stt deduction

dikki52 · #1 20th November 2008, 04:26 AM

i do a lot of trading activity in my portfolio. But i ensure that there is no intra day trade. The stocks are credited to my demat and then only i sell the stocks. tading is not my business i am an investor
While computing Capital gains tax am i entitled to consider STT .

For Eg

Stocks Purchased 100 Stt paid 10
Socks sold 110 Stt paid 11

How is capital gains computed

manoranjan panda · #2 20th November 2008, 08:03 AM

Yes, you can consider STT.
Eg
Your cost price = Rs 100 + 10 paise = Rs 100.11
Your sale price = Rs 110 - 11 paise = Rs 109.89
So your capital gain = sale price - cost price = Rs 109.89 - Rs 100.11 = Rs 9.78.

However, just because you do not do intra day trading does not mean that you are an investor. Income tax authorities look at your frequency of trading, trading volumes, and how big is it as a part of your income before classifying you as an investor/trader.

Panda

diosys · #3 20th November 2008, 04:29 PM

according to me STT cannot be added to purchase or subtracted from sale....It can only be claimed as an expense....More so specially if you are in capital gains category....

vasa1 · #4 20th November 2008, 09:23 PM

Quote:

Originally Posted by diosys

according to me STT cannot be added to purchase or subtracted from sale....It can only be claimed as an expense....More so specially if you are in capital gains category....

Point taken, but can't it be argued as part of the cost (expense) of acquisition/sale in the case of capital gains?

If you are sure it is an expense, under which head of income can it be shown as an expense

?

diosys · #5 21st November 2008, 10:23 AM

Quote:

Originally Posted by vasa1

Point taken, but can't it be argued as part of the cost (expense) of acquisition/sale in the case of capital gains?

If you are sure it is an expense, under which head of income can it be shown as an expense

?

Nope Vasa, cannot be part of cost since this comes under the head of business income...hence cannot be added to cost of capital asset

hitesh · #6 21st November 2008, 11:32 AM

When a person is considered to be an investor in shares, the gains made from the investment fall under the head of capital gains and there is a concessional rate of tax applicable for transactions conducted through the stock exchange. The short-term capital gains rate in such a situation is 10 percent and the long-term capital gain is tax-free. HENCE STT can neither be added to COST NOR it can be claimed as a deduction.

In case a person is considered to be a trader, the entire income will be considered as income from business and the net income would be taxed at the applicable rates. In this case, STT can be claimed as expenses.

Whether a person Trade intraday or not, the Assessing Officer has powers to determines whether a person is a trader or an investor in stocks, based on guideline issued by CBDT in this regards.

Hitesh.

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