Short term capital gains tax or Business income

pkjha30 · #11 27th March 2005, 08:04 PM

Lock-in period of Six months would not be advisable as people invest in shares to make money. This is a high risk business where loss may be total. For example GTB shares. Normally retail share holders would claim STCG/LTCG. The lossess may be set off against respective gains. However this may not materialise. Why penalise investors by putting a lock-in period. He may very well achieve his target price the very next day or prices may plunge like black monday/friday .In such case he should have the option to book profit or cut losses.

Hence I sugest STT with Delivery based transaction (T+1, T+2) should qualify for STCG/LTCG and choice should be left to the Investors alone.

It is a fact that budget of IT Deptt. is much more than the IT collections. But they do concentrate on other things like corporate taxes , dividend taxes, wealth taxes etc. Income taxes from individuals are shared by States as per the recommendations of Finance Commissions.This constitutes an important source of revenue to the states.

But role of IT deptt. is not only in regulating White economy but also in generating Black economy which eats away at the vitals of the country. Customs and Central Excise also play their seminal role in this. One can only hope that Computerisation might bring in some sort of transperancy in their functioning.
Mr Chidambaram and his team of officials have talked about trust. Simplification of Tax laws are part of this. He means business and I hope that tax laws will not resemble jungle laws after few years and we can be proud of paying taxes rather than hiding income.

sh50 · #12 28th March 2005, 09:18 AM

Quote:

Why penalise investors by putting a lock-in period. He may very well achieve his target price the very next day or prices may plunge like black monday/friday

This is very well said. Actually to my mind, time period is of no relevance. Supposing its a very bullish market and you sell in three months, why should you pay business tax. Who will enlighten the ITO officer about the vagaries of the stockmarket and the fact that one cannot wait till six months to sell just to claim CG tax. All the govt people have ivory tower opinions about all these practical matters and arguing with them is like hammering your head against a brick wall. As Trader9 has said, the laws should be absoultely clear cut; there should be no scope for subjectivity.

The best way is no of transactions per period and that too whether it is followed througout the year. I may do day trading for a month but then opt out if I find that it is not my cup of tea. The entire income cannot be treated as business income in these circumsatances. I may even come back to investments after flirting with trading for a while. All this should be viewed with an open mind.

trader9 · #13 28th March 2005, 10:10 AM

Oh! well,

When a person invests, he/she does it for capital appreciation and protecting the real value of his/her money. On an average investments lasts for more than 1 to 2 years. Any gain from such investments is definetly capital gain.

If you want to profit from the vagaries of the market, the ups and downs, you are having business/trading attitude towards the market and such profits should necessarily be taxed as business income.

When you get in and out of the market on a consistent basis, riding the 'waves' within short periods, you are trading.

pkjha30 · #14 1st April 2005, 12:04 AM

Since there is no tax, as of now, on long term capital gains there is no doubt about investment part of it. The question is what should consitute short term investment on which capital gains tax can be paid rather than taxing it as a business income.

In the present scenario, retail investors are not very well protected and mechanisms of Stock Exchanges leaves much to be desired.In fact there is not enough control, transperancy and most of the times it is small investors who are duped.

Therefore, Investor should be allowed to make a decision as to when he wants to get out of the market. it may very well be next day in order to cut lossess aor make a little profit.

However , Trader9 has a strong point about riding the waves. But I feel people are there to make money also and not only long term capital appreciation for which our economy has to grow at a much faster rate than one or two point higher(6.2%) than the inflation(5.2%).

Explaining a thing or two to govt officials may prove a difficult task than making money in the stock market

RajK · #15 17th October 2005, 05:01 PM

This is a grey area. According to my understanding if you trading (speculative) income is greater than normal income then your trading income is taxed as short term capital gains tax.

trader31339 · #16 1st January 2006, 04:57 PM

Help!!!
I had filed my last return in the year 2003 after that havent filed any rerurn.............

I incurred a trading loss of ~Rs 2lakh.(NET POSITION LOSS) .Also this was borrowed funds.

Eventually I took a break from trading and did not filed my return till date.I have started trading again.

I want to update my income tax matters and keep them upto date.

Please advise me what should I do...............what are the penal charges that I should have to pay....pls advise me like pro CA telling me what am I suppose to do

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