 10% or 35% for the short term capital gains.
If u are doing Intraday trading (cash or derivatives) then you are taxed at 35 of the profit that you earn...This is what I understand.

Can someone pls clarify the same.

Cheers,
Raghu

For Short Term Capital Gain, the rate is 10% only. However, if it's a business income, then tax will be applicable as per the Income Tax Slab of the individual. Intraday Trading is classified as Business Income.
The highest tax-bracket as of today is 30%.

Best Regards,
--Ashish

pasha · #9 25th October 2007, 03:48 PM

Hi Ashish,
What is the tax on profit from Equity based mutual funds held less than a year?

>For Short Term Capital Gain, the rate is 10% only.<
How is short term capital gain defined in terms of time? Would'nt all trading income be classified as Business income irrespective of time, provided all trades are held less than a year?

aca_trader · #10 25th October 2007, 04:31 PM

Quote:

Originally Posted by pasha

Hi Ashish,
What is the tax on profit from Equity based mutual funds held less than a year?

STCG @10%

Quote:

How is short term capital gain defined in terms of time?

If a Capital asset is hold for a period of less than 3 years (1 year in case of securities), STCG is applicale.

Quote:

Would'nt all trading income be classified as Business income irrespective of time, provided all trades are held less than a year?

Once it's established that the activity carried out was Trading and Not Investment, Income would be taxed as business income irrespective of the holding period. Even if the holding period is more than 1 year, the income will be treated as Business Income in this case.

Best Regards,
--Ashish

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