Capital gain tax and tax on income from trading


I wont call myself a full fledged trader since some of my holdings are for long term. But I do have a "trade only" list of scrips I do trading on. My question is -
How do I calculate my taxes? I have 30% scrips that I am holding for more than a year. I trade in the rest of them.

There is some ambiguity in the taxes clause. It says if you do not hold for more than 12 months then the income on the gains comes under Income Tax and not capital gain tax.

Please send suggestions on best practices to reduce taxes. How are you guys managing it?

Thanks in advance,

Hi !
It is for the ITO to decide whether you are a trader or an investor.All the same check out the CBDT Circular ( I forgot the No... 4? ) which states that one can have two portfolios .One as an investor and other as a trader. The trading income has to be accounted for in the tax slab . But my question is can an investor like you have short term capital gains? I have the same problem as you do and I belive many of us are in the same boat.


Active Member
Just google for CBDT +trader +investor
and you'll find the circulars or posts giving the circulars in their entirety.
My understanding is that to play safe, its better to declare every thing as trading income rather than risk tangling with the boys from the IT dept!

Hi Eeveryone,

i have a similar question

Long term capital gain is (1 yr and above)

i bought 300 RPL in feb 07 and add accumulated 300 more in Dec 07

in march 08, 300 RPL of feb 07 would have completed 1 yr i can sell. but i have accumulated 300 more in dec mar 08 how can i keep track of 300 + 300 and when i sell how will i know that i sold the first 300 script only....pls hepl...

It's always first in first out. You need to keep a track of which lot was purchased, at what cost and when etc. Every sale applies to the earliest purchased lot prior to the sale.


Active Member
I dont agree to declare all as trading, becauseTrading gains are taxed as business profits and hence income tax is to be paid @30%.

For investor, STCG is now 15% and LTCG is nil.

It is thus sensible to hold seperate portolio for trading and investment.
This is because if one is assessed as trader, then liable to 30% tax even on entire gains (irrespective of short or long term) ...LTCG exemption will not be allowed...cos its not capital gains but business profits.


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