As a trader or investor you had to pay taxes in various forms it depends on your category
- When you buy & sell within a day itself (between 9.15am – 3.30pm) market hours, then such transactions are called Intraday equity trades.
- As per rule, Intraday equity is Speculative business income. So here, there is no fixed taxation rate.
- Speculative losses can be carried forward for 4 years and can be set-off only against any speculative gains you make in that period.
- Speculative income has to be added to all your other income (salary, other business income, bank interest, rental income, and others), and taxes paid according to the tax slab you fall in.
F&O traders (Intraday & Delivery Basis)
- Income from trading F&O (both intraday and overnight) on all the exchanges are considered as non-speculative business income as per Income Tax Department.
- Similar to Speculative income, non-speculative business income has to be added to all your other income and taxes paid according to the tax slab you fall in.
- Non-speculative losses can be set-off against any other business income except salary income the same year. You carry forward non-speculative losses to the next 8 years; however, do remember carried forward non-speculative losses can be set-off only against any non-speculative gains made in that period.
Short Term Capital Gains (STCG)
- Any gains/losses in shares where the holding period is less than a year is considered as STCG. Fix tax of 15% on the gain. This is irrespective of any tax slab applicable.
- Any gain in investment in equity-oriented mutual funds held for less than 1 year is considered as STCG and taxed at 15% of the gain. Do note a fund is considered Equity based if 65% of the funds are invested in domestic companies.
- Short term capital losses if filed within time can be carried forward for 8 consecutive years and set off against any gains made in those years.
Long Term Capital Gains (LTCG)
- If you sell any holding after one year, it can be 13 months, 2yrs, 5yrs, etc. is considered to be long term.
- We have 0% tax if gains are less than 1 lakh and then Fix tax of 10% on the gain. This is irrespective of any tax slab applicable.
- There is no separate tax slab for income through dividend. The dividend income is the taxable income which is taxed as per the slab rates applicable
- If your dividend income is greater than 5000 from any individual company, than 10% TDS will be deducted by that company, which will be claimed back when filing ITR.
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