4.1 – Quick recap
In continuation of the previous chapter: Classifying your market activity
You can consider yourself an investor when –
- Buying and selling stocks after taking delivery to your DEMAT account
If the frequency of transactions (buy/sells) is high, it is best to consider them as trades and not investments. If considered as trades, any income is non-speculative business income, whereas if these are investments, then it falls under capital gains.
Keeping this in perspective, you may have few questions –
- What is long term?
- What is considered high frequency of transactions (buy/sells)?
We discussed this in the previous chapter, but just to refresh your memory – there is no set rule from the IT department to quantify ‘frequency’ or determine ‘long term’.
As long as your intent is right, and you are consistent across financial years in the way you identify long term or high frequency, there is nothing to worry about.
Do note, if you are indulging in equity delivery based trades as frequently as a few times every week, it would be best to consider all of them as ‘trades’ and classifying income from them as business income instead of capital gains.
Reiterating again that if investing/trading on the markets is the only source of income, and even if you are trading with moderate frequency, it is best to classify income from all your equity trades as a business income instead of capital gains.
On the other hand, if you are salaried or have some other business as your primary source of business, it becomes easier to show your equity trades as capital gains even if the frequency of trades is slightly higher.
Updated 2nd March 2016
Finally, the income tax department has brought in clarity by allowing an individual to decide on his own to either show his stock investments as capital gains or as a business income (trading) irrespective of the period of holding the listed shares and securities. Whatever is the stance once taken, the taxpayer will have to continue with the same in the subsequent years. Check this circular.
So essentially,
- Stocks that you hold for more than 1 year can be considered as investments as you would have most likely received some dividends and also held for a longish time
- Shorter-term equity delivery buy/sells can be considered as investments as long as the frequency of such buy/sell is low.
- If you wish, you can also show your equity delivery trades as a business income, but whatever stance you take, you should continue with it in the future years as well.
The focus of this chapter is on investing; hence we will keep the discussion limited to just points 1 and 2. We will talk about taxation when trading/business income in the next chapter.
4.2 – Long term capital gain (LTCG)
Firstly you need to know that, when you buy & sell (long trades) or sell & buy (short trades) stocks within a single trading day then such transactions are called intraday equity/stock trades. Alternatively, if you are buying stocks/equity and wait till it gets delivered to your DEMAT account before selling it, then it is called ‘equity delivery based’ transactions.
Any gain or profit earned through equity delivery based trades or mutual funds can be categorized under capital gains, which can be subdivided into:
- Long term capital gain (LTCG): equity delivery based investments where the holding period is more than 1 year
- Short term capital gain (STCG): equity delivery based investments where the holding period is lesser than 1 year
Taxes on long term capital gains for equity and mutual funds are discussed below –
For stocks/equity – 0% for first Rs 1lk and @10% exceeding Rs 1lk
The above taxation rate is only if the transactions (buy/sells) are executed on recognized stock exchanges where STT (Security transaction tax) is paid. As discussed above, LTCG is a holding period of more than 1 year.
If the transactions (buy/sells) are executed through off-market transfer where shares are transferred from one person to another via delivery instruction booklet and not via a recognized exchange by paying STT, then LTCG is 20% in case of both listed and non-listed stocks (Listed are those which trade on recognized exchanges). Do note that when you carry an off-market transaction Security Transaction Tax (STT) is not paid, but you end up paying higher capital gains tax.
Note that a gift from a relative through DIS slip is not considered as a transaction and hence not capital gain. It is important that gift not be treated as transfer, and relative could be (i) spouse of the individual (ii) brother or sister of the individual (iii) brother or sister of the spouse of the individual(iv) brother or sister of either of the parents of the individual (v) any lineal ascendant or descendant of the individual(vi) any lineal ascendant or descendant of the spouse of the individual (vii) spouse of the person referred to in clauses (ii) to (vi)
For equity mutual funds (MF) – 0% for first Rs 1lk and @10% exceeding Rs 1lk
Similar to equity delivery based trades, any gain in investment in equity-oriented mutual funds for more than 1 year is considered as LTCG and exempt from taxes up to Rs 1lk per year. A mutual fund is considered as equity-oriented if at least 65% of the investible funds are deployed into equity or shares of domestic companies.
For non-equity oriented/Debt MF – flat 20% on the gain with indexation benefit
Union budget 2014 brought in a major change to non-equity mutual funds. As opposed to 1 year in equity-based funds, you have to stay invested for 3 years in non-equity/debt funds for the investment to be considered as long term capital gain. If you sell the funds within 3 years to realize profits, then that gain is considered as STCG.
Note: The government in the Finance Bill 2023 made certain amendments that apply to debt funds that invest not more than 35% in equity shares in Indian companies. As per the new rules, these mutual funds and ETFs will not be eligible for indexation benefits and will be taxed at applicable slab rates, for investments made on or after April 1, 2023.
4.3 – Indexation
When calculating capital gains in case of non-equity oriented mutual funds, property, gold, and others where you are taxed on LTCG, you get the indexation benefit to determine your net capital gain.
I guess we would all agree that inflation eats into most of what is earned as profits by investing in capital assets such as the ones mentioned above.
For someone wondering what that inflation is, here is a simple example to help you understand the same –
All else equal, if a box of sweets priced at Rs.100 last year, chances are the same could cost Rs.110 this year. The price differential is attributable to Inflation, which in this example is 10%. Inflation is the % by which the purchasing value of your money diminishes.
Assuming the average inflation rate in India of around 6.5%, if you had invested into a debt fund, wouldn’t a big portion of your long term capital gain at the end of 3 years get eaten away by inflation?
For example assume you had invested Rs.100, 000/- into a debt fund, and you got back Rs 130,000/- at the end of 3 years. You have a long term capital gain of Rs.30,000/-. But in the same period assume the purchasing value of money is dropped by 18k because of inflation. Should you still pay long term capital gain on the entire 30k? Clearly this does not make sense right?
Indexation is a simple method to determine the true value of the sale of an asset after considering the effect of inflation. This can be done with the help of the Cost inflation index (CII) which can be found on the income tax website.
Let me explain this with an example of a purchase/sale of a debt mutual fund.
Purchase value: Rs.100,000/-
Year of purchase: 2005
Sale value: Rs 300,000
Year of sale: 2015
Long term capital gain: Rs 200,000/-
Without indexation, I would have to pay tax of 20% on the capital gains of Rs 200,000/-, which works out to Rs 40,000/-.
But we can reduce the LTCG by considering indexation.
To calculate indexed purchase value, we need to use the cost inflation index (CII). Find below the cost inflation index from the income tax website until 2019/20. Refer to this for CII data before 2001/02.
| Financial Year | CII |
|---|---|
| 2001-02 | 100 |
| 2002-03 | 105 |
| 2003-04 | 109 |
| 2004-05 | 113 |
| 2005-06 | 117 |
| 2006-07 | 122 |
| 2007-08 | 129 |
| 2008-09 | 137 |
| 2009-10 | 148 |
| 2010-11 | 167 |
| 2011-12 | 184 |
| 2012-13 | 200 |
| 2013-14 | 220 |
| 2014-15 | 240 |
| 2015-16 | 254 |
| 2016-17 | 264 |
| 2017-18 | 272 |
| 2018-19 | 280 |
| 2019-20 | 289 |
Going back to the above example,
CII in the year of purchase (2005): 117
CII in the year of sale (2015): 240
Indexed purchase value = Purchase value * (CII for the year of sale/ CII for the year of purchase)
So –
Indexed purchase value = Rs 100000 * (240/117)
= Rs 205128.21
Long term capital gain = Sale value – Indexed purchase value
Therefore, in our example
LTCG = Rs 300,000 – Rs 205128.21
= Rs 94871.79/-
So the tax now would be 20% of Rs 94,871.79 = Rs 18,974.36, much lesser than Rs 40,000/- you would have had to pay without the indexation benefit.
Like I had said earlier, the indexed purchase value can be calculated using the above method for all long term capital gains which are taxable like debt funds, real estate, gold, among others. You could use the IT department’s Cost inflation index utility to check on the indexed purchase value of your capital assets instead of having to calculate manually.
The interesting thing to note in regards to 20% after indexation for non-equity oriented or debt funds: Most of these funds return between 8 to 10% and typically inflation in India has been around that for the last many years. So with the indexation benefit, you typically won’t have to pay any tax on LTCG of non-equity oriented funds.
4.4 – Short term capital gain (STCG)
Tax on short term capital gains for equity and mutual funds are discussed below –
For stocks/equity: 15% of the gain
It is 15% of the gain if the transactions (buy/sells) are executed on recognized stock exchanges where STT (Security transaction tax) is paid. STCG is applicable for holding period over 1 day and not more than 12 months.
If the transactions (buy/sells) are executed via off-market transfer (where shares are transferred from one person to another via delivery instruction booklet and not on the exchange) where STT is not paid, STCG will be taxable as per your applicable tax slab rate. For example, if you are earning over Rs.10,00,000/- per year in salary, you will fall in the 30% slab, and hence STCG will also be taxed at 30%. Also, STCG is applicable only when the income exceeds the minimum tax slab of Rs 2.5lks/year. So if there is no other income for the year and assuming there was Rs 1lk STCG, it would not entail the flat 15% tax.
For equity mutual funds (MF): 15% of the gain
Similar to STCG for equity delivery based trades, any gain in investment in equity-oriented mutual funds held for lesser 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.
For non-equity oriented/Debt MF: As per your individual tax slab
Union budget 2014 brought in a major change to non-equity mutual funds. You have to now stay invested for 3 years for the investment to be considered as long term capital gain. All gains made on investments in such funds held for less than 3 years are now considered as STCG. STCG, in this case, has to be added to your other business income and tax paid according to your income tax slab.
For example, if you are earning around Rs 800,000/- per year in your normal business/salary and you had STCG of Rs 100,000/- from debt funds, you will fall in the 20% slab as your total income is Rs 9,00,000/-. So effectively in this example, you will pay 20% of STCG as taxes.
4.5 – Days of holding
For an investor, the taxation difference between LTCG and STCG is quite huge. If you sold stocks 360 days from when you had bought, you would have to pay 15% of all gains as taxes on STCG. The same stock if held for 5 days more (1 year or 365 days), the entire gain would be exempt from taxation as it would be LTCG now.
It becomes imperative that you as an investor keep a tab on the number of days since you purchased your stock holdings. If you have purchased the same stock multiple times during the holding period, then the period will be determined using FIFO (First in First out) method.
Let me explain –
Assume on 10th April 2014, you bought 100 shares of Reliance at Rs.800 per share, and on June 1st, 2014 another 100 shares were bought at Rs.820 per share.
A year later, on May 1st, 2015, you sold 150 shares at 920.
Following FIFO guidelines, 100 shares bought on 10th April 2014 and 50 shares from the 100 bought on June 1st, 2014 should be considered as being sold.
Hence, for shares bought on 10th April 2014 gains = Rs 120 (920-800) x 100 = Rs 12,000/- (LTCG and hence 0 tax).
For shares bought on June 1st, Gain = Rs 100 (920-820) x 50 = Rs 5,000/- (STCG and hence 15% tax).
Small little sales pitch here 🙂 – if you are trading at Zerodha the holdings page in our back office platform called Console will keep a tab for you on a number of days since your holdings were purchased, and even a breakdown if bought in multiple trades.
Here is a snapshot of the same –
The highlights show –
- Day counter
- A green arrow signifying holdings more than 365 days, selling which won’t attract any taxes.
- If you have bought the same holdings in multiple trades, the split up showing the same.
Besides Zerodha Q, equity tax P&L is probably the only report offered by an Indian brokerage which gives you a complete breakdown of speculative income, STCG, and LTCG.
4.6 – Quick note on STT, Advance Tax, and more
STT (Securities Transaction Tax) is a tax payable to the government of India on trades executed on recognized stock exchanges. The tax is not applicable to off-market transactions which are when shares are transferred from one DEMAT to another through delivery instruction slips instead of routing the trades via exchange. But off-market transactions attract higher capital gains tax as explained previously. The current rate of STT for equity delivery based trades is 0.1% of the trade value.
When calculating taxes on capital gains, STT can’t be added to the cost of acquisition or sale of shares/stocks/equity. Whereas brokerage and all other charges (which include exchange charges, SEBI charges, stamp duty, service tax) that you pay when buying/selling shares on the exchange can be added to the cost of share, hence indirectly taking benefit of these expenses that you incur.
Advance tax when you have realized capital gains (STCG)
Every taxpayer with business income or with realized (profit booked) short term capital gains is required to pay advance tax on 15th June, 15th Sept, 15th December, and 15th March. Advance tax is paid keeping in mind an approximate income and taxes that you would have to pay on your business and capital gain income by the end of the year. You as an individual are required to pay 15% of the expected annual tax that you are likely to pay for that financial year by 15th June, 45% by 15th Sept, 75% by 15th Dec, and 100% by 15th March. Not paying would entail a penalty of annualized interest of around 12% for the period by which it was delayed.
When you are investing in the stock markets, it is very tough to extrapolate the capital gain (STCG) or profit that will be earned by selling shares for an entire year just based on STCG earned for a small period of time. So if you have sold shares and are sitting on profits (STCG), it is best to pay advance tax only on that profit which is booked until now. Even if you eventually end up making a profit for the entire year which is lesser than for what you had paid advance tax, you can claim for a tax refund. Tax refunds are processed in quick time by the IT department now.
You can make your advance tax payments online by clicking on Challan No./ITNS 280 on https://incometaxindiaefiling.gov.in/.
Which ITR form to use
You can declare capital gains either on ITR 2 or ITR3
ITR3 (ITR 4 until 2017): When you have business income and capital gains
ITR 2: When you have a salary and capital gains or just capital gains
4.7 – Short and long term capital losses
We pay 15% tax on short term capital gains and 0% on long term capital gains, what if these were not gains but net losses for the year.
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. For example, if the net short term capital loss for this year is Rs.100,000/-, this can be carried forward to next year, and if net short term capital gain next year is Rs.50,000/- then 15% of this gain need not be paid as taxes because this gain can be set off against the loss which was carried forward. We will still be left with Rs Rs.50,000 (Rs.100,000 – Rs.50,000) loss which is carried forward for another 7 years.
Long term capital losses can now (post introduction of LTCG tax@10%) also be set off against long term gains.
Long term capital loss can be setoff only against long term capital gain. Short term capital loss can be setoff against both long term gains and short term gains.
Key takeaways:
- LTCG : Equity, Equity MF – 0% for first Rs 1lk, 10% on exceeding Rs 1lk, Debt MF: 20% after indexation benefit
- STCG: Equity: 15%, Equity MF: 15%, Debt MF: as per individual tax slab
- You can use the cost inflation index to determine and get the benefit from the indexed purchase value
- Index purchase price = Indexed purchase value = Purchase value * (CII for the year of sale/ CII for the year of purchase)
- If you have bought and sold the same shares multiple times then use FIFO methodology to calculate the holding period and Capital gains
- STT is payable to the Govt and cannot be claimed as expense when investing
Interesting reads:
Livemint: If you pay STT STCG is 15% otherwise as per tax slab
Income tax India website – Cost inflation index utility
Taxguru – Taxation of income & capital gains for mutual funds
HDFC- Debt mutual funds scenario post finance bill (no2), 2014
Disclaimer – Do consult a chartered accountant (CA) before filing your returns. The content above is in the context of taxation for retail individual investors/traders only.
In the previous chapter you mentioned that Speculative loss can be carried forward only for 4 year whereas in the section 4.7 it is mentioned that, the period is 8 years. Please clarify which is correct.
Praveen, speculative or intraday equity trading losses can be carried forward to 8 years. What we are talking about in Section 4.7 is not intraday equity losses but short term equity losses (short term delivery based trades).
Hello Mr.Nithin,
Suppose i earn a short term capital gain of 60000 (stocks selling in less than 1 year) and a loss of 50000 in FNO in same year , how the taxation is calculated?
You have to pay 15% on short term gain (if your total income doesn’t add upto 2.5lks, no need to pay), declare the loss and carry forward.
Dear Nithin Ji,
If i made a short term capital gain of 15 lakhs and f&o loss of 20 lakh in the same financial year. Now i wanted to ask if F&O loss can be settoff against the short term capital gain.
Regards
Prateek Bansal
No we can’t Prateek. If you show your short term capital gain as business income, you can. But if you show as business income this year, you need to plan to show it the same in future.
Hi,
I have a Trading and Demat account with Zerodha. I want to clear my doubt regarding Transfer of shares to own demat account.
Scenario:
I bought shares 200 shares of Infosys through Zerodha and transferred it to HDFC demat for pledging purpose(LAS).After paying back loan and unpledging shares, I re- transferred it to Zerodha demat. I holded 200 Infosys shares for over 1 a year (3 months in zerodha demat and 10 months in HDFC demat. Will my holding period of more than 1 year continue(eligible under LTCG) after transferring it firstly to HDFC demat and than again to Zerodha demat?
CATEGORY IS”transfer to own account”.
Yes, you are moving between your own accounts. Your holding period wont’ get affected because of that.
Is there a write up on the grand fathering clause for LTCG on sale of equities that might be useful for 31.3.2019 calculations. How does this will get authenticated by the tax officials, our declaration/returns?
Thank you so much Zerodha. I have one question please. If STCG is Rs25000/- so I pay 15% on that..right which gives me profit Rs21250/-.
Now if I have other income from rentals /FDs totalling to Rs300,000/- . Now do I have to add the Rs21,250/- to the Rs300,000/- and then find out my total tax liability or the STCG doesnt hv to be taken in this calculation as it has already bben taxed. Please advise.
Rajeev, if you are using ITR forms. You can show the entire STCG of Rs 25000 under that head. Rental and FD’s etc is shown under a separate head. So STCG shouldn’t be taken in this case.
Hi Nithin,
I think you wanted to mention that “Speculative losses i.e. Intraday equity losses” can be carried over for a period of 4 years only… whereas the “Short term equity losses” can be carried over for a period of 8 years. Please correct if my understanding is wrong.
Yes, thanks for correcting.
I think for “4.7 – Short and long term capital losses” you need to update below para as now LTCGs are taxed.
“Long term capital losses can’t be used to set off against long term gains as in the first place long term capital gains is exempt from any tax. So long term capital loss is a dead loss, and can’t be set off or carried forward.”
Yep, thanks.
Suppose i bought 100 shares @ 10 and sold 50 shares @ 20 to recover my investment within 1 year. And sold another 50 shares after 1 year holding. I am in 10% tax bracket. So what will be tax implications in this situation.
On the first 50, you have STCG of Rs 500. If you are in 10% bracket, you pay 10% of this as tax. Next 50 no taxes.
Tax on STCG is irrespective of tax slab. So flat 15% tax on the gain i.e Rs 75.
No, you get the benefit of lower slab if you are in that. So if your total income is less than 2.5lks, no STCG, between 2.5 to 5 at 10% and after that 15% flat.
If i have shares held jointly in demat account of Person A and Person B. When i sell them on stock exchange – who will be taxed :
1) Person A 100 %
or
2) Person A – 50 % and Person B 50 %
2.
Hello Nitin
Are you sure on this?
I think all profits accrue to the name of the first holder in the demat account and not equally among them.
Hmm.. Yeah, this is an accounting method. But best to follow what your CA suggests. Nothing wrong in either of the ways.
Can loss incurred in intra day equity market be carried over to next year? Can it be adjusted towards STCG incurred in the same year and net STCG/STCL be shown in tax return?
Intraday equity trading losses are speculative, so they can be carried forward for 4 years. It cannot be offset with STCG, it can be offset with only any other speculative gains.
So What tax is applicable on intraday trades (speculative income) ?
– What type of gain is STBT or BTST trades in futures or options ( STCG or speculative)
– If someone is earning 50lacs/yr will it still pay only 15% on STCG or by the tax slab.
Intraday is business income. So you need to add it to your rest of income, and pay as per the tax slabs.
STBT/BTST, is tricky. Can be shown as STCG or speculative. Upto you.
Yes on STCG fixed 15%.
Hi Nithin,
I have to show the loss made under STCG in ITR 4. But in Schedule CG tab , its not accepting -ve numbers. Is it done somewhere else??
Schedule CG, look at point 3. Full value of consideration is the price at which you sell, cost of acquisition without indexation is your buying value. Balance will automatically become negative.
If i purchase stocks on delivery options but sell them on the same day, would it be considered Intra-day or delivery based transaction.
Trading options is considered as a non-speculative business income irrespective of if it is intraday or delivery.
Fantastic. I had no ideas on taxation. What were amts. Just been filing form 16 by my company. Now That i am only trading zerodha gave me a brighter picture. Thank u Nitin. My friends trading (non zerodha) are not aware of most of these facts. I should enlighten them on the same. Excuse me for my spelling.
Hi Nitin,
thanks for this wonderful forum.
I and a NRI based in UAE and have following questions.
1. while discussing with a few freinds came cross trading SGX nifty options on singapore exchange through a international broker through my overseas US dollar account. If I decide to go ahead with this. what will be the tax implications in India. as of now I have investments in equities and MF through my NRE account and a Indian broker and have invested for long term gains selling mostly after 1-2 years. will trading in SGX nifty options make a me a trader for Indian taxation and returns perspective?
2. through my total investments of around 65 lakhs. If my total income is only NRE deposits interest ( tax exempt), LTG and dividends from equities/MF investments( tax exempt) NRO deposit saving interest around 20K with 30% TDS deducted. in this case as mostly all income is tax exempt and total income is less than 250,000 do I need to file returns.
3. If I have to file returns while filing returns do we need to show LTG, dividend income and NRE deposit interest in the returns forms?
Thanks and Regards,
Peeyush
1. For a non resident Indian, only your trading activity done on Indian exchanges need to be considered to determine if you are a trader or an investor in India.
2. If income less than Rs 2.5lks, no need to file returns. But if you want income tax refund which would be deducted on your NRO A/C, then yes you have to file.
3. Yes you have to show all income while filing ITR.
Dear Nitin,
i have received shares as gift from my mother in law, i have hold the shares for about 18 months, now i am in need of funds for buying property so i want to sell them, what will be the taxation. Also i normally give all details to my CA for filing returns, i had not mentioned the receipt of shares as gift in my ITR in that year but my Dmat statement can reflect the date of receipt of shares in my account. Please advice asap…
sir suppose I am trading with two broker 1-nine star broking pvt ltd & 2- is zerodha . I purchase 100 share of sbi on 14.6.2014 on nine star & 100 share of sbi on 15.6.15 at zerodha. if I sell 100 share of sbi on 20.8.2015 at zerodha then according to FIFO witch share would be count as trading nine star ( more then one year–LTCG) or zerodha(less then one year–STCG) for incom tax purpose
Pravin, FIFO demat account wise. When you sell 100 share at Zerodha, it will be considered as STCG for the shares that you held. Nine star will continue to be long term.
Dear Nithin,
Namaste and many thanks and congratulations for the versity contents.
I have one query.
Facts:
(1). I too have two D-mat accounts: one with Integrated Enterprises India Pvt. Limited (since 1998/1999, but activities started only after 2010), and another with Zerodha (since July 2018).
(2). I transferred certain scripts, (one among them Tata Motors, 500 shares, purchased through Integrated, Trade date 04-05-18) from my Integrated D-mat account to my Zerodha account IN MARCH 2019 by when I had zero balance of Tata Motors shares in Zerodha D-mat account.
(3). Much prior to Transferring these Tata Motors shares from Integrating to Zerodha account, I had
(i). purchased 200 shares of Tata Motors on 08-08-18.
(ii). sold 200 shares of Tata Motors on 17-08-18.
(iii). purchased 100 shares of Tata Motor shares on 27-09-18
(iv). Intraday trading (first sold and then purchased) of 100 shares of Tata Motors on 28-09-18.
(v). sold 100 shares of Tata Motors on 03-10-18.
Thus no balance of Tata Motors shares in Zerodha SINCE 28-09-18 till I transferred 500 shares of Tata Motors from Integrated to Zerodha IN MARCH 2019.
The query is:
In view of what you conveyed in your answer to Praveen that FIFO D-mat account wise, is it not an error to consider my selling of 200 shares of tata Motors on 17-08-18 and another 100 shares on 03-10-18 against the Transferred Tata Motors shares (though purchased on 04-05-18 but from another D-mat account with Integrated) ?
Please clarify in view of the existing IT rules.
With regards,
Jamanadas Patadia.
hmm.. my view would be that yes, what you sold will have to be considered as part of the original stock you held. But that said, it is also possible to have two portfolios, trading and investing portfolio. Show all short term trading as business income and continue having all stocks held for long term under-investment portfolio. But the issue with this is that short term trading has to be shown as business income and is taxed at your income tax slab. Best to consult a CA.
Hi Nitin,
I had 800 Shares of IDFC Ltd for past 2 years with an average price of 100 Rs which recently got demerged and I got 800 free shares of IDFC Bank.
I have following queries.
1. how do I adjust the portfolio for each share to reflect correct profit loss for taxation purpose?
How to arrive at the correct price for each for my portfolio?
2. Do I keep the IDFC Ltd price same and put new entry in to portfolio for IDFC bank( again confusion is at what price as I received it free)
3. If I sell IDFC Ltd I guess that qualifies as LTG? am I correct? but the price has gone down by almost 50% now so its a loss.
4. If I sell IDFC bank does that qualify as LTG? if no How will be taxation on that be calculated? as I had got these Shares for free?
Looking forward to get these doubts cleared.
Thanks a lot
Peeyush
Ah.. had missed this query.
Firstly, the holding period (based on date of purchase) for both the stocks will remain the same based on the purchase of the original IDFC ltd. So if it was long term before, it will continue to be long term for both IDFC and IDFC bank.
To determine cost of Acquisition IDFC had shared this with all the share holders.
If you have purchased equity shares of IDFC Limited prior to the Record Date, to determine post demerger cost of acquisition for equity share(s) of IDFC Limited and IDFC Bank Limited, you are advised to apportion your pre demerger cost of equity share(s) of IDFC Limited in the following manner:
Name of the Company % of Cost of Acquisition of IDFC Limited equity shares
IDFC Limited 60.58
IDFC Bank Limited 39.42
So if you originally had IDFC purchased at Rs 100. You can mention the cost of the new IDFC as Rs 60.58 and for IDFC Bank as Rs 39.42. So your long term profit and loss will be based on this.
Thanks a lot Nithin
How to compute tax on UTI Mutual funds ,if i bought them in 2010 with dividend reinvestment option and sold all of them in 2015 ?
Will the units bought using reinvested dividend for period Jan 15 to Dec 15 be considered as STCG ?
I trade in F&O & hence it is NON SPECULATIVE business as per definition. In addition I buy NIFTY ETFs and SELL them only after one year plus. Since no LTCG on Nifty etf trades so Do I have to reflect Nifty trades in ITR4 ? Or I can ignore Nifty etf trades since holding period more than one yr..
Suppose meri income Yearly 1 lac rs hai, equity mutual fund or shares me 1000/- rs ka short term capital gain hua?
to meri total income 101000/- Hua, toh kya mujhe 1000/- rs ka 15% tax dena hoga, jabki meri income tax slab se bahut neeche hai.
For NRE account, short term capital gain at what frequency banks/brokers needs to deposit with govt. is there any need to match tax deducted in a quarter to match and profit and loss of that quarter
It is done monthly.
Hi Nithin,
I’ve some doubt about the long term holding. If i arbitrage (“Sell NSE & Buy back immediate on BSE” ) on the “HINDUNILVR” on 783 days holding period, it’s still remaining on 783 holding period or taken as fresh holding days for counting.
Thanks in advance.
When you do this, stocks actually get debited from your demat account. Hence will considered as a new holding.
Dear Nithin,
I am a Zerodha customer and Highly appreciate the module on Taxation. I have a question based on a off-market transaction you mentioned in this module:
“Do note that when you carry an off-market transaction Security Transaction Tax (STT) is not paid, but you end up paying higher capital gains tax. A typical example of an off-market transaction could be a father transferring equity holdings to his son via a ‘delivery instruction booklet’.”
Few Qs pertaining to the above point where the stock is listed and the equity is held for more than a year :
1. Any cash gifted to a ‘Relative’ is exempt from taxation. However, as per what has been stated above, the transfer of equity between Relatives via DIS attracts STCG/LTCG?
Can you please provide a link to substantiate the same?
2. Is there a way to transfer equity between ‘Relative’ that does not attract STCG or LTCG?
3. If equity is held in physical form and the same is transferred between Relatives, with the corresponding stamp duty being paid, does it still attract a STCG/LTCG?
Could you please provide a link?
4. In case 3, does the equity need to be classified as ‘Gift’ for tax purposes? Is the STCG/LTCG based on the holding period when equity was initially acquired or when the equity was transferred?
Look forward to your responses. Thanks!
Hey Shri, my bad. Have corrected the post.
Note that a gift from a relative through DIS slip is not considered as a transaction and hence not capital gain. It is important that gift not be treated as transfer, and relative could be (i) spouse of the individual (ii) brother or sister of the individual (iii) brother or sister of the spouse of the individual(iv) brother or sister of either of the parents of the individual (v) any lineal ascendant or descendant of the individual(vi) any lineal ascendant or descendant of the spouse of the individual (vii) spouse of the person referred to in clauses (ii) to (vi)
3. If it is a transfer, it is a transaction and hence capital gain will apply. You need to show this as a gift, and yes physical demat certificates can be transferred between relatives.
4. Original holding period will continue
Thanks Nithin!
Hello Nitin
Could you shed light on the following-
1) For shares gifted by a relative through DIS (off market) is it mandatory to have a gift deed?
2) How to calculate capital gains on shares received as gift. when the cost of acquisition by the donor(original holder is not available)?
1. Not mandatory as the DIS slip will have reason mentioned as gift. But you can maybe get a confirmation letter from the relative in writing.
2. If original holder cost is not available, you will have to take it as 0.
Sir,
I have Dmat account on the name of A as ist holder (me) and B(Brother) as joint holder. I have another Dmat account with A(myself) as the sole holder.
If I transfer 95% of holdings(approx.150 companies) from Dmat account of A+B to another Dmat account A. My questions are:
1. What charges I have to pay to DP for transfer of shares from Dmat A+B to another Dmat A, if I give DIS for 95% of companies to DP
2. Regarding taxation on those 95% companies—I suppose my holding period should be counted for taxation purpose. For example if shares of RIL were hold for 11 months and if I sell those RIL shares say after 2 month of transfer into Dmat account A from Dmat account A+B (i.e 13 months total from date of purchase). I think LTCG will apply as holding period is 11+2=13 months (>12 Months).
Regards,
shanker
1. Depends on the DP you are trading with. At Zerodha it is flat Rs 13 per scrip. (some DP’s charge Rs 25 or 0.05% whichever higher).
2. Yes, Holding period will not get affected.
Hi Nithin,
I have a query regarding investments under 80C for non speculative income (I trade only Nifty Futures). Trading is the only source of income for me.
Last FY (2014 – 2015) I had shown a loss in my ITR of 6 lakhs (ITR was filed before due date). I know that if this FY (2015 – 2016), I show a gain of 4 lakhs, this will be offset with the 6 lakhs loss last year (I don’t have to pay any tax this year) and I will carry forward a loss of 2 lakhs for next year. My query is if I show investment of 1.5 lakhs under 80C this FY, will my income for this FY become 2.5 Lakhs (4 – 1.5 = 2.5) so that I can carry forward a loss of 3.5 lakhs for next FY (6 – 2.5 = 3.5)? or will 80C come into affect only after I have cleared my losses and show gains?
Kindly help.
80C and business income are part of different sections. SO if you have business gain of 4lks and loss of 6lks, they first get netted out to give you a 2lk loss that can be carried forward. You cannot declare it the way you have mentioned.
Hi Nithin,
Thanks for an easy explanation.
How are stock transactions in foreign exchanges taxed?
As an Indian national, If I gain profits from buying and selling in Nasdaq (both Long term and short term), how are these treated?
It is considered as normal income, you can get indexation benefit. Check more about indexation in the chapter above.
Hi Nithin,
Would appreciate your response to my query posted yesterday (March 2nd) wrt off-market transactions.
Hi,
I am salaried person.I have opened an account with zerodha in the last year and started trading/investing since 19th october, 2015. I have done both investing(equity delivery) and trading(intraday equity) in the last few months. In both cases I have gained profits but the losses are maximum. According to ‘EQ tax P&L breakdown – FY-15/16’, my
Short term Equity Total turnover : 2,29,114.80
Short term Equity Total realized profit : -20,318.50
Intraday Equity Total turnover : 16,692.95
Intraday Equity Total realized profit : -11,431.85.
So I am running under losses and I am not holding any security/stock in my demat account. My Questions are
1] Should I need to show these losses when I would file income tax return for the financial return 2015-2016?
2] Which ITR should I file?
3] Can I show the losses in both equity delivery and equity intraday trading as “investment”?
With Regards
Debarya Das
1. Yes it is best to show the losses.
2. ITR 4 since you have also done intraday equity trading.
3. No, both have to be kept separate. Do go through the module once, have explained all this in detail.
Best,
Hi,
Thanks for replying to my queries. I have few more questions.
1] Since I have not make overall profit both in equity delivery and equity intraday till now, so I did not pay any advance tax. Should I need to pay it?
With Regards
Debarya Das
Not required. Equity delivery anyways if you are showing as capital gains, don’t need advance tax to be paid.
Hi,
I exercise only Equity Delivery and would like to know what would constitute high-frequency-trade in order to determine business or capital gain income. You have mentioned that, number of “trade”s few times per week on average over whole year can be viewed as business income rather than investment.
Q1. Does “trade” mean pair of buy and sell ?
Q2. If single buy or sell exercise can be seen as “trade”, does this mean 104 (2*52) equity delivery order execution per year i.e 2 times/week will be termed as business income ? (or can it be < 3 times/week i.e. 155 per year)
best regards
sai
Hey Sai, I have recently updated the chapter. CBDT has finally let the investor decide to choose if it were a business income or capital gain. Updated 2nd March 2016
Finally the income tax department has brought in clarity by allowing an individual to decide on his own to either show his stock investments as capital gains or as a business income (trading) irrespective of the period of holding the listed shares and securities. Whatever is the stance once taken, the taxpayer will have to continue with the same in the subsequent years. Check this circular.
I have recieved tax notice for AY 2014-2015 for trades in F&O. Zerodha Account was in the name of my wife and all other documents is in the name of my wife. She is a housewife with no income. Since there was a loss of Rs 1.5 Lacs I did not file income tax return. Moreover Income tax to be filed for income above Rs 2.5 Lacs. Please suggest what is to be done.
You will have to reply to that notice saying the same, and attach proofs (bank statement, trading account ledger and P&L). It is best to file returns even if there is a loss.
How is STCG calculated in below case: reliance inds bought 100 shares @ Rs. 920 on 12-02-2016. Again bought 50 shares of reliance Inds @ Rs.940 on 15-02-16. Again bought 50 shares @ Rs.950 on 26-02-2016. On 10-03-2016 done intraday in Reliance by selling 50 shares @ Rs.1020 and buying 50 reliance shares @ 1035. How is the sold quantiy on 10-03-2016 treated on basis of STCG. Is the intraday acitivity not considered for STCG as it is speculative acitivity but the same shares are with us in Demat account so net delivery is considered. Should the sold 50 quantities be sold on basis of FIFO for STCG bought on 12-02-16. Please clarify
The intraday activity will not be considered for STCG as the stocks don’t get debited from demat account. It will be considered as intraday trade.
Ok. Thanks.
Hi,
I have the following
1) Income from Salary (30% Tax bracket)
2) Income from Long Term Capital Gain (Holding period > 10 years)
3) Loss from Short Term Capital Gain (16K)
4) Loss from Intra-day (3K)
2), 3) and 4) are from the same trading account.
Can I still declare 2) as Long Term Capital Gain (Tax Exempt)
and 3) and 4) as Short Term Capital Loss to be carried forward?
Appreciate your help.
Thanks.
Yes 2) is exempt (the recent circular has cleared all ambiguity) 3 can be carried forward as short term capital loss, 4) is speculative business income. This can’t be carried forward as short term capital loss, has to be shown as speculative business loss on ITR4.
Thank you, I am a satisfied client of zerodha and I have never ever seen any CEO getting involved in resolving petty queries of customers (probably even at the cost of your day job of managing the company). .. You are truly passionate about what you do and will remain a role model for entrepreneurs for many generations… All the best.
A follow-up question…
As mentioned earlier I have
1) Income from Salary (30% Tax bracket)
2) Income from Long Term Capital Gain (Holding period > 10 years)
3) Loss from Short Term Capital Gain (16K)
4) Loss from Intra-day (3K)
Now, if I have to declare my return in ITR-4, do I have to get audit done for all of 1), 2), 3), 4) or only on the total turnover for 4), which I am showing as speculative business loss?
Thanks again…
Audit is required on the entire ITR (so all included). But since your intraday loss is so little and if you don’t really intend to carry forward this loss, you can show a small profit instead of a loss, and this could mean no need of getting an audit (as per section 44AD). If your CA is smart, he will know what to do.
Many thanks Nitin, will follow up with the CA and figure out something.
I am salaried person. I had purchased 100 shares of sks microfinance in 2013 and sold them in Feb, 2016. I booked profit of Rs. 20000/-. I had also invested Rs. 5000/- in UTI banking sector fund (mutual fund) (equity fund) in may, 2013 and sold them in 2015 and booked profit of 1700/-. both these come under NIL tax liability as the holding period is more than one year. is it necessary to show these incomes or simply file ITR1?
if not ITR1 then which ITR form?
thanks
Use ITR2 and show these gains as long term capital gain. It is anyways exempt from taxes.
thank you very much
I bought 100 shares of X on 01-May-2016 at Rs.100 per share. On Jun 17th its price is Rs.52. I again bought 100. On Jun 20(2 days after the last transaction date) I sold the earlier 100 shares at Rs.50. Will this be entitled as tax loss harvesting ? Please clarify as your post mentions sell first and buy same script after 2 business days
Yep, it will be like tax loss harvesting, since you have booked loss on your earlier purchase.
Nithin
I have one query…Suppose I buy 1000 shares of Tata Motors. Now I sell 500 shares after 6 months and rest of the 500 shares after 12 months.
Then I can take the benefit of long term capital gains(i.e No Tax) on 500 shares. Am I right?
Yep absolutely.
Hi Nitin,
I am ZeroDHA customer. I have one more demat account, holding good amount of shares in it. All shares are purchase more than a year back. Now if I transfer that to zeroDHA demat account, Should I need to wait more than a year to sell to avoid short term capital gain? Or it is considered as long term holding? Basically I assume by doing off-market transfer to ZeroDHA I can save brokerage. Pls clarify.
Transferring from one demat to another of your own, won’t change the holding period to determine long/short term gain. So you can transfer and sell, and it will still be long term capital gain.
Hi,
I have moved my shares from ICICI to Zerodha DMAT. On Q I am suppose to enter the buy price for those shares. Please suggest should I enter the Price inclusive of STT and other tax components or the buy price ?
It is upto you. But I’d suggest to do it without the cost, will be easier to account when filing.
I invested only in delivery last year but the number of transactions i did with my 20 Lakh capital is 10. ie i bought and sold several stocks in last one year with this amount. Over all i made 6 lakhs profit ( stcg). I am really confused whether i have to show the full value consideration as 2 crore 6 lakhs (approx 10 x 20 lakhs+ 6.5 lakhs – Brokerage 0.5 lakhs) =20600000.
and cost of acquisition as 2 crore. This will project the money i invested is a huge amount. is it correct or wrong ?
How do i capture the money spending on purchasing research report, internet connection..etc..
Can i consider these amounts in cost of improvement ? if not what all items can be considered for cost of improvement.
It is correct, doesn’t matter if this number is huge.
Yes you can consider all of that as cost of improvement.
Thank you sir..
Dear Nithin,
In the last paragraph
“Long term capital losses can’t be used to set off against long term gains as in the first place long term capital gains is exempt from any tax. So long term capital loss is a dead loss, and can’t be set off or carried forward.”
But in LTCG (non equity oriented) we are paying 20% on gain with indexation. If we get loss here, can it be set off and/or carry forward?
I was speaking more in the equity context. But yes, you can carry forward and set it off against non-equity long term gains.
Hello Sir:
Greetings!!
I have started my SIP for MF as Resident Indian for a 1 year. Now, I am NRI. I had switch off Equity to debt fund and vice versa. So,due these got profit of around 12K. So, Its STCG if I am not Wrong ? Also, I have done few transaction in delivery based in stock market and profit is very less. All transaction comes under STCG. So I have few question.
1). Should I have to pay STCG tax in IT return ?
2). When I came to knew that NRI profile its not easy to do trading. I had gifted all my holding to my mother. Would it be any problem ?
3). Which ITR form I should use ? Previously I was salaried person. So I was filing ITR1.
Thanks in Advance.
BABUBHAI
1. Yes, if there is STCG, yeah you have to pay. If the STCG was earned when you were a NRI, then no benefit of tax slabs, so you have to pay this.
2. No problem
3. ITR2
I am filing return as STCG where in profit is 10000 on a turnover of total 2 crore buy value and 2crore and 10 thousand. what should i fill in cost of acquisition and cost of sale in IT form 2. As my turnover is above 2 crore do i have to do TAX Audit as well.
For capital gains no need of an audit, it is only in case of business income.
Hi Nithin,
1. In FY 15, I made profits in F & O trading and shown its income as other sources and filed ITR2
2. In FY 16, I made losses in F & O trading (~ 3 lacs on a turnover of 30 lacs). Can I file ITR2 and avoid tax audit by CA.
3. If I do not intent to carry forward losses, can I file ITR1 or ITR2 without showing the above losses.
1. You should have used ITR4
2. Best not to, as it can cause issues in future.
3. No, ITR4 or ITR4s
I have following income
1. salary
2.long term capital gain from equity/equity mf
3.sort term capital gain from equity/equity mf
4.profit from intraday trading
5.profit from btst(without delivery )
6.loss from equity (without delivery)
I have following questions.
1. can I declare myself as Investor?
2. which ITR form I have to use.
3. Can I consider income from item 2 as LTCG?
4.Can I consider income from item 3 as STCG?
5.Can I combine income from item 4,5,6 and consider as speculative income?
1. Yeah
2. ITR4 since u have to declare intraday profit as speculative income.
3. Yes
4. Yes
5. 4 can’t be combined with 5&6
Do i have to consider item 5 and 6 as stcg and stcl?
5 is STCG, 6 (if from intraday equity trading) is speculative business loss
Hi Nithin, I am a government employee and I have opened an account with Zerodha and do both intra day and delivery based trading. But o e of my colleague told me that we can not do trading in share market? Is this true? Please elaborate thanks .
Santosh, there is no issue with delivery based trades for sure (as long as you don’t have access to sensitive information). Intraday is something you will have to find out from your department.
Lets say I own a stock for 300+ days and suddenly I am expecting an intraday fall of say 15% , if I sell my holdings and buy it back again on the same day , does my cap gain status change for the same stock which I was holding for 300 days ? or any square off resets the counter and Upon rebuy the counter resets to 1 . please explain the taxation here.
If you do intraday on your holdings, it won’t affect the holding period of stocks in your demat.
3. what is the difference between business income and speculative business income?
4. suppose if i’m an investor , should i show the speculative business income under other income?
1. I don’t have time to maintain books. so i don’t want audit. so what type of trades( ltcg.stcg,intraday) ihave to do?
2. I want to take stance as an investor. so what type of trades( ltcg.stcg,intraday) ihave to do?
5. As i take stance as an investor , I have to show my income under capitalgains( which is not bother to do ltcg and stcg trades) only. I have not going to show my income under business income. suppose if i have done intra day trading , under which head ihave to show this ( business income or other income)? otherwise shall i have to restricted to do only ltcg and stcg trades as an ivestor stance?
Chiru, I am answering based on both your questions, whatever I can make sense of it.
1. As an investor, you can only show equity delivery investing as capital gains.
2. Intraday equity has to be shown as speculative business income.
3. If you have only capital gains, there is no need of an audit.
Suggest you to go through all the chapters, I have explained all that you have asked in detail already.
I have a question to ask.
I bought 100 shares of one company in year 1988 around sometime.
These are in name of my sister and myself(brother).
At that time i was having many folios in the same company due to Gift purpose in AGMs.
All the shares in other folios sold out in mean time.
This particular folio left unsold and shares are in physical forms till date.
The company grown up like anything and issued many bonus issues and splitting of shares from Rs 10 to Rs 1.
As a result, the holding increased by many folds and today its increased to 8000 shares from 100 shares in 1988.
The first name in Share certificate is of my sister, who not an income tax payee, whereas myself is salaried one and income tax payee.
My questions in this regard are:
1. Since I invested the money in origin for 100 shares, but my name is second in holding pattern, how can i get the shares transferred in my name.
2 I just want to transfer the shares in my name due to taxation issue, as the dividend received during the period is not shown anywhere.
And company is declaring handsome dividend of Rs 6.00 per share last year.
3 I am scared from taxing point of view. Whereas myself is investor and files the ITR 2 since long for showing STCG and LTCG. But due to second holder in subjected holding I am not able to show Dividend Income in my ITR under Tax free income.
I humbly seek your guidance.
I have an account with Zerodha in my wife’s name.
Regards
The best way to go about this is open a demat account with your sister as first holder and you as second. Convert the shares into demat. Once the shares are converted, you can either decide to keep them in this demat or transfer the shares into your individual demat account. There is no taxation aspect that you need to be worried about.
All dividends paid out by companies anyways don’t attract tax. Since all these stocks are held from 1988 (>1year) there is no capital gain tax as well. Even if you were to transfer shares from this joint demat to your individual demat, sister can gift brother without affecting the holding period or attracting any tax.
Sir,
I am currently unemployed, and living(and paying tax) on interest from FDs. After quitting my job, i also started investing in shares. In November 2016, i sold some shares which i had bought prior to March 2015. The amount is 3.5 lacs( i needed money for further investments, and also personal needs). However, although i understand from your lesson that i don’t have to pay tax( as it is long term CG), but where do i show it while filing my income tax (My understanding is that while i don’t have to pay tax, i do however have to disclose this). Please clarify?
Regards
Mini
You can show it under long term capital gains in ITR2 form.
Thank you!
my total buy / sell in a year is more than 2 crores . But I do only delivery based trading (min 5 days). I am showing the income as STCG. If have no other income except Interest and rent (Together less than 1 lack). My question is Whether Tax audit is applicable. I am ready to pay 15% tax on STCG. Is this right. If Frequency of trade is more then is there any problem
Naresh, it is okay to show this as STCG. If you are showing as capital gains, no audit requirement. Make sure to speak to your CA.
Nice to see some many queries answered and great job.
Had a confusion:
If equities are sold and the STCG are re-invested as business income, will that still be taxable?
Eg. A holding company running trades only(preferably both investing and speculative) can use the head of business income?
Been looking for a workaround on that front – any creative solutions if the re-investment way is not right?
Hmm.. the gains you make from STCG can be used for trading (it is not business income, it is your capital now). Capital is not taxable, only profits/income is.
Hi guys
i got a text from the IT department saying the last date of payment for the third installment of advance tax is 15th december. In the chapter above, you have said that 15th dec is the date for the second instalment. Can you clarify? I can send you a screenshot of the text.
Thanks.
From Assessment Year 2017-18 (Financial Year 2016-17) onwards the first installment of advance tax for the Individual as well as other assessees has been made uniform i.e. 15th June of the financial year.
Due Date Installment Payable
On or before 15th Jun, 2016 Not less than 15% of advance tax.
On or before 15th Sep, 2016 Not less than 45% of advance tax as reduced by the amount paid in the earlier installment.
On or before 15Th Dec, 2016 Not less than 75% of advance tax as reduced by the amount paid in the earlier installments.
On or before 15Th Mar, 2017 The whole amount (100%) of advance tax as reduced by the amount paid in the earlier installments.
So technically you have received the right notice.
15th of december is the tthird installment
You have to pay 75% of the estimated tax liability by 15th of december.
Please find the following links for yor further reference
http://taxindiaupdates.in/advance-tax-liability-for-the-a-y-2016-17/
http://economictimes.indiatimes.com/wealth/tax/budget-2016-ups-tax-compliance-burden-on-individuals-advance-tax-due-3-months-earlier-now/articleshow/51340959.cms
Regards
Armaan Budhraja
I had no gains before august 2016, therefore no liability for 15th june. So I have to pay a penalty on the 15% tax that was not paid on 15 sept?
From which date were the new rules effective? which date should I consider to calculate the penalty from?
Thanks
hmm… I can’t figure out what new rules you are talking about. If there was no income, it is okay to no pay any advance tax. There is no penalty.
Hi Nitin
The new rules I am alluding to the links that Armaan has referred to in his post and also to the list of advance tax payment dates he has written.
I had gains by 15th sept towards which I payed advance tax according to the earlier (3 times a year sept, dec and march) regime. I did not pay 45% of the total tax on 15th sept, I paid 30%. There would be a penalty on the 15% that was not paid. To calculate that, I want to find out what date should I consider as the start of the “penalty period”? Were the new rules( 4 dates of payment) in effect beofre that? How do I calculate this penalty? Where should I go to pay this penalty? How do I notify the It dept that I have deposited the penalty amount?
Thanks
I have been doing the Intraday trading viz Equity and Nifty Futures from Mid October 2016. On Zerodha platform.There are some profits and losses in my account.Shall I need to pay any advance tax in December 20,16 particularly towards the above trading.Please reply per return.Regards.
” STCG is applicable for holding period over 1 day and not more than 12 months. ” suppose i bought share on 1 st aug. 2015 and sold on 31st july 2016. Here holding period is less than 12 months but 365 days completed (because of 29th feb). Will it be short term capital gain or long term capital gain.?
Lokesh, the rule says 12 months, so ideally you should count that only.
Hi karthik,
Recently i’ve opened an account with zerodha. Before this i use to trade through another brokerage firm .I have some shares in that(own) account and some in my father’s account, now i want to transfer them to zerodha account. How can i do that transfer and Any taxes will be levied on this transfer???
Thanks&Regards
When you transfer shares from your account or your immediate family account (as gift), there are no taxes applicable. Axis might charge you a small fee to transfer shares out of their demat. Check this answer.
Hi, On “LTCG for non equity/debt, gold/international etf”, isnt it true that you can calculate either 10% without indexation or 20% with indexation, and take whichever is lower? Above article seems to suggest 20% with indexation is the only option. Can you clarify pls.
Rajesh what you were saying was only upto 10.07.2014.
Oh, I see. Its getting hard to keep track of the changes 🙂 Thanks so much for replying. On a separate note, want to thank you guys for setting up these tutorials; fantastic. I havent seen anywhere on the internet so far, such good content, adequately and elegantly described to a painfully detailed level (as a compliment), and consolidated. Thank you so much.
I havent been able to find a chapter that describes the zerodha’s trading tools (kite in particular) with examples on various types of orders. Is it there somewhere already? I have seen bits here and there, but a consolidated doc would really help.
Thanks Rajesh, guess you haven’t yet checked the Kite user manual, has videos as well.
Hello Sir,
The above answer is still not clear in case of LTCG tax rate on non equity/debt MF, property, land/building, gold/silver etc.
Contradictory and unsatisfacory answers are mentiined at variuos sites/blogs.
I’m quoting one ref. from income tax india tutorial (for FY 2018-19/AY 2019-20)………
“Long-term capital gains arising from transfer of specified asset
——————————————–———————————————–
A taxpayer who has earned long-term capital gains from transfer of any listed security or any unit of UTI or mutual fund (whether listed or not),not being covered under Section 112A,and Zero coupon bonds shall have the following two options:
a. Avail of the benefit of indexation; the capital gains so computed will be charged to tax at normal rate of 20% (plus surcharge and cess as applicable).
b. Do not avail of the benefit of indexation; the capital gain so computed is charged to tax @ 10% (plus surcharge and cess as applicable).
The selection of the option is to be done by computing the tax liability under both the options, and the option with lower tax liability is to be selected.”
The above reference is updated till finance act 2018.
So as per above quote/ref, even for FY 2018-19/AY 2019-20, the taxpayer still has two options to tax his LTCG on non equity/debt MF, non equity/debt MF, property, land/building, gold/silver etc. i.e. either 10% without indexation or 20% with indexation.
Please clarify whether the above inference is correct or not?
If not, please share a reliable source wherein it is clearly mentioned about tax rate as 20% with indexation ONLY and NOT as 10% without indexation in case of non equity/debt MF, property, land/building, gold/silver etc.
Yes inference is correct.
So, For above mentioned securities/cases for FY 18-19, it means we can exercise lowest of the two options viz. 20% with indexation or 10% without indexation as against the only option of flat 20% with indexation as mentioned in the chapter.
Right, Sir?
Yes.
Thanks a lot sir for clarification.
How the taxation works for below case?
I have 1Lakh funds in my account. now on 13th Jan 2017 I have bought 10000 (ten thousand) shares of script A with CMP 10Rs.
in 3 months CMP reached t 20Rs now i have not sold all my shares but have sold only 5000 (5 thousand) to get back my capital back.
Now these remaining 5000 are my gift stocks. Which tax will be applicable for this sale transaction.
Note – I am not going to sell remaining 5000 for 2 years.
For what you have sold, you have booked profits, so it is an income. You will have to pay 15% as short term capital gain on 5000 x 20 = Rs 1lk, so 15000 as taxes for this financial year.
If I take back my Invested funds then why it will be profit. My profit is still invested in stocks.
Taxes doesn’t work your way. If you have sold to recover the original amount invested it would be considered as a sum of investment + profit out of which you have to pay taxes on profit, now the remaining amount that still remains invested in the stocks can go to long term profit depending on how long you keep it. One thing to note is that this calculation is considering that you have already paid taxes on the initial investment amount.
Your invested amount is how much you invested into a stock, not how much you transferred to your trading account.
Will STCG not be 7500/- in above case as sample calculation below?
Sale value = 1,00,000 (5000 x 20)
Buy value = 50,000 (5000 x 10)
__________________________________
STCG = 50,000
STCG tax = 7500 (50,000 x 15%)
The tax p&l shows a profit of -188.35 for intraday and SHORT TERM GROSS PROFIT ₹8,764.60…
How do I include this in my tax evaluation?? I think for short term gross profit (equity delivery) tax has already been deducted @15%. The total INTRADAY TURNOVER is ₹201.25 and SHORT TERM TURNOVER is ₹1,72,947.20. With this much turnover (small amount) do I need to file tax returns ?? Is there any minimum turnover amount for tax filing??
I job and used to file itr-4 for that in 20% tax slab. If I need to file tax for intraday amount how it has to be done? can I set off intraday loss(-188.35) against any like savings bank interest etc.
Please suggest, I am new to this field.
Thanks.
Sir,
I recently opened an account with Zerodha. I want to transfer shares worth 7 lakhs from husband DP account, which is with a different broker to my Zerodha DP account. Will there be any tax litigation involved for the transfer of shares ? Which option is safer to select in DIS slip….. ‘Transfer among family members’ or ‘ Gift” option. what will be the difference between these options? Please guide me.
There won’t be any taxation on this transfer. Husband to wife can be shown as a gift.
Sir,
What will be the difference between ‘Transfer between family members” and “gift transfer”.
It is the same thing. Taxation is not applicable only if it is immediate family (Father, mother, wife, husband, son, daughter)
My friend is a novice to trading. He want me to operate his account for a fees. i have my own separate account. I want some clarifications on
1. Whether i have to pay STCGT on the fees paid to me?
2. Whether he has to pay STCGT on the total profits?
3. If yes for both the above we are paying tax twice for the same amount. Is it correct?
Pl clarify?
In your example above (4.7 – Short and long term capital losses) I’ve an extended question. I’m now left with STCG of 50k losses in the 2nd year. Now in case i made long term capital gain of 1,00,000. I don’t have to pay any tax againt 1 lakh. Now my question to you is, even thought i made good profit in LTCG and i don’t pay tax on it, i still continue to enjoy the benefit of not paying tax till i make another 50k in profit under STCG to net off my losses to zero? and then pay taxes when i make profits only under STCG?
Yes and yes
Hi Nithin,
I am new to Zerodha and stock business.
Below is my stock investment details in Zerodha.
INTRADAY GROSS PROFIT ₹222.65
INTRADAY TURNOVER ₹560.25
SHORT TERM GROSS PROFIT ₹155.30
SHORT TERM TURNOVER ₹55,913.55
LONG TERM GROSS PROFIT N/A
LONG TERM TURNOVER N/A
TOTAL CHARGES ₹211.82
Also I have salary income above 3lac and below 4.5lac, my main income.
My question is 1) can I simply file ITR2 ? (stock profits as capital gain) , OR I have to make audit for this small income ?
Thanks
Pallab, Ideally best to use ITR4. Many people also show it as capital gains if turnover is less (not the best approach). Whatever you do, make sure to declare in your ITR that you have traded.
Hello sir, one question.
for example I am only doing short term trading only of shares of different companies for entire year. On some I made profits on some losses. do the STGC (15%) is applicable on every trade I made profit on? or i can just use like this “profit – (minus) loss = balanced amount taxed as 15%?
Ashish you have to pay tax on net profit, so yes on profit-loss.
Hi Nithin,
Thank you for addressing all the concerns regarding taxation in capital market. I had a quick question, can we claim AMC charge as an expense while calculating STCG?
Hi Nithin – I am a Zerodha client, which I use primarily for trading. Additionally, for my long term equity investment, I am subscribed to equity PMS. Can I show PMS fees as expenses (cost of improvement) to reduce my STCG, which have arisen due to PMS selling shares with holding of less than a year.
Yes, you can.
I want to see all EQ, F&O, Commodity all market transaction or tradebook within single reporting for a whole year eg. from 01.04.2014 to 31.03.2015. How can we find the same? and also the Net Profit/Loss in the same way we require, then how we get the reporting in a single report?
These are all different segments, not possible to include them in one report. You can download all the three as excel and maybe combine it yourself.
my business income is 3 lacs and i bought shares worth 2lacs of single company,do i need to show shares at the time of purchase in IT return or at the time of sale ,i searched on internet that shares purchase worth 1 lac or more reported to IT dept. and its comes under AIR 005 ,is anything to worry?
Yeah, ideally you should have shown the investment in your balance sheet. Nothing to worry though, if someone asks for clarification just explain.
Sir I usually trade in commodity,and also get benefit of leverages what should my total sales or total turnover,
For example-i have 5000 rupees, with support of leverages I bought 2 unit of silvermic@40000 and sells them @40500. In these case what is my turnover
Do read the chapter on turnover. Turnover is not contract turnover, it is absolute sum of your profits and losses. In this case around Rs 1000 profit, and hence that is the turnover.
Sir,
I and my husband have trading accounts with you
I understand , this is not platform to complain
but, I have no choice to reach you
MY HUSBAND HAS SENT 10 MESSAGES, IN DETAILS
BUT SUPPORT SECTION IS MAINTAINING THAT
ZERODHA LEDGER IS CORRECT
MY HUSBAND IS RETIRED MANAGER OF CANARA BANK
WORKED AS HEAD OF RECONCILIATION
the problem is
my chartered accountant is taking objection
on ledger statement of my husbands trading account with zerodha
which shows 0.01 paisa difference in reconciliation
between your ledger statement of my husband A/C. DG0240
AND
ledger statement as mirror account prepared in TALLY ERP.9
I give here the transaction which Zerodha ledger shows
(DOTS are added to prevent the distortion of message , after posting and made it to remain intact.)
Date……………………………………………………………… Debit……………….. Credit………………………Net
28.02.17 opening Balance …………………………………………………………………………………….660414.31
28.02.17 bening Payment Gateway Charges…………..10.35……………………………………….660403.96
28.02.17 Settlement value for……………………. ….246981.35……………………………………….413422.62
Sir
this the net balance , which zerodha lydger shows as 413422.62
this is wrong sir
THE CORRECT NET BALANCE SHOULD BE 413422.61
Tally EPR.9 Shows the correct balance as 413422.61
my husband asked to support section to contact YOU/CHARTERED ACCOUNTANT
They mantain that they are correct and say they have taken opinion of chartered accountant
and so zerodha ledger is correct
SIR
YOU INTERVENE
OR SUGGEST ME HOW MY HUSBAND SATISFY TO MY CHARTERED ACCOUNTANT
sir
please
help
REGARDS
RENUKA GHANSHAM HARDASANI DR2336
GHANSHAM HARDASANI DG0240
Renuka, rounding off errors will always happen, there is no way to avoid this. This is no big deal at all, surprised your auditor is bothered about this.
I have heard that there is an Income Slab excessing which a person needs to pay Income Tax. But, If the total Income of a Person including income from the Stock Trading do not cross that Minimum Income Tax Slab, Still Is it Mandatory to Pay Tax? Suppose, the Yearly Income of a person from other sources is Rs. 2 Lakh and the Income from Stock Trading is Rs. 30000 (Yearly) totaling Rs.2,30000 in a Year that is lesser than the Minimum Income Taxation Slab, then Still Is he Required to Pay Tax? Please Reply.
Of course not. No need to pay tax unless it is less than Rs 2.5lks.
Hi nithin,
I have losses in trading,So don’t to spend more on audit.
Can we do audit by ourselves and file income tax returns??
Thanks in advance
Audit by ourselves not possible.
I have done a lot of intra-day trade transactions , does this lead to more charges on audit ?
For debt mutual funds ltcg is flat 20% after indexation,,,wheras for stcg its as per tax slab,,,,now if i have no other income,,then reedeming before three years and showing it as stcg is better right,,or is my thinking wrong.
Hmm.. not necessarily. Indexation reduces the net income significantly.
i bought on 1 company share on 31 aug 2016, but sold on 25 april 2017. so do i pay short term tax on assesment year 1 april 2016-31 march 2017
You can show this for AY 2017/18
AY is confusing bcause its one year ahead.
so to clarify do u mean while filling the return of previous year April 2016-march 2017. do i have to or next year i can show that
No, Since you are selling it this year, you have to show when filing April 2017 to Mar 2018
Dear Nithin , I joined Zerodha in Nov 2016. I have made STCG on EQ delivery in 16-17 of about Rs.50000/= with a turnover of about 25 lakh. I am a salaried person in the 20% slab. 1) Is it OK to file my return under ITR2 ? 2) The charges related to Zerodha EQ delivery trading amount to be about Rs.6000/= Can these be used a setoff in ITR2. Thanks
Please advise:
I am a salaried person. This year I have made STCG of 2,46,000 by selling equity shares. Previous year I have carry forwarded the loss of 1,60,000. My salary for this year was 1,91,000. Also I have earned 16,000 from fixed deposit interest. I have certain deductions which I can take such as mediclaim, pf, dividend and saving bank interest. How much is my tax to be paid if any, can you help me on this?
You can set off the loss, so I am guessing you have 85k of STCG. If you add 85k to 191, it is around 2.7lks + 16, Say around 3lks. Apply all your deductions. You have to pay 10% above Rs 2.5lks as taxes after all deductions.
I have a confusion!
If i bought Stock “X” at Rs. 100 on 26 September 2016 and got delivery in DEMAT A/C
on 29 September 2016 Market Started falling after Surgical Strike and i sold stock “X”at 10:20 AM and bought back at 03:20 PM.
With this activity i saved the loss of Rs.20 that i could have suffered but technically it’s shown as “Profit”
After 2 Months i sold Stock “X” at Rs.200
Now it is clear that Rs. 100 (200-100) are STCG
but what about Rs. 20 that i saved on 29 September ?
Will it be Speculative income Despite having Stock in DEMAT?
Do i have to disclose it ?
As it is not real profit it just saving of Loss that could have suffered
Thank You
That Rs 20 will be speculative income. Yeah, technically you have to.
Well that one need to be changed….:(
I have a SIP from last two years in 3 different MFs however they have never been redeemed or sold and they are in still in continuation. But their current values are higher than the amount invested. Will this qualify as capital gain even if the units are not being sold??
No capital gain only once you have sold.
My husband sadly passed away last year. He had invested in some stocks for us in 2 demat accounts –
Account 1 in HDFC was in his name as 1st holder and mine as 2nd holder,
Account 2 in ICICI was in my name as 1st holder and his as 2nd holder.
When I submitted my husband’s death certificate to HDFC and ICICI, they asked me to open new accounts claiming that they cannot just delete my husband’s name (RBI circular says they should be able to just delete the name of the deceased person). Because the banks were not helpful, since last month I have 2 new demat accounts at HDFC and ICICI.
I would like to combine all shares from the 2 accounts into one account at Zerodha to avoid paying their ridiculous brokerage fees (ICICI is charging me 0.75% + other charges on top of that).
However, after reading the FIFO rule for taxation I am concerned about selling any shares. All shares I hold were bought more than 2-3 years ago. So at first glance it looks like selling them should incur no tax. However, if the FIFO rule is for each demat account, does that mean that I cannot sell these shares before the end of 1 year of holding within a demat account?
Example 1 – We bought Reliance Industries 100 shares in 2009. It was in my joint demat account with my husband with him as 1st holder and I was 2nd holder. Since April 15 2017, these 100 shares of RIL were transferred from the closed joint demat account to my single demat account at HDFC. If I sell those shares today in May 2017, is my holding period for long/short term tax treatment considered from 2009 or from April 15 2017? If I create a new Zerodha account and transfer shares to Zerodha on June 1, does this mean that I cannot sell for long-term tax treatment until June 1 2018?
Example 2 – I have L&T 50 shares bought in 2010 in my joint demat account at ICICI with me as 1st holder and my husband as 2nd. Now those 50 L&T shares are in my single demat account at ICICI since April 10 2017. If I sell those 50 L&T shares today, are these long-term or short-term for tax treatment? If I transfer these shares to Zerodha and then sell, do I have to wait for 1 year of holding in Zerodha demat account before selling?
Example 2 above, I presume I can claim that I was the 1st holder of the old demat account, so the purchase date still remains the old purchase date. Example 1 is harder for me to find the right info online about taxation. If I transfer all to Zerodha, how best to sell to avoid paying tax for my shares that were purchased many years ago?
Thank you
Transferring shares between your own demat account doesn’t change the holding period. For that matter, all transfers between immediate family, husband/wife/children, can be shown as a gift and original holding period will apply.
1. 2009 itself
2. Long term if you sell now, or if you transfer it to Zerodha and sell.
3. No tax implications like I said by transferring to your own demat account. It is like how transferring money between your own bank accounts has no tax implications, similarly if you move stocks between your own demat accounts, has no tax implication.
Wheather a govt employee in india can have investments in equities ? If yes what amount of tax is needed to be paid in LTCG . AND WHERE TO SHOW THE SHARES WHEN HELD IN DEMAT AND WHERE TO SHOW AS INCOME WHEN SOLD?
Investing in equity shouldn’t be an issue, best to confirm though. LTCG is 0 and STCG is 15%, just like for everyone else. ITR2.
respected sir,
(1) i have done much losses from 2005 to till date and i am government servant i file IT return every year but not shown losses, if i have to rebeat this losses from new profit can i shown old year losses? or can i file old year return repeat?
(2) if i purchase A company share qty 1000 @ 50 with brokerage of Rs.500 in may.2016 and i sold qty 500 @ 60 in Aug.2016 brokerage of Rs.300 (of 500 qty) when STCG counting brokerage of purchase side i have to count Rs.500/- or per unit findout brokerage and findout (500 qty) brokerage…… i mean i shown purchase side brokerage rs.250/- and when sell remaining 500/- qty then shown purchase side brokerage rs.250/- or total Rs.500/- on first time sell partly qty………please guide me thanks
1. If you haven’t filed your returns on time, you can’t claim the benefit of the loss.
2. You can add cost of brokerage into cost of your holding. So STCG is calculated after all costs (except STT).
Respected Sir,
my cousin brother transfer his share in my demat account approx before 5-6 years, he had want to close his demat account. can these stock consider as a gift or not? please guide me……. thanks
Hmm.. if it is cousin, it can’t be shown as a gift. Only father, mother, brother, sister, even uncle/aunty allowed.
Hi Nithin/Team,
I was trying cleartax.in to submit details of my capital gain/loss ( I use Zerodha ). Do we have to mention purchase/sell date & price of each & every share ( for short term capital gain/loss) ? Or in actual ITR2 form (Java tool or Excel version) we’ve option to enter consolidated short term capital gain/loss(Already calculated by q.zerodha in P&L section) somewhere ?
First time trying to fill ITR2.
Thanks.
Yes, in actual ITR2 form (Java tool or Excel version) we’ve option to enter consolidated short term capital gain/loss, but this has to be done quarterwise.
Hi there,
I have an existing computers business for which I file my itr under section 44 ad but fro time to time I also buy F&O. In this financial year, my total sum for options traded was 35 lakh but overall I had a loss of 1.5 lakh. Is it compulsory to show this turnover or can I consider myself as an investor as I really don’t want to audit the books and also do not want to increase turnover of my existing business.
Thanks
Best to stay compliant to rules. Yes, required to show as trading income.
Sir,
As I have salary income and Equity related capital gains, I have been filing ITR-2 returns till last financial year .
1) Is it the same ITR-2 to be filled on revised ITR forms for AY 2017-18 ?.
2) I have done gift transfer of shares worth 2 laks to my spouse account. Where this need to be shown in my ITR-2 ?.
1. ITR2 forms are available on income tax website.
2. As gift.
sir,
In which schedule/heading of ITR-2, can I show the value of gift transfer of shares done to my spouse account ?
Haven’t seen the new ITR2 forms. Best to consult a CA.
Can you please tell me with example what is acquisition/full consideration for equity trading as an investor. I have LTCG / STCG. Shall be grateful if you kindly explain with example as you do always.
Hmm.. I have explained everything in the chapter above. Can you be more specific.
Thanks for prompt reply. I have gone through your article. It is really excellent. And top of that your way / method/ process of explanation. Fantastic.
My requirement is for filing return – acquisition/ full consideration value is asked.
Suppose I bought shares worth 10 lakhs and sold the same at 11 lakhs.
What will be acquisition/ full consideration value for LTCG. This fields are required to be filled in IT return.
Acquisition is 10lks that you bought. In case of long term you don’t have option to fill both fields.
i am a retired govt employee ,i had pension income, and now i am doing private job right now. I do intraday and delivery based in equities in my Demat account,i had opened account on my wife name in Zerodha and all the documents what i had submitted on her name only and she is a house wife.I do trading in zerodha too.can u pls tell me what ever the profit iam getting in my wife demat is taxable in my name or my wife name whether it is intraday or delivery based.
If T&D is in your wife’s name, it is taxable under her name
I am an investor and trader as I trade in equity and F&O.
Shall I submit ITR4 for FY 2016-17 or AY 2017-18
ITR3, it is renamed from ITR4 to ITR3 from this year.
Hi Nithin,
I have F&O Turnover of Rs. 1000000 (ten lakh), but made a loss of Rs. 100000 (one lakh).
I am salaried in 30% IT bracket, have other capital gains.
As I understand I need to get Audit done (because F&O turnover <2cr AND profit < 8% of turnover), and file ITR3.
Can I avoid Audit by claiming (even when I have loss in reality) that I made a profit of Rs 80000 (8% of turnover), and paying a tax of Rs 24000 (30% of 80000) ? I am anyway paying more tax than required??
If yes, can I do this by putting below entries in ITR3?
1) Part A-Gen: Audit Information a) Are you liable to maintain accounts as per section 44AA = No
2) Part A-Gen: Audit Information b) Are you liable to maintain accounts as per section 44AB = No
3) Part A P&L: item 53b: Gross Profit=80000
Thanks
yes, you can do this. But do consult your CA once. This way you will not be able to carry forward the losses to future.
Hi Nithin, its about 8% factor for audit or no audit.
How to check profitability of 8%?
Is this gross profit divide by turnover OR net profit (after deducting cost including STT)?
In this year’s tax PnL it shows me 3k profit, 11k cost and turnover of 33k. So gross profit is 3k but after deducting cost net is loss of 8k.
Net profit.
my wife is a house maker and she do trading in zerodha which is on her name,if the profit is less than 2.5 lkh,is it mandatory to pay tax, and to declare the income.Trading is the only income for her.The money what she is using for trading is mine.
No need to pay tax, but best to file ITR.
Sir iam going to gift my wife a amount 20 lakhs which i got as long term capital gains and that was reflected in income tax returns too in the last financial year.
1.Is there is any limitations of amount to gift wife…
2.She is a house wife ,she use to trade in zerodha,If she invests that amount in shares ,the profit what ever she is getting is getting clubbed with my earnings or on her name ,let it be STCG or LTCG.
1. no, u can gift her.
2. It will be her earnings.
thx alot for ur suggestion
I have income of Rs 493000/- from salary and i have Short term capital gain from shares (STT Paid) of Rs 16000/-. Further I have long term capital loss of Rs 28000/-. What is my Income tax payable. In earlier years i had short term capital loss also. Can it be carried forward now.
If you had carry forwarded your short term loss from before, you can set it off against your gain this year. But if you have’t, STCG at 15%.
Is there is any procedure to gift money to wife OR parents…or directly we can transfer to their bank accounts(amount is 20 lkhs each ).I heard that bank will intimate income tax authorities for a amount more than 10lkhs deposition in a account in a year. is there is any problem for transferring that much of amount.
You can directly transfer. But make sure to show it while filing your returns. Banks might have an alert in place for higher value transaction. But that is okay, as long as your are showing this transaction in your ITR.
I have a joint demat account with my brother (I am the first holder). All the investments in the demat account have been done by me and paid for by me. Can I remove my brother’s name as the second holder and replace it with my sister’s? What would be the procedure for this?
I made loss, intraday=2000.00 ,short term capital loss=38000.00 in financial year 2013-2014. i didnt declare these losses in my itr1 at that time. now1) can I revise the itr, if so which form to be used.2) I made intraday loss=12000.00, stcg=22000.00 in fy2016-2017. which form to be used for filling itr. And can I adjust the stcg losses occurred in 2013-2014, with profit of 2016-2017
1. No, its too late to revise.
2. ITR3. No you can’t carry forward loss if not declared on time.
Hi,
Please see below and suggest which ITR form I need to fill.
– Salaried employee with total annual income of 1.3L.
– Intraday/speculative profit of 13k.
– Intraday/speculative turnover of 15k.
– Short-Term profit of 2L.
– Short-Term Turnover of 80L.
Thanks in advance.
ITR3
You mention in the article that STCG is applicable for holding period over 1 day and not more than 12 months.
What about intraday trades which are bought and sold on the same day?
It is considered as speculative business income and not as capital gain.
Suppose I bought 100 shares of company XYZ on 01-08-2016 @RS. 200/share. Company demerged into XYZ and ABC in the ratio of 1:1. I received 100 shares of ABC in my demat a/c on 21-07-2017 but trading of ABC started on 02-08-2017. I sold 50 shares of XYZ on 15-07-2017 @Rs. 80/share and remaining 50 shares on 05-08-2017 @Rs. 70/share. I also sold all the 100 shares of ABC on 10-08-2017 @Rs. 150/share.
Now while calculating STCG and LTCG
1. What will be my buying cost for the shares of XYZ sold on 15-07-2017 and 05-08-2017?
2. What will be my buying date and cost for ABC?
3. What will be my STCG and LTCG?
4. Will there be same tax treatment in case of Bonus shares in 1:1 ratio instead of demerger?
1. When company demerges the company also give a % value being demerged from the main company. So if it is 30%, you can mark 30% of your cost of buying company XYZ to Company ABC. ALso drop the main company cost to 70%.
2. Buying date for ABC will be that of XYZ itself.
3. Everything will be based on when you bought the main XYZ.
4. In bonus, the new shares you get comes at 0 cost. Here it comes with a cost, so treatment slightly different.
1) Can a person be a investor and trader at the same time?
So is there is any advantage in maintaining two trading accounts-
(a) one for investment
(b) one for trading
2) Does all tax accrue to the person in whose name the trading account stands in case he has multiple demat accounts in various combinations but in all such accounts he is first holder?
I know zerodha permits only one demat account to be linked but ICICI/HDFC among others allow linking upto 5 demat accounts.
3) With respect to point 2 above, isn’t the first account holder in joint demat the primary custodian of shares just as in case of savings a/c and MF holdings.
1. yes
2. Yes.
3. Yes
If I am not coming under tax bracket and now I want to do trading in stocks. And buy a stock in small quantity and sell it on the same day. Will I come under tax bracket
IF you make profits and your total income more than 2.5lks, yeah you will come under tax bracket.
Wat is the best way in stocks to avoid coming under tax bracket
My bank ac is joint . When Iam doing trading and if the interest is taxable, to whom it is taxed?
If my wife has no much personal income and she starts trading. Is she taxable if she sells the stocks in a year which comes below Rs. 250000 of a year
If it is a joint account, ideally the person who earned the money is taxable. If you want to show it under your wife, best to open a bank and trading account in her name and do it separately.
Hi Nitin
Great job You have made many things easier. Just a small confusion. I have Intra day trades and short term trades in equity. The frequency of short term trades is low as I am a Salaried person. So can I show the short term trades as STCG and the Intra-day trades as speculative business income? Or do I need to show both Short term trades and Intra-day as Business income ?
Thanks a ton
Mayank
Yes, you can show STCG and intraday as speculative business
Even if a person does 1 or 2 intra-day trading the entire year, still does he need to show the income under speculative business and file ITR3/4?
The reason for the above question: I am a novice investor who has so far filed ITR2. I just wanted to try out trading for a few days. If it doesn’t work out I will do more deep dive and try again next year.
Technically you have to show all your intraday trading under speculative income on ITR3.
Thanks for your reply.
And can ITR3 be filled and filed by self? Or does it mandate a CA? And does it need to be audited before filing?
It can be filled yourself. But if you are liable for an audit then you need a CA.
Ok thanks. I searched for liability for audit. So if turnover is more than 1 Crore then audit is necessary. By turnover in terms of trading means the total transaction amount right? Like if I have bought shares for 50 L and sold all of those for say 60L then total turnover is 110L(50+60)? Or is the turnover 60L(max(buy,sell)) or 10L(profit/loss)? Which is turnover?
10L. Can you please go through all the chapters, I have explained in detail.
Thanks for your reply. I will go through the chapters.
Cheers!
i think he is right…i don’t know for sure though..
under presumptive tax scheme…if our turnover is less than 2 crores and profit is more than 8% of turnover then we don’t need to audit our book at all…correct me if i’m wrong….
This is correct, do check the chapter on ITR forms.
Hi Nithin
I am a state govt employee with annual income of rs.480000. I am very much interested to invest in stock market but i have certain confusion. Please clear all my confusion and my queries are:
1- Can i invest in stock market being a govt employee?
2- Suppose i buy some shares today and after getting delivery sell them after 7-10 days. Can i repeatedly do the same transaction in a month?
3- Which itr form should be used?
Thank you
1. Investing should be okay. But do double check.
2. Yes
3. ITR2
Thank you
Sir
what is the STCG tax on income of a person whose overall income including STCG is below Rs.100000/-. is it exempted or 15% like others
No tax until your total income is over 2.5lks
Dear sir,
can we get the details of brokerage and other charges in trade book option or anywhere else where we can track it on each transaction basis. right now it is shown clubbed on day basis.
Thank you very much.
Regards and Thanks,
shafik s.
Shafik, in the current version it is clubbed per day. We have a new Q coming up, where we will show by trade and scrip wise.
Thank you very much for replying.
Detailed charge list here – https://zerodha.com/charges and brokerage calculator here – https://zerodha.com/brokerage-calculator
Thank you very much for info.
sir
is thereany branch of zerodha in lucknow
bcz i wanted to open an account
Vijay, if you have an AADHAAR card then can open an account instantly online, here is the link – https://zerodha.com/open-account.
But, yes – we do have an office in Lucknow –
Mr. Rajesh Kumar Upadhaya
LGF – 8 Eldico Udhyan Plaza 2
Opp. to Dental College
Raibareli Road, Lucknow
226025
Phone: 8960821459
Nithin Sir,
Really its a great work from Zerodha, to help everyone even in Taxation level and also other queries from different topics. Congrats for this great Initiative.. I am using Zerodha for last 6 years and had good experience till now. Can you please clarify the few queries which I have for a long time..
1. If my annual income is Rs 6L and the amount invested in share market is 4L for long term(delivery), should I need to provide the amount details invested in shares during IT filing. If so, How to do it?
2. In case 4L is mentioned in IT Filing, will tax be calculated for 6L alone or for 10L(6L+4L) if I am investing for long term. ?
3. If I mention 4L in IT filing, will it benefit me to reduce tax or will it increase my total tax to be paid.??
3. I buy shares on a monthly basis regularly. In that case, if I sell shares after few months, will the shares bought first a year before will considered for tax calculation or is there any order?
Thanks in Advance.
Regards,
Sudarsan.
Sudarsan, you have to declare only your income in your ITR. If you have invested money, you don’t need to show it on your ITR. So you need to just show your 6lks income.
Thanks a lot for your response sir..
Dear Nithin,
I have inherited some shares, which were bought more than 25 years ago. The shares were bought on prominent exchanges – BSE and NSE in india and held in demat form. If i sell now, what are the tax implications. I do not have any idea of the buying price…
Thanks
Amit
Long term capital gains doesn’t attract any tax. So no tax for you to pay.
STT is payable to the Govt and cannot be claimed as expense when investing.
can we claim it if it was trading rather than investing?
If you are showing it as business income, yeah this is your cost.
My self salaRied person with additional business of technical consultancy
Now started investing in equity and mutual funds
Which it should I file
Up to now I used to file itr 4s which is now itr 4
As I disclose consultancy income by rule of 44 Ad
You will need to use ITR3 as you will have capital gains when you book profits on your equity and MF.
Hi
I am an NRI and my wife is resident Indian (for taxation).
i transfer money from my NRE account to her resident account and he invest in mutual fund through COIN for long term. ( rs 30000 per month).
she dont have any other income in India and will be doing mutual funds only ( no intraday or equity)
my questions are
1) does she need to submit ITR .coin investments made are for long term gains only
2) I am submitting ITR for my investments.so will i need to include what i gift her.i read about clubbing with my earnings.ca you explain
1. Not required, but it is a good habit to file ITR even if there is exempt income.
2. Yeah, you can transfer to her account and show it as a gift.
thanks nithin
I do all of the followings:
Invest for LT & ST
Trade BTST, Intraday, FnO
For ITR, can I act both as an Investor & a Trader & take benefits as below:
Investor (LT/ST) : take benefits of LTCG, STCG.
Trader (Spec/Non-Spec Business) for BTST, Intraday, FnO : take benefits of business expenses/loss carry forward & loss adjustment with other heads.
If my profit from Trading (Spec/Non-Spec Business) is less than 8% (or Loss), do I need to get an Audit even if I have profit from Investing activities/other Income & thus in total I have profits more than 8%.
Will the sale amount from Investing activity will be taken into consideration for T.O. for Audit ?
Yes you can be investor and trader. If your total business profit is more than 8% of turnover, no audit required. Sale amount from investment is capital gain, not used for turnover calculation.
Dear zaroda is it banker can do Future and Options?
No restrictions from the exchange. You need to find out if any such from your bank.
Yes, even a banker can trade F&O.
Dear Nitin, i had a demat account in sharekhan and i want to open another demat in zerodha.what i want to know is
1. Can a person eligible for multiple demat accounts?
2.my name in bank is B.L.N.Prasad and rest all other (Pan,Aadhar) is in elaborated form,can i open a account in this conditions with out any problem in future for transfers.
3.so my cheque book had also short form of my name,or else i had to change my name in bank records as per Pan card.
Kindly advice…
1. Yes, you can.
2. Yea, we open account as per the IT database.
3. This will work. If your bank can give you a letter saying you are BLN PRasad (full form) will be helpful.
Dear Sir,
As I got a good response from Equity Market( fully thanks to you), I am planning to Redeem my Mutual Fund and invest in equity directly.
1. Since last 10 years I am regularly investing in the MF through SIP & lumpsum and I have not shown my investment while filing my previous income tax return.
2. Since my all investment is long term and does not attract any type of capital tax gain
3. Suppose I redeem my investment of MF and investment in the direct equity.
4. Do I have to show redeem amount from MF & fresh investment of direct equity in my future income tax return filling. i.e(2017-18)
Thanks
SHRINIVAS BHAT
This is exempt income, so need to pay any taxes. But make sure to calculate the profit, show it as exempt income (EI) while filing your ITR.
I majorly do investment activity. Only once I did intraday trading ending up in loss of around Rs.12. I didn’t intend to do intraday or F&O in future. Can I declare myself as Investor and submit ITR2 or do I need to consider myself as Trader here?
You could.
My name is prince jagdish singh
Username :RP5820
Pls exlpained capital gain tax on bonus issue
if bonus share sell less than 1 year then capital gain tax ???
if normal share sell less than one year then capital gain tax ??
Bonus share is new share that is acquired at 0 cost. So yes, STCG if you sell before 1 year @15%. STCG of 15% is same for bonus and normal shares.
Hi,
I had purchased short term debt fund and sold it after 3 months for a profit of 5000. Since this comes under STG, please let me know should I be paying 15% tax or tax as per my IT slab.
For debt fund it is 20%. Have explained above.
Wouldn’t that be as per individual’s tax slab, and not just flat 20% ??
Hi Team, Can you please share the taxation details of ETF holdings for Long term and Short term. Is it same as Equity taxations?
Please explain if we should hold for 1+ year or can sell at a profit of few months holding by comparison in example if possible.
Regards,
Piyush Kushwaha
ZT0962
Yes ETF is like equity/stocks. Do read through all chapters, explained in detail.
Hi Nithin, it is a great article and most valuable one. I just would like to ask one thing that if I don’t have any business related expenses then turn over or revenue earn from Intraday or FnO, itself is profit to be taxed according to respective tax slabe
yes
Hi Nitin,
Just want to know whether STCG or tax on F&O profit is in addition to STT
or
STT can be reduced from overall tax calculated, as it (STT) is already paid tax.
Thanks
It is in addition.
Could you shed light on taxation in the following situation –
I have joint bank and joint demat account with my parents.
In both accounts I am the first holder. The trading account is in my name.
Recently, my mother transferred some money from her (another) account by ERROR into my account.
1) How to show the above transfer in my return?
2) How to calculate the capital gains in such case? Would it accrue to me only or equally among all demat holders?
You can show transfer from your mother as a gift. NOt taxable.
Suppose
I sold some shares of reliance for profit of Rs 2200 and I also sold some share of Tata at a loss of Rs 500, under STCG then on what a amount I will have to pay tax on Gross profit of Rs 2200 or on net profit of Rs. 1700.
On 1700
1. I have read in other sources that advance tax is payable if calculated tax liability exceeds Rs10,000. There was no mention of this threshold in this chapter so I wanted to confirm this. Do I have to pay advance tax is my tax liability on realized profit is less than Rs 10,000?
2. And what happens if I realize a very big profit in March which I couldn’t anticipate now? Will I be penalized for this?
1. Not required.
2. Yeah, this is tricky for trading as a business. No penalty, but you will have to pay interest on advance tax not paid.
And how do I calculate and pay this interest? I mean I can calculate and pay Advance tax myself through Challan. But will the IT department contact me somehow to tell that I have to pay this much interest or that is also my responsibility?
Paying interest is also your responsibility. End of the year income, divide it into 4 quarters. Every quarter there was a delay, pay 1% per month as interest on tax that wasn’t paid.
Hi Nithin, its about the bonus share taxation. I had 20 RIL share ( buy at 1500) before declaration of bonus share. And after adding 1:1 bonus share I had 40 total. I sold all together at 800. Can you please suggest how to consider these for STCG?
The first 20 shares you would have short term losses (1500 -800). IN the new 20 bonus shares you will have short term gain (0 -800). So net gain of 100 x 20 = 2000. On this Rs 2000 you pay 15% as STCG.
Thanks Nithin for clarification.
I got an another doubt after going through this chapter. Basically, I had some gain (20000) from delivery and some losses (-40000) from intraday. Initially for 1-2 month, I was doing trading seriously and later its occasionally due to some personal reasons.
My doubt is,
1. can I accumulated show net losses (-20000) as short term capital loss?
2. Since I was in assumption thay intraday loss can be setoff against STCG, I haven’t paid advance tax for last quarter, will this attract penalty?
There are other income mainly from interest of savings account, FD and EPF withdraw (assuming I’ll receive last before 31 Mar, its taxable due to less than 5 yr service).
1. No, intraday is speculative business and delivery can be shown either as STCG or non-speculative business income. You can’t net this off.
2. hmm.. I think you can handle this without any penalty. Do speak to your CA.
Pardon, based on clarification, If the bonus is declared after 1 yr, so the initial 20 shares will be having Long term capital loss, while the bonus 20 shares shall be having STGC. Dose that mean I have to pay 15% on 20×800= 16000? Is my understanding is correct?
Yes, you are right.
Thanks Nithin for prompt reply.
With this, I really got a lesson that if a stock is held for more than a year and if any bonus is about to declare, better sell before bonus declaration to avoid paying higher tax. For above example, tax is 2560 while if sold before its zero 0 with little chance of reduced gain.
Hi
1. Does new bonus shares also attracts STCG if its sold before 12 months of bonus shares allotted date ?
2. If you have STCG and still your income is less than 2.5 lakhs. Still we need to pay taxes on STCG or its exempt?
3. In such scenario in para 2 still should we need to file ITR if our total income including STCG is less than 2.5 lakhs
1. Yes
2. Exempt
3. Always best to file ITR, not mandatory though.
Hi Nithin
I have an individual account with Zerodha. Now I want to start a joint account with a friend and he will be the first holder. He will invest the money and I will handle the account and we plan to share the profit.
1) Can we share the profit directly from zerodha account to both of our bank accounts or do we need to transfer the profit to the first holder’s bank account and then transfer to my bank account?
2) If we sell the shares after 365 days and we share the profit, do I need to pay any tax?
3) If we sell the shares in joint demat account before 365 days , how much tax do we have to pay?
In my opinion, the sale proceeds could be transferred to the linked/designated bank account only as per the contract signed by you. From there, you may distribute the funds according to your convenience. For IT purpose, the profit may be shared in proportion to the contribution/investment.
A trading account can’t be joint account. Only the demat account where the stocks sit can be joint.
1. Money always has to go back to the trading account holder.
2. If you take money, for you it will be a normal income. So no LTCG benefits.
3. 15% is the STCG.
“2. If you take money, for you it will be a normal income. So no LTCG benefits.”
A.) If we start joint demat account and our joint bank account is linked with the trading account, then both of us will get LTCG benefits or only for the trading account holder ?
B.) Is there any way for both of us to get LTCG benefits ?
1. Like I said earlier, trading account can only be individual. Only the trading account holder can take benefit.
2. You can create a partnership business, put money in the partnership and invest through that entity.
Hi Nithin,
Held equities for more than 3 years in Demat Account (jointly with my son) with ICICI Direct (NSDL). All the equities were purchased with my own fund and my son’s monetary contributions are -nil-
Transferred the equities to Zerodha (CDSL) where the Demat Account is being held in my single name and my son as nominee.
Due to the different name combinations of the accounts ICICI considered the transfer as “Inter-Depository-Sale” and levied transfer charges with VAT.
The query is: whether this transfer shall in any way change the status of my equity holding duration or LTCG against sale from Zerodha Demat Account Now…?
No, inter depository transfer between the same person doesn’t affect the holdings date count in any way.
Hi Nithin
I have an individual account with Zerodha. Now I want to start a joint account with a friend and he will be the first holder. He will invest the money and I will handle the account and we plan to share the profit.
1) Can we share the profit directly from zerodha account to both of our bank accounts or do we need to transfer the profit to the first holder’s bank account and then transfer to my bank account?
2) If we sell the shares after 365 days and we share the profit, do I need to pay any tax?
3) If we sell the shares in joint demat account before 365 days , how much tax do we have to pay?
Dear Nithin,
I understand that the dividends earned from equity and MFs are not taxed at investors hand. However I am confused whether the dividends earned within one year of investment either in equity or MF or ELSS are also not taxable at the investors hand. Please clarify.
Regards,
Sharanu
Yes, all dividends are tax free irrespective of time you have held the investment.
If there is no issue of liquidity then BTS Tomorrow or BTS day after tomorrow will be considered as delivery trades and not as intra day right? Moreover since we did not actually take delivery the charges will be less than delivery trades right(since DP charges are avoided)? Or are there any other charges with respect to BTSTomorrow? Moreover will BTSTomorrow(Assume I have only very few BTSTomorrow) come under short term capital gains(ITR 2) or Speculative Business income(ITR 3)?
BTST is capital gains or speculative is a grey area, I don’t know what is the correct answer. I think if not too many such trades show as capital gains, and if many then speculative. Yeah no DP charges on BTST.
Thanks for your quick reply.
Does the charges by Zerodha for BTSTomorrow also 0 like delivery? I know delivery charges are 0 and intra day is Rs 20(min).
Yes BTST is also 0
If I book profit from stock “A” and reinvest in Stock B, do I still need to book STCG or LTCG? Profit money didnt arrive to my bank yet.
If you held for more than 1 year then LTCG otherwise STCG
So, my income is below 2lk thats mean i dont need to pay STCG 15%. asume i bought 1 share of 100rs. next day i sell it to 105rs. Now what is my actul profit ?
Rs 5 is your profit. But there could be charges like STT, GST, etc. You can check that out here: https://zerodha.com/brokerage-calculator
I have bought shares on delivery and shorted in equal quantities in future. Profit in delivery and loss in future. What will be the tax treatment. Will it be taxed on arbitrage profit or treated as STCG and loss in future. Thanks
If it is hedged, you can net off the loss with profit in delivery.
Dear Sir,
I am planning to migrate USA for employment purpose.
I also wanted to invest money in Indian share market (Delivery based only) directly for long time.
I have two questions:
1) Will my Indian share related income be taxable in USA as I heard that USA takes tax on global income ? How much true is it ?
2) If I want to open trading account repatriable/non-repatriable basis in zerodha, which bank will be suitable by considering the cost involved.
Could you please illustrate the total cost of 100 share (share price=50 rs) buying and selling via Yes Bank PIS route (i.e. zerodha charge + bank charge+ any other charges) ?
Hi,
1. Yes, you will be taxable in the US. But there is double taxation avoidance treaty. Check this https://home.kpmg.com/xx/en/home/insights/2011/12/us-income-tax.html
2. You can do this through YES
After the recent demerger of Orient Electric from Orient Paper Industries, how do I calculate the cost of acquisition of shares of both these companies.
Has the company given any communication on how to apportion the cost?
Could you kindly provide me the link to any communication which the company has given in this regard.
Thanks,
Jamshed
Cost of acquisition is still not provided by the company, they will update in the link given below.
http://orientpaperindia.com/investors/demerger-of-electric
Now they had provided the cost of acquisition.
http://orientpaperindia.com/resources/fck_upload/SplitofCostofAccuisition.pdf
Hi Nitin,
Can you help us on this.
Will get someone from our team to answer, haven’t checked this.
Pre-demerger cost of acquisition of Orient Paper and Industries Limited (OPIL) shares in the following manner.
Orient Paper and Industries Limited (OPIL) 60.77% + Orient Electric Limited 39.23%.
If you invested Rs. 100 in OPIL after the demerger your new average price for OPIL will be 60.77 and new stock Orient Electric Limited average price 39.23.
http://orientpaperindia.com/resources/fck_upload/SplitofCostofAccuisition.pdf
I understand that LTCG and dividend from equity have 0% tax, but are LTCG + dividend counted towards 50 lakhs for surcharge calculation?
My salary is ~4.5 lakhs, but sold most long-term stocks and paid STT. Now salary + LTCG + dividend will exceed 50 lakhs. Do I have to pay surcharge?
Surcharge is on tax amount which is calculated on basis of gross total income. In your case there won’t be any surcharge as your gross total income will be less than 50lks (LTCG won’t add to your total income)
Sir,
I have ltcg from selling a property suppose 800000 and loss in f&o trading suppose 500000.
Can I adjust tax liability 8laks-5laks= 3 laks.
Or profit in ltcg from property to any other losses.
Hi Nitin
Do mutual funds pay capital gains tax when they sell shares ?
If that is the case then is there not a double taxation when mutual fund units are sold ?
Thanks
manu
No they don’t.
With recent development in Budget and LTCG for equity in place now, I would like to know how to calculate cost of acquisition for shares, earlier i never used to worry and used to add all expenses (STT, Stamp duty, Brokerage etc) since i am long term investor and generally sell only after a year.
Now kindly explain what expenses under contract note can be added while calculating cost of acquisition.
I am holding account with Zerodha, where other than share base prices below listed are misc expenses.
1. Brokerage
2. Exchange Transaction Charges
3. IGST
4. STT
5. SEBI Turnover fee
6. Stamp duty
Could this module be updated to reflect the newly implemented LTCG. Also is Zerodha going to have a plugin to calculate LTCG or will the calculation be left to the investor
Until 31st March 2018 nothing changes. You can sell and long term is still exempt. So I was holding back until then. But yeah, makes sense to make a note of that and update.
Sir,
My query is related to Use F&O to hedge my long-term Shares Holdings that I
Treat LTCG.
I Short Futures far month & carry it later
Now I having negligible profit in that account.
Should I have to fill ITR-4 for that
And I have to take care of turnover for audit.
Or there is anyway to avoid filing ITR-4.
I am Govt.Employee, that’s why I am concern about that
With regards
Darshan.R
You will have to use ITR3 (earlier was called ITR4). I don’t think there is any issue for a govt employee filing using ITR3.
Thanks A Lot Sir.
One more Query regarding Day trading,
If I have loss some amount in day trading,
Is it possible to set off with profit of F&Of
In same year and next 8 years
With regards
Darshan.R
what is the lock-in period of ELSS fund after 01 April 2018?
what is the lock-in period of ELSS fund after 01 April 2018?
&
what are the changes in taxation on ELSS fund after 01 April 2018?
Lock in remains same as 3 years before. LTCG will now be @10% of the gains above Rs 1lk.
Thanks for Reply Nitin Sir.
Hi Nithin, I have intraday losses, position based gain and MF losses this year.
1) As you have mentioned earlier in reply to my query, I can show the position based gain as non-speculative business income, in that case can I show STT also as a cost? (Since I have traded intraday, I have to anyway file ITR 4)
2) I have another doubt, can I adjust the MF losses against position based gain (considering 1) above).
3) what about the exit load, MF company charges on exit before predefined duration? Will that be a cost for tax consideration?
1. Yes
2. MF will be capital gains, can’t adjust it to non spec business income
3. Yes, you pay capital gains on your net gains (excluding exit load).
Thanks Nithin for so prompt response.
I understand that I can show the position based gain in 2 ways,
1) as capital gain, so I can adjust those against MF losses. Here, I can’t claim STT as cost.
2) as non-speculative business income and can reduce the STT from gain as cost. Here, I can’t offset the MF loss against this gain.
Is my understanding is correct?
yes
Thanks Nithin!!
I sometimes trade and I also hold the share of shares, my annual income is less than 2.5 lakh and I do not even have any salaries if I have to pay tax
Please reply
According to the new rule, if my annual income is 2.5 lakh or not, then even if I will exceed the long term capital gain of 1 lakh, I will have to pay 10% tax
The 2.5lks slab benefit you will still get. So if you had no other income, for the first 2.5lks, u wont’ have to pay tax.
Hello Sir,
Can you please explain your reply?
I don’t understand the math.
1. If LTCG exceed 1 Lakh then we do have to pay 10% only if total income is greater than 2.5lkhs?
But,
2. If total income doesn’t exceed 2.5lkh and if LTCG exceed 1lkh we don’t need to pay?
Which one is correct 1 or 2?
Or are both wrong?
Thanks.
Both wrong. If your total income from LTCG is assume 1.5lks. 1lk is exempt. So the remaining 50k gets added to your other income and you pay taxes. If your total income (50k + everything else) is below 2.5lks, there is no tax to pay.
Understood. Thank you.
I am getting monthly dividend from HDFC Prudence Fund. My question is whether the dividend received by me is considered short term gain (stg) for taxation or long term gain. If it is considered s t g then the amount of tax should be paid by me or by the HDFC MF HOUSE. Pls clear it.
Ashok, dividend income is exempt from taxes (upto Rs 10lks in dividend) in the hands of the investor. Above that it is 10%.
Can the Zerodha back office give a link showing Capital gain / loss quarterly
It is urgent
Quarterly isn’t possible right now. YOu will have to calculate yourself.
Hi, last year I have opened Zerodha account,I am doing both intraday and delivery ,overall I got losses only ,no other income from other sources,which ITR I have to submit.
Thanks
1. My investment+expanses exceed 2.5L but less than 2.8L in FY 17-18. Am I taxable ?
2. I Should Fill ITR ? income tax deptt will ask for source of money ?
3. I am Unemployed Invested Amount Got From Parents in Installments.
1. Only if your income is more than 2.5lks net, you need to pay taxes.
2. Yeah, best to file ITR. Not mandatory if you haven’t earned anything.
3. You can show the money as gift from parents. It is not taxable.
I have capital gain of Rs.1.75 L this year on an investment of Rs. 20 L. On the paper the unrealized loss is 4 lac.The actual value of my stocks now is only 16 L as all my 15 stocks are in the red from Jan18.Can I sell some of these loss making stocks to the tune of Rs. 1.75 L by march end and buy the same or other stocks in the first week of April18. Does it make sense to avoid capital gains tax this way.
Yep, you can. Doing something like this is called tax loss harvesting.
As discussed in Budget 2018 and the recent passing of the Finance Bill in 2018, LTCG will be taxed at 10%.
Can you please tell us the impact of the same? And whether loss in LTCG can now be used to offset LTCG/STCG profits?
I will update the post. Check this thread. Yes LTCG losses can be offset against LTCG gains.
1. ok understood! so LTCG gains can be offset only against loss in LTCG, not against loss on STCG ? (would have been better if we could do this, since both gains are taxable now)
2. When you update this post (or any in varsity), do you also update the pdf file ? Cause I usually read the pdf only.
Ah, no pdf file hasn’t been updated. Let me get someone to do this.
Hi Nitin,
Need clarification on below scenrio
1. I have Intraday profit of 15000
2. Short term capital gain of 4 Lakh
3. I have income from FDs interest.
4. I dont have any other income other than above. Which ITR to be filled? Is it okay to fill ITR2?
5. From your article, got to know that for Intraday profit need to fill ITR4. But is it okay to club Intraday profit with Short term capital gain and show it as a Short term capital gain and use ITR2?
6. And how much I have to pay as tax. as of as my understanding
First 2.5L no tax + 1.5L PPF i will show under 80C
Should I pay only for 15000 profit as tax?
Please clarify on these
4. ITR3 to show intraday profit.
5. It is called ITR 3 and not ITR4 now. It is not right to club intraday with STCG.
6. yep only 15k
Thanks Nitin, Few more queries:
1) But, I read it as 80C deduction is not applicable for Short term gain. Is it so and in that will I get a benefit of only 2.5L slab and remaining 1.5L also I have to pay flat 15% asit is short term capital gan comes under 111A?
Ah yes you are right. 80-C deduction not available against capital gain. First 2.5lks no tax, next 1.5lks at 5% (IT slab).
Hi Nitin,
I am an NRI and my wife is resident Indian (for taxation).She is a house wife , she invests about 10 lakh in FY17-18 in equity shares through zerodha. She dont have any other income in India.
The money what she is using for investment is mine (transferred from my NRE account to her resident account).
my questions are
1) Do she need to pay any tax for this FY. ( Only investment has been done this year, No Profit booking)
2) does she need to submit ITR? (If yes, please explain briefly )
Regards
Hashir
1. No
2. Even if there is no income, it is best to file ITR. In your case ITR2.
Thank you Nithin. Appreciate your effort & response.
1. Do IT dept send notice to all who are involved/active in Share market or mainly to those who do intraday n short term trading?
2. What are the benefits in filing ITR if we don,t have any taxable income in the FY. (if any).
1. Notices are random, no patterns.
2. Nothing as such, just helps you create a track record of filing ITR.
Hi Nitin,
A qtn on carry forward loss from short term capital gain,
Suppose, if I showed a loss of 2 Lakh in previous year and it is carry forwarded to this year and this year if i show a profit of 2.5Lakh profit.
1) In this case, can I carry forward the previous year loss to next year and show this year profit as it is? As anyways for this year proft is 2.5L and I dont have to pay tax as it is below 2.5L slab.
2) In that way Can i carry forward last year loss to next year without adjusting it for this year profit.
Pls clarify
Thanks in advance
1. No, you have to first set off the losses from previous year.
2. No
Dear Nithin,
My son has recently turned major. Can I use this opportunity to Gift some of my stocks and shares to him to reduce my tax outgo. He has a PAN and demat a/c; and does not have any other source of income.
Regards,
Yuvaraj
Sorry….I meant to say “NCDs and shares” above…and another query…
– Will the original holding period too get carried over to him?
Thanks.
yeah u can. yes original holding period continues.
Thank you very much, Nithin.
Another query…different one. Per this news item in ET new LTCG laws do seem to have created new loop holes…Bonus stripping gets better? Or am I missing something?
ET: How proposed tax on long-term capital gains will be calculated for bonus, rights issue shares
https://economictimes.indiatimes.com/wealth/tax/how-proposed-tax-on-long-term-capital-gains-will-be-calculated-for-bonus-rights-issue-shares/articleshow/62895500.cms
Nithin, can I also request a response to the above query please?
Yuvaraj
Yep, on the face of it looks like it gives an opportunity. But section 94 remains the same for bonus stripping (if being done to claim losses)
(7) Where—
(a) any person buys or acquires any securities or unit within a period of three months prior to the record date;
(b) such person sells or transfers—
(i) such securities within a period of three months after such date; or
(ii) such unit within a period of nine months after such date;
(c) the dividend or income on such securities or unit received or receivable by such person is exempt,
then, the loss, if any, arising to him on account of such purchase and sale of securities or unit, to the extent such loss does not exceed the amount of dividend or income received or receivable on such securities or unit, shall be ignored for the purposes of computing his income chargeable to tax.
(8) Where—
(a) any person buys or acquires any units within a period of three months prior to the record date;
(b) such person is allotted additional units without any payment on the basis of holding of such units on such date;
(c) such person sells or transfers all or any of the units referred to in clause (a) within a period of nine months after such date, while continuing to hold all or any of the additional units referred to in clause (b),
then, the loss, if any, arising to him on account of such purchase and sale of all or any of such units shall be ignored for the purposes of computing his income chargeable to tax and notwithstanding anything contained in any other provision of this Act, the amount of loss so ignored shall be deemed to be the cost of purchase or acquisition of such additional units referred to in clause (b) as are held by him on the date of such sale or transfer.
Dear Nithin,
STT is not allowed as deduction what about stamp duty, SEBI Charges, transfer charges and service tax and other cess?
you can show them as costs.
Hi Nithin,
I have NRE Dmat account. They deducted 90000 INR (simplified figure) STCG on a transaction with profit of 6 lakhs. I made loss of 2.5 lakh in same FY in another transaction. I understand, i need to pay STCG only on 3.5 lakhs now.
1) Can i claim refund for additional STCG (paid on 2.5 lakh extra) in first transaction?
2) While filling ITR, do i need to consider straight 15% tax or should add as normal income?
3) Which ITR to file?
Thanks
1. Yes, you can claim refund
2. ITR2 and straight 15% tax. NRI’s don’t get the tax slab benefit.
I sold my shares (held for more than 12 months) on 16th February post the declaration of LTCG in budget. Will the LTCG on this sale be taxed
No.
Thanks Nithin,
Per this news item in ET new LTCG laws do seem to have created new loop holes…Bonus stripping gets better? Or am I missing something?
ET: How proposed tax on long-term capital gains will be calculated for bonus, rights issue shares
https://economictimes.indiatimes.com/wealth/tax/how-proposed-tax-on-long-term-capital-gains-will-be-calculated-for-bonus-rights-issue-shares/articleshow/62895500.cms
Hi Sir,
Please advice on the below scenario. Thank you.
I have a loss of Rs. 5 lakhs carried forward from Fy 2016-17. i have a profit of 4 lakhs for Fy 2017-18. I understand the offsetting and carry forward a loss of 1 lakh and no tax payable for Fy 2017-18. My turnover is less than 2 crores and profit of 4 lakhs is less than 8%. Would i require audit since i have no tax to be paid. No other source of income. Pls advice. Thanks.
Yeah, technically no need of audit. But it is best to get it done.
hi nithin, i am a zerodha client since last april to till now, i have made some gains over short term delivery trades and made some losses in intraday. Overall i incurred profits from delivery trades and losses from intraday trades, my total profit is less than 10k. I don’t have any other income as i am learning stock market trading only, for this i borrowed some money (36k) from my father, i have not registered on income tax department yet. Plz tell me what is my tax liability or whether i can continue trading without tax filling yet.
No tax liability as you haven’t made profits of more than 2.5lks. It is best to file ITR saying 0 tax to pay. Go through the module.
Hi Nithin Sir,
Kindly help my curiosity. If I have credited 1,00,000/- to my zerodha account and I have invested all of it in some stock @100/- (i.e. 1000 shares). Now stock is @120 and I have sold 500 shares. So amount Invested in shares is 60000/- and 60000/- is a free cash available. I have reinvested this 60000/- amount in another stock instead of redeeming into my bank account. Do I have to pay tax on 10000/- profit that I made by selling 500 shares?
At end of year, March 31st, you will have to pay taxes on all realized profits + losses. So yeah, on 10k u have to
Hi Nitin,
First of all, it’s really good to see a CEO replying to customer comments frequently (We never see this for other organizations)!
I have 2 questions:
1. An STCG can be taken as Speculative Business income or non-speculative?
2. A stock if bought in March 2017, and sold in April 2018, at profit, that would be considered for tax calculation for which FY? 2017 or 2018?
Thanks in Advance!
1. STCG is capital gain and not business income. Do go through the module.
2. 2018
Thanks
Hi,
“When calculating taxes on capital gains, STT can’t be added to the cost of acquisition or sale of shares/stocks/equity.”
Does this mean that STCG and LTCG tax is applicable on ( net Profit + STT ) ?
Yes
i earn 2 lac from dividends and 2 lac from long term gain from shares will i have to pay tax as per new rules
Dividends are tax free. First 2.5lks of income no tax. So if your total income is only this, no taxes.
I paid Rs 50000 brokerage for 1 Year for trading upto Rs 100000 and part of 1 year period falls in different assessment years. Now I have various options to calculate Capital gain using Rs 50000 brokerage i.e.
1. I can deduct whole Rs 50000 in the year when tax amount is more.
2. I can calculate a weighted average rate of brokerage and deduct it from sale proceeds using that rate
3. I can deduct Rs 25000 in one year and Rs 25000 in second year.
Please suggest what is the correct treatment as per Income Tax Act for deduction of Brokrage amount from sale proceeds.
Ideally whatever portion of this Rs 50,000 was used up in year 1 should be shown for that year as expense. But this is really upto you and your CA.
Hi Nithin,
My F&O turnover in FY 2017-18 is Rs 38000 and Loss Rs 33000. I am in tax bracket of 5% on income from FDs. Besides there is STCG of Rs 24000 also. Whether audit is required in this case? If so, being an investor can I show 8% profit in F&O instead of loss to get away with audit. Or Is it better to ignore the loss as i don’t want to make good or carry forward. Which ITR to use in each scenario. Please advise.
I am a regular follower of your interactions with investors and the responses are wonderful and catchy.
Thanks a lot.
Yeah, you can show 6% of turnover as profit to avoid audit. ITR3 needs to be used. Don’t ignore and not declare F&O trading, there are chances of getting a notice.
I am in 5% bracket,age less than 60 and have FD income of 2,60,000. In addition to this I have income of Rs 3,00,000 from shares STGC under 111A. For income above Rs 2, 60,000 can I calculate tax at normal rate of 5% instead of STGC rate of 15%. Please advise. Regads
Yes, until 5lks of income at 5%, over that at 15%.
Hello Nithin Sir,
I have started investing this year (FY 18-19) only through Zerodha.
Suppose I have bought 50 shares @ Rs. 150 of company A and 20 shares @ Rs. 100 of B in FY 2018-19. I have not sold any share so far as I intend to hold them for long term (>1 year).
As I have invested total Rs. 9500 (7500+2000) during FY 18-19, do I need to show this investment in ITR-2 of AY 19-20 ??
Or Do I need NOT show it at all as there will be no capital gain/loss during holding period?
Please also tell me, being a salaried person, can I file ITR-1 during AY 19-20, as I have been filing so far till AY 18-19 OR do I need to file ITR-2 even though there will be no capital gain (holding period > 1 year) during FY 18-19?
You don’t need to show as there is no realized capital gains/loss. Yes you can file ITR1 if there is no capital gain.
Thanks a lot sir, for clearing the doubt.
Hi Nithin,
First off, great article man. I have been struggling for a few years now to understand exactly the various scenarios and calculations in regards to my tax liability. This article has cleared out quite a bit of the fog in my mind.
Now to my question, I have invested in a tax saving Mutual Fund during FY 18-19 (locked in for 3 years). Do I have to declare any gain the MF makes, in my declaration for AY 19-20, then again for the next two AYs; thereby paying (or not paying) the applicable tax for the individual year gains, OR can I declare the total gain I realize at the maturity of the MF, and declare in the third AY only, and pay the applicable tax for the LTCG.
Regards,
Karthik
It is capital gain, only once you have sold the asset. No need to declare until you sell and book a profit.
Sir, i have income from Salary, and also from Long term capital gains( stocks), short term capital gains( stocks), intraday (stocks) and also derivatives( stock futures). which ITR to be used for income tax filing and where should i mention my intraday (stocks) and also derivatives( stock futures) income?
ITR3 for all.
Thank you sir.
Sir, Is indexation used only while calculating capital gains in case of non-equity oriented mutual funds, property, gold, and others where we are taxed on LTCG,
OR
Is indexation be used for equities and EOMF also?
(Income tax tutorial seems to suggest otherwise)
If it’s not used for equties, then why not?
Only on non-equity. In equity, you anyways already get benefit of lower taxation on capital gains.
Thanks for answers Sir!
You are doing a commendable job !! Marvelous!
Sir, but as per accounting standard 13 the profit on sale of equity is determined by weighted average cost.
Hello sir,
I have moved to Zerodha platform in FY 17-18 from another platform
Some of the stocks that I hold were credited via ESOPs from my company (and hence there was no buy price against these in my previous demat account). Since I transferred them to Zerodha now, now there is no buy price reflecting in Zerodha too.
1. How do I add the price manually in Zerodha for such transaction, so that I get correct P&L at the end of the year from zerodha.
2. How do I add other on-market transactions of my stocks (date of purchase, buy price), so that zerodha is able to calculate P&L at the end of the year via FIFO?
Hello Sir,
I have found the answer to my query above. I can do it here. https://q.zerodha.com/report/discrepant/
Regards,
Sharat
1. We are maybe the only broker who allow you to enter discrepant quantities with price/date. The old version of Q has some issues with this feature, if you can give us a few more days, https://console.zerodha.net/dashboard/ will go to beta. You can check the holdings page and P&L page here.
2. On market transactions are automatically added on P&L and FIFO is applied to generate P&L. Old reporting tool: q.zerodha.com, new reporting tool in pre alpha https://console.zerodha.net/dashboard/
hi Nithin,
You are doing great. hats of for your efforts.
I have a question. I have opened demat account with zerodha in the name of my wife. I am already having demat account with SBI in my name. Now i wanted to know whether i can transfer my equity shares held in sbi demat with my PAN to zerodha demat with my Wife’s PAN.
plz advice..
regards
Yes, absolutely. You can show it as a gift, so it won’t be a tax event for your wife.
so can u tell me how can i do it. what is the process of transfer.
regards
And again thanks for your reply
SBI would have given you DIS slips (similar to cheque book for your bank account) that allows you to transfer shares from your demat to other. On that DIS slip, mention the stocks you want to transfer, your wife’s demat account details with us, submit that DIS slip back to SBI. Stocks should show up in her Zerodha demat within 1 day of SBI processing it.
thanks nithin , You are doing a great job. keep it up.
hi Nithin,
I have zerodha account with my wife’s PAN. I have around Rs 70000 loss including equity, intraday and options trades in the last financial year.
She has no other income . So does she need to fill ITR and if yes which form to fill and finally does she need to perform audit for her trades as your her profit is less than 6% .
It will be a great help.
Not mandatory to file ITR, but it is best to do so to avoid any notice asking why you haven’t. ITR3 and no need of audit as no income. Do speak to a CA.
ok .. i’ll do it. Thank you for the help.
Hi,
I had made 2000 rupees profit by buying and selling shares delivery based in last FY all sales are short term only before 6 months holding period. I am in 5% tax slab as I had salary income more than 3.5lacs as main source of income. Now my question is I can declare the 2k as either income from other source and pay 5% or 2k as short term and pay 15% am I correct? Note this is my first instance in share market.
Now in this FY I did some intraday lost some 20K and made some delivery trading gained 5K. If in last I showed my short term as other income and paid 5% this 20k loss + 5k profit =-15k loss can show this loss as I did not changed my stance.please suggest
One more thing if I got some 50k in coming years as long term gain for holding greater than 1 yr can I get that ltcg expectation if same rule applicable in that year also or I need to pay 50K * curent tax slab may be 15 or 30 at the time as salary may increase
even if u declare income as short term, you get ur slab benefit. U get to pay only 5%.
Intraday loss can’t be setoff against capital gain income. You have to declare the loss and carry forward. You can set it off to future profits.
If you show as long term capital gain, yes, you don’t have to pay tax.
thank you nithin, but for short term it will be 15% TAX na.
if any intraday profit suppose i made 1300 profit after adding all losses and profit but others charges (brokerage,STT, …etc) are summed upto 1K. i made only 300 so i just add 300 as other income and 5K as short term. i will pay tax for additional 5.3K as per slab (5k short term+0.3 intraday).
If your total income is above 5lks, yeah short term is 15%. Otherwise if lesser, you can pay as per the slab.
what about intraday losses ? i dont want to carry my losses further i had
INTRADAY GROSS PROFIT₹-4,297.50
INTRADAY TURNOVER₹5,847.50
As per the q.zerodha.com/report/taxpnl/
please suggest what to do
Hi Nithin,
First, thanks for your efforts. Really appreciated.
Have few queries. Kindly please see if you can address:
1. Say my income is more than 10L and I am under 30% tax slab. Now, say my LTCG is 5L, After the 1L tax exemption, the tax for the remaining 4L needs to be at 10% 0f 4L or 30% of 4L?
2. I work for a MNC and my company gives shares (via e-trade) annually (actually bi-annually) through Bonuses & ESPP. At the time of issuing the shares, 30% tax amount is deducted on those. Those shares are listed only in the US and not listed in Indian Stock Exchanges. Have been holding on to these shares for more than a few years now. Say, if I have to sell all of them now, how will it be taxed? How is LTCG and STCG calculated for these? I get dividend also from these stocks which are still in US e-trade account. And which ITR should be used. ITR-2?
3. Now, consider that the amount received by selling all these shares is re-invested in buying a house in the same financial year. Should I still need to pay taxes (for the shares)?
Your response will be very much helpful to me,
Thanks a lot in advance,
1. 10% of 4L (if Indian listed company)
2. I am guessing shares are part of your compensation and taxes already paid for it and part of Form 16. The gross amount on which taxes is already paid is the cost of your shares. LTCG will be if you held for 3 years otherwise STCG. Dividend is taxable in India, so you need to add it to your other income here. LTCG for you (foreign listed stock) would be 20% with indexation benefit, STCG would be as per your income tax slab.
3. You can take this benefit and not pay taxes, but provided you don’t have more than one residential house.
1)sir if I buy 10 lot of usdinr future @68.05 and sell it on 69 and made the profit of 5000 the total turnover is 5000 right not 1370000 and I need to pay tax for 5000 right.?
2)In currency ow exactly total turnover is calculated?
1. Yes 5000 is turnover. Taxes you pay on net profit you make end of year after all your charges.
2. Same as u explained.
Hi Nithin
I’m a Zerodha customer for about a year now and very satisfied with services. Thank for this detailed chapter and the Q&A platform; it is highly informative.
In your chapter you have already clarified that while calculating taxes on capital gains, except STT, all other charges like exchange charges, SEBI charges, stamp duty, GST taxes can be added to the cost of share.
What about Zerodha annual AMC charges (Rs. 300 + GST) and DP Charges (Rs. 13.5 + GST / scrip sold)? Can they also be deducted while calculating taxes on STCG?
Kind regards,
Nilesh
Yes you can.
as per your statement we may add DP charges as a expenses then,
why all DP charges paid in a financial year not showing in Zerodha P&L statement.
I want to get more clarification while filling ITR2 in STCG as a investor not business:
Can we add Total Charges including STT+AMC charges+DP charges in section “Expenditure wholly and exclusively in connection with transfer”
You can open the ledger statement on q.zerodha.com, you will be able to see all charges. Yes you can add everything (except STT).
I have received some shares from my nephew thro OFF market on 15-09-2004 for consideration at the prevailing market price (STT was not in vogue).The same were sold on 05-06-2017 by paying STT. What are the tax implications.
Since one side STT not paid, I think you should pay @20% but with indexation benefit.
Dear Sir,
1) I have Form16(salary), STCG(delivery), FO(derivative) and Speculative gains (equity intraday). So what kind of form is applicable?
2) I have 2 demat accounts, one with HDFCSec and other with Zerodha. I have gains in HDFCSec but loss in Zerodha account (eq intraday and FO Derivative). Can I consolidate gains and loss of both demat accounts?
3) Does FO Derivative loss or gain counted as STCG?
I would appreciate your reply. Thanks.
1. ITR3
2. Yes, you have to consolidate.
3. No, non-speculative business income. Go through all chapters of this module.
Hi, In the ITR2, there is a section to enter the LTCG figures. How do we ensure it is not taxed since the sales were made before Feb 1st 2018 ? There is no place to mention the amount as being taxed at 0%
Taxes are automatically calculated, you just mention it under exempt income (long term capital gain)
sir, in terms of stcg from delivery only… i am salaried…
filing itr 2…please clarify the following:
stt is levied every time we purchase and sell but it is not deductible on either side while computing stcg;
so
1. full value under consideration is = sale value – all expenses like service tax ,gst, turnover charges etc,. without stt.
2. cost of acquisition =all the above expences when purchased +and purchase value excluding stt when purchase done.
3. expenditure on transfer/ sale = all above expenses when sale done, exclusive of stt…??
please answer ….
Yes to all 3 of them.
Thanks.
sir, if i sell 10 shares of a company for rs 10 per share 10*10=100,
but after brokerage and other taxes of say rs 3 i get net rs 97,
what is the full value under consideration here ? 100 or 97 ?
97 for calculation of income when filing ITR
Thanks.
I sold some shares on 30th march 2017, I got Profit/ Loss statement for FY17-18 from my broker the profits from above transaction is been attributed to this financial year, does it work like this ?
Credit from the sale proceeds are received 2 days after the sell trade. But still I think this should be part of last year P&L.
Thank you for replying….
How do I get to know the standalone taxes and brokerage charges when I buy and sell shares of different companies on a single day ,as we get a consolidated trade contract/bill for the day ?
If you are trading at Zerodha, brokerage is 0, so that is not something you need to be bothered about. But yeah, trade wise charges isn’t available. Our new reporting platform will have it, hopefully will be launched in next 4 weeks.
Thanks.
Hi,
Could you please guide me for below –
i have total Short Term capital gain of 60,000 from Multiple Investments (Total Sale Value = 25 Lakhs)
Capital incurred is 3 lakhs only & done some investments on margin fund given by broker.
Do i need to notify the margin fund to income tax in ITR3? As total 25 Lakhs is nowhere near to my income.
I am filing itr3 as there some speculative business income of 10K for turnover 1.5 lakh.
Thank you.
Margin fund would be anyways shown as bank transfer. So yeah you will declare the money lying with the broker I guess. The investments you do are capital gains, no need to calculate turnover on that. Do go through all chapters.
Dear Sir,
Here is one more that is pestering me of late :
As per my knowledge and from trade details from back office,
1. I bought 100000 shares of A for the first time @ Rs. 0.10 on 20/01/2016.
2. Afterwards I only bought different numbers of shares at different times and prices but never sold any.
3. I sold ,this scrip, for the first time on 12/06/2017, same 100000 shares @rs. O.13.
So to calculate profit/loss/gains from this sale, I reckon you follow “first in – first out” policy (if not, please let me know….) the profit must be the difference of rs. 13000 and 10000 that is rs.3000 and that too is a long term profit/gain.
Is my comprehension right ?
Or otherwise if one has to averages out the purchases before the sale then also profit/loss would differ.
Please clarify….
You are right.
Thanks a lot !
Sir if I have short term capital loss of 10000/-and short term turnover is 15 lakh and am showing it in capital gain so do I need to audit as profit is less than 6% of turnover
With capital gains no concept of turnover. So you don’t need audit etc, just use ITR3.
I have a long-term capital gain of Rs. 139672. Is it okay if I add this as ‘Long-term capital gains from transactions on which Securities Transaction Tax is paid’ Under ‘Schedule EI’ in ITR 3? is this STT paid?
Yes.
Thanks a lot !
I want to know about short term capital gain. I have done trade short term and invest in share also trade in future and option. i calculated turnover 60lakh. Buy Value of all the share in cash and future is 10 crore and Sell value is 9 crore 99 lakh 70 thosand. that mean 30000 rs loss in current financial year. my question is if i fill ITR form 2 there should write acquisition (Buy value 10 crore) total sell value 9 crore 99 lakh 70 thosand. if i wrote this type it show my turnover nearly 20 crore. but actual turnover is 60 lakh. can i write sell value as 60 lakh (turover) or buy value minus loss of 30000. that mean buy value is 59 lakh 70 thousand. so which one is correct form for ITR-2 FORM fillling please guide me. when should i mention Turnover detail in ITR-2.
No concept of turnover for equity investments and on ITR2. It is only for F&O. Do go through all the chapters, I have explained in detail.
I sold shares(bought 3 years back) on 28th of Mar2018 but I received the funds only 2nd April 2018
Should LTCG TAX be reflected in FY 2017-18 or FY 2018-19
Is LTCG based on FY of transaction or the FY in whichthe bank receives the sale proceeds
Kindly clarify
I think best to do on trade dates. So last FY.
I have long term capital gain of 40000
which is not taxable should i use ITR 1 ( No declaration or ITR 2
ITR2
Hi Nithin,
My wife plan to start Intraday and deliver thru zoredha end of this month . If she getting profit, in short duration (less than one year), how will be her taxation, either 15% or as per tax slab?
If she is in a tax slab of less than 15%, then as per tax slab. If more than 15%, then only 15%.
Sir,
I am zerodha member since 2015,i filed my itr for FY 2015/16 after getting audit,I did incurred losses in delivery as well as in speculation and i did sold all my shares in the same financial year(Sale/purchase in same FY}. but my CA made mistakes
1-he entered my delivery shares(few) entries in speculation loss. resulting to high speculation loss and less delivery loss.
2-shown less brokerage charges and balance brokerage included in total speculation loss.
3-i am having business income which would have been adjusted in delivery loss in case right ITR by my CA.
NOW how i should proceed. please let me know.
Hmm.. it is too late now to revise that return.
Hi Nithin,
It is mentioned that there should be consistency with respect to classifying gains/losses from delivery based trades, either as capital gains or as business income. However, say, I do a job for a few years, during which I report my delivery based gains/losses as capital gains. But a few years on, I leave my job and take up trading/investing as a full time activity. Then, do I need to change the way in which I classify gains/losses from my delivery based trades, and report them as business income?
This is up for debate, but yeah if trading is the only thing you are doing, it is best to show it as business income.
Hi Nithin,
Thank you for being patient in replying to numerous queries directed at you. Here’s another one.
I am filing ITR 3 with audit as my business income is less than the threshold specified under Section 44AD. Delivery equity profits and net loss from F&O combined together yield a profit of ~ 90k on a turnover of ~ 1 crore.
My query is that in ITR 3 form ->
a) Where should i mention the delivery equity profits so that it’s considered as business income. There is a specific heading In ITR3->P&L-> Other income “Profit on sale of investment being securities chargeable to Securities Transaction Tax (STT)”. Is this the place to specify the profits ? Or, Should i mention total sale value under operating revenue and then enter the cumulative cost of acquiring equity delivery shares under Purchases heading [ITR3->P&L] .
b) Regarding F&O losses -> If I have correctly interpreted your previous responses. Do I have to proceed like this ? Cumulative Positive settlement from F&O segment has to be shown under Operating revenue. And,Cumulative Negative settlements, net of charges, have to be shown under Purchases heading. Is my understanding correct ?
b. Correct
a. Show your equity delivery trades like F&O itself.
Thank you.
Hi,
I was just checking my Tax P&L statements (Equity) and figured that it just considers the transactions of shares that are bought and sold within the same financial year, but not the ones which are bought and sold in different financial years.
For examples, shares that I bought in Feb 2018 and sold in April 2018 are not part of Tax P&L statement for FY2018-19 in my Zerodha Q dashboard. How are these transactions taxed and what is the most effective way to retrieve them in Zerodha Q dashboard ?
If you have sold stocks bought last year this year, it will be part of this years tax P&L. Taxation will also be for this year itself.
Please let me know the steps in brief, to reinvest the dividend amount for a particular script. Is there a specific option for DRIP in Zerodha?
Hi,
I understand form the above chapter that i need to file ITR3 as the income from business, speculation and short term CG.
I feel it tough to fill in the details in ITR and so below are my queries,
1. In which part to report speculative income?
2. In which part to report business(f&o) income?
3. For short term and speculative (intraday) income, how to report the expenses incurred for trading because in ‘tax p&l’ report from zerodha, only total charges are given. So how to calculate the expenses incurred seperately for short term and speculative.
It would be helpful if someone assist me.
Thanks in advance
Hi, for filing the ITR, best to consult a CA. Extremely tough to support it online.
hi.
i am housewife, and my STCG is 140000 and no other income. and very few intra day trades (only 7 in year) with loss of 2000. can i file ITR-2 to show STCG.
thanks in advance
hmm.. yeah, I guess you could. Do speak to a CA.
thanks for your reply
Dear Nithin
I’ve read your post and multiple queries and responses (though not all). Haven’t been able to get a solution to my queries as yet
Myself and family hold multiple demat cum trading accounts with you. We’re all investors and thus I was hoping that at the end of the year I’ll be able to simply extract a capital gains report which I can then use to file my tax returns. Unfortunately, the various reports I get from Q are firstly incomplete (Tax P&L doesn’t have sale and purchase dates!!!) and some transactions are also missing (especially buybacks and OFS across all accounts). Data is also incomplete in Trade Data
This year I had to manually prepare this data (for FY17-18). I’m sure I can’t do it next year. Are you planning to improve on the reporting?
Regards
Rajiv
Yes, we should have the report with breakdown of trades/charges soon.
This refers to the Infosys Bonus article. For taxation purposes of investors, shouldn’t the cost of Bonus shares be NIL?
Yes, of course.
I have shares in my demat account received from my father more than one year old.I have no records of date of purchase ,cost of share etc.If i sell those shares what cost to be considered.I hope value as on 31 jan 2018 to be taken as cost after the new tax rules on shares and profit above one lakh will be taxable .Kindly clarify.
Yes, you are right.
Hello
The functionality called out in
“If you are trading at Zerodha the holdings page in our back office assistant Q will keep a tab for you on number of days since your holdings were purchased, and even a breakdown if bought in multiple trades.”
is not working on my account. Can someone fix that ?
Check this https://tradingqna.com/t/how-to-get-a-dividend-report-which-is-received-in-a-financial-year/46507/3, are you logging into console.zerodha.com?
Sir,
Today i am new to share trading. Today, i came to know about MIS leverage in intraday trading. Suppose i have fund of around Rs. 100000 in my Zerodha a/c. I got MIS leverage of 10x times in a particular shares and share price rs 1000. Hence, I can buy 1000 shares worth of Rs.10,00,000. Following are my questions regarding the above scenerio:
1. Is it essential to apply stop loss in MIS?
2. What are the consequences if i cant make profit for the day. Suppose if the share falls to Rs 900 and I did not put stop loss.
3 What will be my actual loss from the above example? Will I loss all my Rs 1,00,000 (100×1000) that was in my a/c or I will loss Rs. 10,000 i.e. Rs 100(share price down by Rs.100) x 1000 (No of shares).
4. what are the other impacts of intra day loss using MIS leverage?
Please explain.
Thanks
1. Not mandatory.
2. It will automatically square off positions if you make a loss more than 50% of your capital. If for any reason it doesn’t, you will have to make up for the losses. In this example, you would have lost entire capital.
3. 100 x 1000 = Rs 1lk
4. Profits and losses can be exponentially higher.
Hi Karthik,
first of all my compliments for providing us encyclopedia of stock market via zerodha varisty..
my query is, u have mentioned that if we do off market transaction then we have to pay more tax, but u have written If the transactions (buy/sells) are executed through off-market transfer via delivery instruction booklet and not via a recognized exchange then LTCG is 20% in case of non-listed stocks, and 10% on listed stocks which is same i.e 10 % LTCG for transaction carried out via exchange.
i am bit confuse in this, please explain.
Hey Vikas,
There has been an amendment to it from this year. I am changing the post above. Capital gain is 20% for all transactions which are carried outside the exchange (without paying STT).
hi nithin, i have my demat account on zerodha. I only do cash delivery trades hence i am liable for STCG only. Thus 15% flat tax will be imposed on my STCG profits. My salary is around 10 lac. My current STCG profit is 1.5 lac. Now should i pay only 22500 as STCG tax or it would also add as per my tax slab so that my net income become 11.5 lac then pay my taxes?
Only 15%.
Hi. Nithin sir,
I am a student who studied ug by taking education loan of around 1.8 lakh. Which amounts to around 2.6 lakh now with interest of around ₹2200 adding every month.
i had earned about 2.8 lakh in FY2017-18. and resigned job to prepare for Pg entrance exam..
i had made Fixed Deposit of around 8 lakhs with my parents contribution (planned for Pg college fee once i get seat)
i recently closed all the FD(10% TDS deducted) and started investing in shares via zerodha demat account.. (mostly short term and intraday)
since i am not earning now .. and have no other source of income… what is the best way to file returns? as an investor or trader?
The article says once choosen we have to follow the same in coming years….
while it us beneficial now to choose myself as trader for saving tax… i have fear of paying excess tax in future when i start earning…
please suggest me appropriately..
thanking you…
one more question sir…
if i invest all of 8L in equity shares should i show the source of that money? as i had earned only 2.8l for which i have filled the returns and got the TDS back?
i read in the article that if we do intraday trading we have to file ITR 3..
i did only one intraday trading by mistake as it waz default in kite app… should i file ITR 3 this year? does it requires expertise to file ITR 3? i had filed ITR 1 by myself..
if we buy share in CNC and sell on same day does it count as intraday trading? is it considered as speculative income..?
can it be ignored as the profit i earned was in few paise..?
thanks for wonderful article explained beautifully sir.. any layman can read your article and get insight on this….
kindly reply..
Yeah, source of money has to be shown. Gift from parents not taxable. If it is just one or few trades, don’t use ITR3, you can using ITR2. Yes if you buy and sell CNC on same day, it is still intraday. But if it is extremely small in terms of turnover, you can show them as investing itself.
If you are doing intraday trading, best file this as a trader.
thanks for reply sir…
kindly clarify this also sir..
If we choose now as a investor and file ITR-2 and in future years if we find choosing as trader is beneficial,
1.can we do that?
2. is it appropriate?
3. any disadvantages?
Yeah you can shift in the future. But you can’t really shift just because it is beneficial only for taxation. You can get questioned for that.
thanks for clarifying sir..
one last question..
can we do tax loss harvesting in mutual funds too?
how?
thanks..
Yes. If you have mutual funds on which you have booked profits and you are holding onto funds which have unrealized losses. You can exit the one with losses, book it and set off the taxes on the realized profits. You can repurchase the exited mutual fund again the next day.
thanks again for answering sir… its gives us immediately confidence to trade in your platform when the CEO of the company cares to reply to his customers…
but one suggestion sir.. as i m new to trading i have inquired those by raising tickets 3_4times… but most of the time your faculty gives generalized answers…. it forces us to reopen the ticket and we ll get clarity after having to reopen the same ticket 2-3times… it would be nice and time saving to both if they just answer specifically as you do here…
Dear sir i recently opened my trading account with you, my query is i am unemployed i.e i have no fixed income from any source and if my STGC, LTGC or any capital gains from stocks below Rs 2,50,000, Do I have to file any ITR and or I have to pay 15% 10% tax pls clarify.
No taxes to pay if your total income is less than 2.5lks. But it is best to file ITR.
sir how do i disclose the amount gifted by my father to me?
if the amount gifted is around 10-15 lakh(assumed)..but the short term profit by investing this in equity(no other income) is less than 2.5lakh in the financial year, is it absolutely necessary to file ITR? (ITR 2)?
for your information my father is govt employee with income in 2.5-5lakh slab..
How to show, best to consult your CA. It is straight forward on the ITR. Best to file ITR.
Hey Nithin,
When I was going through the IT departments chart on CII I got this
CII for year of purchase -1999
*0*
CII for year of sale-2017
272
It has mentioned the CII of all the years before 2000 as ‘0’
Sooo I got a little bit confused,
Your thoughts??
Hi Nithin, I was reading through the comments and it is highly commendable that you are still answering the queries and it is over 3 yrs. I read almost all of the comments but yet to find any answer for my doubt. I am an investor and holding some shares since 2012. Some of them are making profit and some are in losses. Now here are my questions:
1. I sold some shares and with the amount received I again purchased new shares. Now do I need to pay LTCG tax (if it is over 100,000) or show that in ITR?
2. For loss making shares, which price will be considered, the one on which I bought or the price on 31 Jan 2018?
1. Yes, you would need to. Once you have realized profits, you have to pay taxes on them after netting off realized losses.
2. You can consider whichever is higher – both for profits and losses.
Thanks for answering those queries:
1. And the profit will find its place in ITR only if it is above 100,000 for that year. Correct?
2. Will profit be added to my income and then taxed according to slab or is it 10% flat on any profit above 100,000? (I don’t have any income source).
1. yes
2. 10% flat
Nithin,
Congrats! Saw a news item that you are now No 1 broker in India. You have done this by keeping investors like me very happy.
Few queries please…
1) Can long term loss on shares be setoff with long term gain in NCDs? Both have same taxation rates of 10.3%.
2) For the past few years I was earning much of my income from consulting fees. I was using ITR3. This year I have nil income from it and most income is from FDs and NCDs (and loss from shares). These are all delivery only transactions (no trading). Which ITR should I be using?
Thanks.
Yuvaraj
1. yes
2. ITR2 then.
Hi Nithin,
I am new to zerodha and trading, In past 2 months I have purchased and sold many equity shares multiple times. The gains from the the market I have reinvested again in market. Haven’t done any withdrawal to my bank account yet.
Could you please tell me if I will have to pay STCG on the gains and how can I calculate it through Zerodha statements or Zerodha will send a consolidated statement at the end of FY.
I am a salaried person.
Thanks,
Bhuwan
Bhuwan, if you can login to console.zerodha.com and search for tax P&L, you will see your STCG, LTCG, Speculative, etc.
Thanks Nithin,
One more query I have wrt taxation.
The STCG shown in Zerodha is the only amount I have to pay to the IT department or the capital gains will add to my salary income and then I will have to pay as per my tax slab.
Tax from salaried income is already getting deducted by company as TDS.
Please let me know.
Thanks,
Bhuwan
On STCG only.
Sir,
I wanted to know, if i earned 3,00,000/- Rs of Profit Annually through M.I.S. ( Intraday Trading) after deducting all taxes (like brokerage Charges etc) and i have no any other source of Income. Then Please tell me. Do i have to pay Any kind of tax on this profit. if yes than what would be the slabs of tax for this income.
U have to pay taxes as per income tax slab. First 2.5lks no tax, and between 2.5 to 5 at 5%. So at 3lks, u would have to pay 5% of Rs 50,000. But from next year (after budget news), there won’t be anything for under 5lks.
I holding some shares more than 1 year duration Whether I can show those shares for tax redemption.
Tax redemption? Didn’t get your question.
Sir can you explain long term capital gain in shares with example according to grandfather clause?
IT is explained above right?
Hi Nithin,
Can we setoff short term capital gains from Debt Mutual funds against short term capital loss from equity/equity MFs? Since the tax slab is different wanted to understand if this is acceptable?
Thanks
Aravindh
Yes you can offset STCG on debt fund with STCL on Equities
I have alongterm capital loss of 4000 in shares and short term capital gain of Rs 10000 inshares . can i offset LTCL with STCG?
No, LTCL can be offset only with LTCG.
Hi Nithin – I think you are right on this aspect of setting setting of LTCL, however, I was excited to receive the following response from you support team . . . 🙂 – short lived though
Dear Tony Lopes,
Thank you for writing to Zerodha.
STCG can be set off against LTCL, it can be carried forward for 8 years. Please refer to taxation module in Varsity for more information. https://zerodha.com/varsity/module/markets-and-taxation/
Please get in touch with us if you need any other information through our Support Portal or by calling us on 080-40402020
Team Zerodha
Quite happy to see that Nitin Kamath himself is directly providing input clarifying several points. Only one point, I rather could not locate or might have been missed:
What if some one has held the stock for more than one year by 31-03-2018, but sells now before 31-03-2019? I do recollect something like no tax on LTCG if sell price is less than or equal to highest price as on 31-01-2018. Can some one throw light on this – confirming or contesting?
Thanks in advance.
Check this link . Your purchase price can be considered either as market price on 31st Jan 2018 or whenever the stock was purchased before 31st jan (whichever higher) to calculate LTCG. If you have bought it after 31st Jan 2018, then you have to pay LTCG tax of 10% above Rs 1lk.
Is there an option to see the number of days for which the stock has been held in zerodha. Like it was show in the picture,there is a days column.
Yep, go to https://console.zerodha.com/portfolio/holdings/. Hover the mouse on any stock, you see a … icon. Click on it and you will see a tab called breakdown. This shows what you are looking for.
Thanks nithin ,that was helpful
Nithin,
Total annual income is Rs 3.5 lacs. LTCG and STCG is another 50K. Can this 50K be treated under <Rs 5 lacs IT slab or do i have to pay 10% and 15% LTCG and STCG respy?
Thank you,
Yuvaraj
Can be treated as <5lks and no taxes needs to be paid.
I earn 600000 pa + ltcg is 800000…what will be the tax…all I want to know is tax bracket applicable to ltcg….or it is flat 10% whatever your ltcg is?
flat 10% above 1lk of LTCG. First 1lk, no tax.
Hi Nithin,
i have a query related to stock that has stopped trading on stock exchange.
Bought share 100 shares of ABC for 10 Rs. each. now after bankruptcy or some other reason it has stopped trading on stock exchange.
in this case,
1. any possible way to get rid of the stocks or do we need to declare a loss in income ?
2. how do we calculate loss and under what section will this need to be declared ?
Thanks,
Anuj
As an NRI I have made multiple purchases of the same share :
75 Nos @ Rs 404 on 24/11/2016 ( This has been indexed At Rs 654/- for LTCG as on 30/01/2018)
75 Nos @ Rs 619 on 07/07/2017
75 Nos @ Rs 575 on 27/06/2018
75 Nos @ Rs 493 on 12/10/2018
75 Nos @ Rs 455 on 18/02/2019
If I sell the the entire lot of 375 nos at today’s current price of Rs 497 there would be a total loss of Rs 4695 based on the Average Price of Rs 509 per share.
Since there is a Net loss will there be any STCG deduction for purchase made on 12/10/2018 and 18/02/2019. Alternatively if there is a STCG deduction at source , what would be the basis of deductions.?
STCG is only on the gains and not the losses. Typically STCG will be calculated by the PIS bank based on FIFO, and the bank will pay the taxes on the gain.
I want to clarify the following:
1) Does Zerodha deduct IT on STCG at source?
2) If so at what percentage?
1. No
2. NA
Hi Nitin,
I have started Tradind kon Zerodha and i am new to investment.
I am salaried and IT in 20% slab,
Mt question is
1. is it IT have been calculated in transaction value ( more than 80 lacks) as i am doing F&O daily transaction values more than 1 lacks. which give approx. 1- 3 k profit, so my fried told if transaction values goes beyond 80 lacks have to show in IT.
2. Which ITR form should fill as saliried and investment in F&O.
3. Can we show F&O loss in ITR and where to show.
Thanking you in advance.
1. If you are trading, whatever be the value, it is best to declare on ITR.
2. ITR3
3. Yes, go through all the chapters of this module.
I am a salaried person. Salary income is Rs.11 Lakhs.
I am an investor. However, few intra day trading was also done, which resulted in loss only.
In zerodha I have the following for 2018-19
Intra day Loss Rs.53000
Short term Profit Rs.72000
Long term loss: Rs.7000
(So the net gain is only Rs.12000. However, i paid charges of Rs.38000. Hence the net loss is 26000 ).
Charges Rs.38000 (break up: Brokerage 6000, ETT 3000, GST 2000, STT 21000, Stamp duty 6000, SEBI turnover fee Rs.150, Other charges Rs.850 )
I had only STCG and in Intra day and STCG there were only loss.
Please inform whether (a) I can deduct the total expenses of Rs.38000 in STCG itself. (or) show each expenses to the respective type of trading.
In zerodha console, the expenses incurred for Intra day, STCG, LTCG is not shown separately. Only the consolidated expenses under each head is given. Hence, how to segregate the expenses for these heads separately.
After the charges, I had only net loss in this FY.
Kindly write a detailed article, on how to adjust these charges,expenses, etc., to the gains/losses of different types like Intra day, STCG, LTCG, for investor with salary income also.
thanking you,
You have to show expenses to the respective heads. You can approximate the charges by total turnover. From this FY we are taking live trade/scripwise charges. Which means you will start seeing the charges separately as well.
Hello,
My two queries:
1)So on LTCG you only have to pay tax when you close that position,Correct me if i’m wrong.
2) What about dividend that you earn suppose if some large investor holding more than 4-5 lakh shares ,then that person would probably get more than 1 lakh as dividend ?
THANKS
1. Yes
2. 10% over Rs 10lk in dividend per year (not Rs 1lk)
Hello sir,
I don’t have any other income. I am doing day trading and delivery based trading. And during the FY 2018-19 my loss in day trading was around Rs. 11,000/-. And in delivery based I earned Rs. 1,400/- only. Should I pay STCG tax of 15%?
Thanks
No, you need to pay tax only if your total income falls in the tax bracket.
Nithin,
My only earning is from interest income, ST and LT gains from shares and NCDs. So I am filing ITR-2.
1) What are the deductions allowed? Like, my son is in college, can his fees? HRA, medical, travel, etc.
2) Can I offset charges related to Demat? How about charges levied like STT, stamp duty, etc.?
Thank you,
Yuvaraj
1. hmm.. no
2. Everything except STT.
Hello,
1)Recently my grandfather passed away and he was having portfolio worth of 1.1 cr INR.Now nominee was my father’s brother.so shares will be transferred to his account.For property distribution he will transfer half the shares to my father’s account.Now how LTCG will be calculated in such scenario like what will be the start of holding period and what will be the purchase price for capital gains?
2)In the chapter it is written that once you declare yourself as trader or investor you have to stock to that in subsequent years,so if initially i was involved in Non speculative trading and later on i shift to just capital gains(LTCG or STCG) can i change declaration from trader to investor?
THANKS
1. Until last year there was no capital gains, but now it is at 10% over and above Rs 1lk of capital gain per year. Starting date to calculate this is 31 Jan 2018. Check this https://support.zerodha.com/category/account-opening/getting-started/articles/how-does-the-new-long-term-capital-gain-tax-made-applicable-work. Gift from brother/father is exempt from other taxes. You just have to pay capital gain whenever you sell it.
2. Yep, you can. You can continue doing intraday trading (speculative) and delivery trading (capital gain).
Hi Nitin,
I am an NRI . Recently Wipro had announce bonus 1:3 ratio. I had 200 shares which made my share as 66.66 so I received 66 full shares and got Rs175 as fractional bonus trust entitlement for the 0.66 portion. I got 147 in my account after deduction of 28 Rs TDS. I am filling ITR2. I have following queries.
1. whats the taxation angle on this fractional bonus cash that I received? someone told me the fractional bonus price if paid as part of bonus trust is not taxable. please advice if this is correct as the TDS has been deducted on same.
2. Where do I need to report this income in ITR2? which section?
3. While claiming TDS deducted for this fractional bonus in ITR2 now you need to mention the gross value and choose the type of income from a drop down menu. the options are Interest income/Capital gains/other income. which one do I select for this fractional share payment?
Thanks
Nitin,
Good article. Key takeaway section to be corrected for LTCG.
Please add sections in the article for bonus and split shares.
Cheers
When I started reading the article, found few vague sentences such as “For stocks/equity – 0% for first Rs 1lk and @10% exceeding Rs 1lk” and hence, I stopped reading further. It is not clear which amount 1lk refers to – whether total transaction/selling amount or the capital gain. Pl make required correction.
Isn’t this written in the Long term capital gain subsection and after an intro to how LTCG is calculated?
I have a Realized Profit of Rs. -63800.30 this is mentioned in Zerodha Tax statement
Do i have to mention it in my Tax filling .
If yes ,then how ?
Yes, on ITR3. For tax filing best to speak to a CA.
When I buy and sell stocks, I have to pay total 6 different kind of charges:
1. Brokerage
2. GST
3. Exchange transaction charges
4. SEBI turnover fees
5. STT
6. Stamp duty
Which out of these 6, can I deduct from my gross profit when calculating capital gain? Can I deduct all 6 except GST?
What about if I show the profit as business income instead of capital gain?
Also, can I deduct the above charges from my profit on both buy and sell side, or only on sell side?
I am asking this to file ITR.
Other than STT all other costs can be added to the cost of acquisition.
i am holding some shares of companies which were traded for many years, but got suspended or delisted from stock exchange in just last 1 or 2 year, due to compliance issue of companies with stock exchanges. do i have to file ITR with these companies quoted as unlisted . name them in ITR while filling return
kindly answer my query
thanking you
Not required until you exit and have some capital gains.
Hi.
When calculating taxes on capital gains, can I include the following charges in cost of acquisition.
DP charges,
Call & trade
Brokerage – Z
Central GST – Z
Clearing Charges – Z
Exchange Transaction Charges – Z
Integrated GST – Z
SEBI Turnover Fees – Z
Securities Transaction Tax – Z
Stamp Duty – Z
State GST – Z
Regards
YEp
As per 4.6 of this article STT is not allowed to be Included.
Information Regarding “DP Charges” is not mentioned here.
Can I have a information what exactly to be included in “Expenditure wholly and exclusively in connection with transfer” field and what not of ITR-2 for STGC
Quoting 4.6 Here –
“When calculating taxes on capital gains, STT can’t be added to the cost of acquisition or sale of shares/stocks/equity. Whereas brokerage and all other charges (which includes exchange charges, SEBI charges, stamp duty, service tax) that you pay when buying/selling shares on the exchange can be added to the cost of share, hence indirectly taking benefit of these expenses that you incur.”
Other than STT everything else.
Hi Sir,
My name is Abhijit. I am unemployed since Feb 2018. I have been redeeming my mutual funds (non ELSS). I want to understand:
1. If I need to pay LTCG tax if my mutual funds LTCG is more than 1 lakh but my salary is 0 since I am unemployed.
2. Any online portal where I can get a consolidated LTCG tax report since few of my mutual funds were invested through CAMS and few through FundsIndia and my mutual portfolio does not reflect together in both.
1. No tax if your total income is less than 2.5lks
2. There is nothing like consolidated LTCG report, you have to calculate this on your own if you have invested on multiple platforms.
I have incurred a long term capital loss of Rs 300000 ( three lakhs ) and intraday loss of 191000( one lakh nienty one thousand ) in the financial year 2018-19 .
i got income of
self employed job works, 95000 –
interest income from fds& sb 80000,
divident income 23000
total income 198000
total loss from share market 491000
So which itr form i have to submit & whether i need a tax audit or not
ITR3. Tax audit not needed as your total income is not taxable.
Thank you sir
Dear sir,in ITR 2 PAN no of unlisted share to be indicated,where can one get this.company do not respond,web side also not showing any detail .
Regards
You can download the annual return from the MCA website, http://www.mca.gov.in. You will find PAN on it.
Hi Nikhil,
I had some capital gains during FY 2017-18 and filed ITR-2. But, in 2018-19
1. I did not buy/sell any equality shares during 2018-19 (so did not had any gain /loss equity) but still have stocks in my demat which bought in previous years ( 2016-17,2017-18)
2. Bought few MF and did not redeem any MF (so did not had any gain / loss in MF)
Can you please let me know if I can use ITR-1 this year (instead of ITR-2) as I had income only from my salary, interest on savings/FD and dividends from stocks
Regards,
Shankar
Yeah you can use ITR1
This chapter 4 Taxation of investors is discussing on all things but why discussion on taxability of futures, options, commodities is not illustrated?
Kindly let us know the stand to be taken when the assessee is having salary income and only the surplus funds he is investing in trades of futures & options (intraday & overnight) and his intention is not to earn profits but for investment.
How it can be concluded in the above case whether to be treated as capital gains or business income?
Can you make sure to go through all the chapters of this module. https://zerodha.com/varsity/module/markets-and-taxation/
Hi Nikhil Ji,
Whether presumptive taxation under section 44AD can be adopted and offer 6% income in case of trading in futures & options and declare.
Yeah, you can. Go through all the chapters of this module please.
Hello Sir,
Salary : above 2 lacs
Short term capital loss : Is it required to pay as a profit (8% on turnover) to avoid Audit ? or it does not require Audit ?
F&O loss: Profit to be shown as 6% or 8% on turnover to avoid Audit ?
Thanks
Dilip
Anyone know the acquisition cost apportionment for the demerger of Arvind into Arvind and Arvind Infrastructure (later renamed to Arvind Smartspaces)? While the company gave out the cost of acquisition for the 2nd demerger (into Arvind, Arvind Fashions and Anup), there doesn’t seem to be any details available for the first demerger which took place in 2015
I wasn’t able to find it either. Have written to the company’s compliance team seeking the details. Will update here once I hear back from them. You can write to them as well at [email protected]
Dear sir
Have zerodha account.Want to know if frequent buying and selling of delivery based trading for short term gains if exceeds 10 lakhs is considered as high value transaction or not on capital investment of around 05 lakhs.Pl clarify
Not really. If buy/selling stocks is your primary activity, then you need to declare this as business income and not capital gains.
Dear sir
Suppose,I hold on to my shares or investment which are making profits in particular financial year,Do I need to pay taxes on unrealized profit or I can pay tax once I will quit my investment?
No, you don’t, you have to pay only once realized.
Hello Sir,
Suppose I have 1000 shares of a company in long-term holding. Then let’s say today I first buy and then sell 1000 shares of the same company. Is my sell transaction considered long-term with first-in-first-out on my original 1000 shares? Or is it considered a short-term day trade?
It is considered as intraday trade as your holdings in demat doesn’t get affected.
Hello,
I recently received shares from my grandfather through DIS.Now i have two queries:
1) how to calculate holding period? Do i count it from the day i received or from the day my grandfather had bought it?
2) If i sell some of the shares do i have to pay taxes?
THANKS
1. Has to be counted from the day your grandfather bought it.
2. Yes, you will have to.
How can we show the trading as an business income for the tax benefits.? Please help. I do trade in fno
Please share
You have to do it while filing your ITR. Best to consult a CA for that, check this https://zerodha.quicko.com/
Hello Sir, Can investment be made in Debt Mutual fund via ELSS ? Or Any Debt mutual fund option for which investment can be claimed under 80C of income tax ?
Can I club Long term gain and losses arising from Equity and Debt.
NO. ELSS stands for Equity linked Saving Scheme. Hence Debt Mutual Funds are out of the picture for this particular case and for the purpose of Section 80C
ear Zerodha Please refer MY LOGIN IG IY8089 wherein shortterm realized profit  Rs9.1 in financial year 2019-20 from Q1 to Q4 andd at present i am not come under IT SLAB so i request to inform whether tax is to be paid or not for the trading done through zerodha.In case of profit through selling shares, let me know the details of tax to be paid for profit. — MVK SATYA RAMESH
If you don’t come under an IT Slab, there is no tax to pay. But it is best to file your ITR.
I would like to apply denat account for my pvt ltd company. If we want to invest our business profits in stocks, how it will be taxed. We need pay tax only for stocks or we also need to pay tax for business profits also.
The rules are the same as for individuals. You can show it either as capital gains or business income.
sir
1. if STCG is paid as per (15%) criteria ,and not as NON-SPECULATIVE BUSINESS INCOME .
will one get benefit of no tax below 2.5 L (assuming no other source of income) .
2. How we can mention above in itr.
thank you sir
1. Yes. Any tax has to be paid only if your total income is taxable.
2. You just have to add the STCG in the relevant section. It won’t ask you for any taxes. Check this: https://zerodha.quicko.com/ for help.
Dear Sir
My question is about tax and inheritance across generations. I am 70 years old. My husband passed away 12 years ago. My son passed away 2 years ago. My son’s wife and children are foreign citizens. My husband left behind stocks which he bought with my son’s money many many years ago. I want to give those to my grandchildren. I don’t know where to start. I am reading about these and came to zerodha. I want to transfer my shares to zerodha if that makes it easier to solve my situation.
My husband used to invest his life savings into the stock market. He lost a lot of money during Harshad Mehta and again 2006 and 2009. During those times, my son who had gone abroad for studies started working there and sent us money for our living and for paying our home and car loans. My husband invested a lot of my son’s money into shares also. I was joint holder of my husband’s demat accounts and my son was nominee. Unfortunately both are no more.
The rightful owners of these shares in my demat account are my grandchildren. However, they are little and they are foreign citizens. I’m thinking how to get the ownership to them and the tax issues related to this.
I was thinking about selling all shares, converting money to US dollars and sending them the money through the bank. However, the new Budget will impose 5% tax on the money sent abroad. I don’t know – Does that 5% tax apply to inheritance too? I can claim TDS when I file a tax return, but will it be a never-ending 5% tax when I try to send the 5% refunded tax amount to my grandchildren?
I am also reading about options to inherit as shares. Luckily nominee for demat account is treated as owner of the shares in the demat account. Can 2 grandchildren who are minors be nominee of a demat account? Will my grandchildren need to file tax return in India and US and report FATCA about ownership of demat account in India?
Hmm.. this is tricky. I think the best way is to sell the shares and transfer the money. The tax is on the transfer of money abroad, but the tax can be claimed back after filing of returns. Alternatively, you can sell, book an FD with it and add your grandchildren as the nominee. Btw, you can also nominate minor through a guardian for the shares you hold.
Hi Sir,
If I am doing only Cash & Carry (CNC), and have Long Term capital loss of 20k, Short Term Capital Loss of 25K in FY. 2019-20, Planning to carry forward this using ITR2.
1, If I have a profit next year in LTCG or STCG do i need to go for TAX AUDIT ??
2, And ITR 3 will be sufficient next Year ??
Regards,
Ram
1. NO
2. No need of ITR3, you can use ITR2
Whether Ltcg loss can set off against profit in same year and next year
yeah
Dear Nithin,
My income for the year is Rs 2 lacs (NCD and FD interest). In addition, LTCG (from shares & NCDs) is 2.95 lacs. So net income for the year is Rs 4.95 lacs. Will my tax slab be 5%? Or is LTCG always @10.3% irrespective?
Thanks,
Yuvaraj
LTCG will be 5%, if you are in lower tax slab, you get that benefit of lower than 10% tax.
hi
Thats a very good article and thank for that.
I have a query, If Short term realized loss (In Equity) is – 100000/= and FnO profit is 500000. I should show profits from business as Rs.400000/- and pay taxes accordingly?
That is if you are showing short term realized loss in equity as business income. If you show it as capital gains, you cannot set off. Check the entire module.
Do i need to pay STCG even if i dont withdraw the proceeds from my trading account?
Thanks.
yes, you have to pay STCG if you have sold the stock and realized the gain.
Suppose I have a share certificate of 100 shares of RIL purchased in November 1994. If the said shares are dematerialised in 2016 when the price of stock is Rs. 1000.
Purchase price of Nov. 1994 is not available.
What will be the cost of acquisition and period of holding for the said 100 shares?
You can maybe figure the price looking at historical data of reliance and use that for acquisition price. Holding period also is from 1994 to now.
Dear Nithin
I have a very simple question…..How are profits / losses in the short delivery / auction / close out …to be treated for tax
Is it a STCG / Loss or business profit / Loss or speculation .
Also if I have sold Reliance at Rs. 800 and failed to deliver and my broker is debited at Rs. 780 on T+1 as valuation debit and
auction takes place at Rs. 750 on T+2 …then Rs. 30 ( 780-750 ) will go to the investor protection fund Yes ..but what about the
Rs. 20 ( 800 – 780 ) difference the broker makes on my short delivery …should i not receive that credit
It is a grey area. But you can treat it as STCG itself, as your intention was to buy stocks for delivery.
Can you post the second question on tradingqna.com , will ask our team to check and respond. I think the entire benefit goes to IPF
Hi,
If all the funds be it LTCG or STCG or F&O or Intraday are not transferred from the Trading account to Bank account in the whole financial year, do we need to declare anything? And will all the rules such as Audit, etc apply?
Dear Sir,
In Section 4.7, you have mentioned that Short-Term Capital Losses (STCL) can be set-off against STCG as well as LTCG.
My question is:
Does STCL can be set-off against LTCG only in the same year or the carried forward STCL can be set-off against LTCG ?
Regards,
Rahul Mishra
Only in the same year. Subsequent years STCL can be offset with STCG. Similarly LTCL against LTCG.
Hi,
I am currently a salaried employee paying taxes in the 30% slab. What % of tax t be paid for (1) Short term gains (1-364 days) -30% or 15%?
(2) Long term gains – 10% over 1 Lakh or 30% of the gains?
Thank you,
Syam
1. 15%
2. 10% over 1lk.
Hi,
I am a salaried individual with annual salary of rs 1200000/-. I have earned 3000 as speculative profit and 67000/- as capital loss. Wheater I have to pay tax on speculative profit portion? If yes what will be tax rate.
Regards
Yes, you have to pay on your speculative profit. As per the income tax slab you fall in.
If all the funds be it LTCG or STCG or F&O or Intraday are not transferred from the Trading account to Bank account in the whole financial year, do we need to declare anything? And will all the rules such as Audit, etc apply?
Yeah, it doesn’t matter if you withdraw or not. If you have booked profits, you have to declare the income and file ITR.
As per current changes on taxation laws,how are dividend returns from long term stock investments taxed?
You have to pay tax on it as per your income tax slab.
It’s mentioned in this post that it is required to pay advance tax on realized (profit booked) short term capital gains. If someone is a salaried individual and has realized a STCG profit by doing only one buy/sell in a year (other stocks being held for long term), is he/she still required to pay the advance tax for the capital gain in that quarter? Can’t it be clubbed in the final ITR?
Hmm… no.
Sir, If Net income from STCG is below 2.5 lakh. Do I need to file ITR?
Not mandatory.
I had bought tax free bonds on Zerodha platform at a premium(on face value). These bonds are due for redemption in 2024 i.e after more than 3 years from the date of purchase. On redemption they would be redeemed at par (face value). Can I claim the premium paid as capital loss in the year of redemption?
I had also purchased unlisted preference shares at a premium and got them transferred to my Zerodha account through off market transaction. These are due for redemption in 2026. Can I claim the premium paid as capital loss in the year of redemption?
Yes, you can, for both.
In all your examples for indexation a person selling a debt fund after 3 years or 10 years would have to pay Tax …Is that right imean shouldn’t the gain from a debt MF held for more than 3 years be considered as an LTCG please explain its a bit confusing
For debt funds there is LTCG tax to pay unlike equity where upto Rs 1lk LTCG has no tax.
Sorry about the FIFO buy kindly explain for the first question
Hey nitin
In “Short and long term capital losses” section you gave one example “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. For example, if the net short term capital loss for this year is Rs.100,000/-, this can be carried forward to next year, and if net short term capital gain next year is Rs.50,000/- then 15% of this gain need not be paid as taxes because this gain can be set off against the loss which was carried forward. We will still be left with Rs Rs.50,000 (Rs.100,000 – Rs.50,000) loss which is carried forward for another 7 years.”
Hear you mentioned 15% of gain in the next year need to be paid but it has to be offset with the loss what I made in the previous year. then the rest 50k loss can be carried for further 7 years. Am I wrong anywhere else. Can you send me the and in the mail when you update your comment hear.
Thanks
ARUN
Good day,
I hold one share which is under insolvency not being traded anymore as it failed to comply exchange norms. Kindly advise how do I treat it in my tax re-stun. Can i write it off. I fill form-2 for ITR.
Thanks in Advance.
Best to continue showing in your holdings. Yeah continue using ITR2.
Hi, this was a nice read.
I have a query though: If I am selling a bunch of my stock in profit (LTCG) will the tax be deducted at source by Zerodha, or will I need to declare it separately while filing the ITR?
If I transfer my yes bank shares in kotak to zerodha, will it be considered off market transaction and rate of income tax will be higher ?
Not at all. It is from within your accounts, so not taxable.
I was holding Andhra Bank equity shares for past 5 years. In April 2020 these shares got compulsorily converted to Union Bank shares due to the merger of Andhra Bank in Union Bank. Accordingly I was issued Union bank shares in April 2020. If I sell these shares in June 2020, would I have to pay STCG (shares being sold within 3 months) or LTCG (original shares being held for over 5 years)?
The original date of acquisition will be considered, hence LTGC.
Thanks. So I would take Union Bank share price (highest) on 31 January 2018, as my acquisition cost and calculate the LTCG accordingly, even though I did not possess Union Bank share as at that date. Is this the right methodology?
Ah no. The ratio was 325 shares of Union Bank for every 1000 shares of Andhra bank. So if you held say 1000 Andhra at cost price of Rs 10 (an example), you held Rs 10000 of Andhra. If you got 325 shares of Union, your cost of Union bank shares = 10000/325 = Rs 30.
How tax will be calculated if i make profit of 1.20 lakh in 1 year by intraday ,short term and long term Can I myself file return???
No tax. taxes are only if your total income is in the income tax slabs. Best to take some help to file returns.
Hi Mr . Nithin . I bought SBI shares on 5th June , 10th June , 15th June ( 100 shares each time ). i would like to sell 100 shares . Which dated shares will move first from DP .
Your demat doesn’t keep a tab of cost of acquisition, etc. While filing ITR, you would have to declare using FIFO (First in First out). So what is bought first has to be exited first.
Hi, Help me out to calculate capital gain,
Suppose purchase price – 100/-
Brokerage(Purchase Side)- 2/-
STT(Purchase Side)- 5/-
Other charges(Stamp Duty(1/-),GST(1/-), Exhange(1/-)= 3/-
Sell Price-150/-
Brokerage (Sale)-3/-
Stt(Sale)-6/-
other charges-3/-
What will be my capital gain- is it
150-100=50/-
or
150-122=28/-(including all cost brokerage, stt, gst etc)
Please clarify.
I file ITR-2. Holding period more than 1 year.
Other than STT you can show everything else as a cost of the trade. You have to pay taxes only on the net gain. If you sell it after a year is 10% above Rs 1lk long term capital gain for that year.
Greetings Sir,
Suppose my STCG from sale of Equity shares in a FY does not cross 1 lakh but within the Slab 2.5lakhs, I need not required to pay STCG.
But whether it is mandatory to File Income tax return provided I have no other Income other than STCG from sale of Equity shares which is less than Rs.1 lakh????or I need not file Income tax return???
Kindly clarify the same
With Thanks!
It is not mandatory but it is advisable to file ITR if you have stock market transactions.
Sir,
Even if my STCG less than 20000 in the Financial year, still I need to file ITR?
Advisable, not mandatory.
sir,
If i trade on cnc and the amount of profit i gain used to invest in other shares. sometimes i bear loss too. so my question is
do i need to pay short term capital gain tax?
How to treat the loss that i bear during the trade?
where do I get all the details of gain and loss of my trading during the financial year?
If you have net gain in your account, yeah STCG.
You have to pay tax only on your total net gain. If you have net loss, you can carry forward for future years.
You can go to console.zerodha.com and look at your tax P&L
Hi … I have kept shares as collateral in the broker’s Demat account. He receives the dividend on such collateral shares. He usually credits the dividend amount received to my ledger credit. Now from 1st April 2020, the Company is deducting TDS on the dividends paid above Rs. 5000. Will the broker give the TDS credit to me or not?. When will I receive the TDS credit from the broker as I have to show the gross amount of dividend on the shares as my taxable income?
why don’t you update this based on the current tax rates (Most of the detail in this page is Old tax rates)
Which tax rates? The post is updated now.
Section 4.4, 1st heading – “So if there is no other income for the year and assuming there was Rs 1lk STCG, it would not entail the flat 15% tax.”
I am a NRI (earning in foreign country) with no income in India. If I have STCG (say upto 1L) then as per the above quote, it implies that, 15% STCG won’t be applicable for me?
Hey Raj, NRIs don’t get that benefit. You will have to pay STCG from Rs 1.
Which ITR form should be used for a person individual resident if he has income from FD and long term loss from shares and mutual funds ( equity ) , can he use ITR1 as it is simple and which can be filled online and he don’t want to carry forward loss to future years as it is not big and the reason for asking is ITR 2 is complex for a normal person and ITR1 can be filled online ( not to download and upload xml or excel files
Advisable to use ITR2 and declare the loss.
Thank you sir
Hello sir,
I have one doubt regarding point number 3 which you told at the beginning of this chapter.
3.If you wish, you can also show your equity delivery trades as a business income, but whatever stance you take, you should continue with it in the future years as well.
My doubt is if I decide to show gain from my delivery based trades with high frequency as business income can I offset the loss for the same with business income and pay the tax for the remaining?If so then for how many years the carryforward can be done
to offset the business income?
Hi,
Some of my Sell transaction done via zerodha account have been highlighted by income tax compliance. The transactions have been market as off market although they were done via zerodha portal (STT paid) . I am not able to understand why such a query from IT department. Kindly help!!
Many customers across various brokerages have received this notice. You just have to respond saying it is an on-market transaction then.
I have one query related to Gold Bond.
if we buy the gold bond from the secondary market, Are capital gains exempted from tax when mature?
Will I get an interest of 2.5% if I buy these gold bonds from the secondary market?
No, any capital gain is exempt, even if the secondary market.
tax and charges should be deducted from
profit/loss for calculation of net capital gain for itr or else
Hi Nithin,
1. I am a salaried employee and I have been investing in Mutual funds prior to being employed. I have invested in a 3-year SIP mutual fund and the SIP ends next year (May 2018 – April 2021). At the end of the SIP’s tenure, (I have opted to redeem rather than re-invest the SIP amount) the total amount (monthly SIPs + gains on them) where will the invested amount be deposited – to my bank account linked to the DP or in the Demat form – Funds section)?
2. Once I get my returns, how will I file for STCG? In the 3 years tenure, the 1st and the 2nd year will have returns in the LTCG spectrum, but for the 3rd year, I will have to file for STCG since the MF SIP units I bought from May 2020 – April 2021 will be held less than 365 days. How do I calculate the STCG in this situation?
P.S. Please correct me if my explanation/question is wrong or let me know if you require more details
Thanks!!!
Hi Harris,
Please find the response:
1. If you have invested through demat, you will redemption proceeds in Demat. If you have invested through MF House website or App – you will get proceeds in Bank Account.
2. Once I get my returns, how will I file for STCG? In the 3 years tenure, the 1st and the 2nd year will have returns in the LTCG spectrum, but for the 3rd year, I will have to file for STCG since the MF SIP units I bought from May 2020 – April 2021 will be held less than 365 days. How do I calculate the STCG in this situation? – Download the Capital Gain Statement where gains or losses are distinguished as Short Term or Long Term. Based on the figures available in Stmt, file it in ITR.
Calculation goes like this
NAV on Sale Date minus NAV on each SIP multiplied by units.
Hope this helps.
Hi Nithin,
I am a salaried employee, i have traded for two days (11-12 August) after creating demat account on zerodha. So on first day i bought 3 shares of 5000 ruppes and holded them till t1 days and solded. On t1 day or the second day I’d done sone mis and cnc and also solded them also, cause i was not aware about taxation. I made a profit of 30 ruppes but after day settlement its gone in brokerage. So now it’s 0.
I am planning not to do trading investing from today to next year or 2020-21. Can u please help me to know, how much tax i have to pay for these 2 days work. Even i have no profit no loss. Or if the itr notice came then what should I do.
Tax has to be paid only on profits, not for trading. So no taxes you have to pay.
sir, suppose i hold 100 axis bank in demat account @390 . i sell 100 shares @440, buy it back @420 and again sell it @430, so which sell (i.e 440 or 430) will be considered delivery sell and which one will be considered intraday sell.
Sir,
Pl help me with this-
I have two demat accounts with two different dps. I have made rs 50000/- short term gain in one account and made 50000/- short term loss in another account in same financial year. What will be the tax liability?
Hi Prashant,
Aggregate Gain from both the accounts are NIL. Hence, tax liability will also be NIL.
Thanks for all your very humble responses. I’m a law practitioner, had LTC loss of ₹ 26000 in FY 19-20. Not been filing returns as overall income below basic exemption limit. Now, how and which ITR form can I opt to carry forward the loss. Suppose, this year, if LTCG is ₹ 1.5 L; LTCL ₹ 70,000; STCG ₹ 50,000 ; STCL ₹ 20000 and ₹ 1.1 L income from business and profession. How should I report all this.
Hi Das Anudas,
I’m a law practitioner, had LTC loss of ₹ 26000 in FY 19-20. Not been filing returns as overall income below basic exemption limit. Now, how and which ITR form can I opt to carry forward the loss – Use ITR 2 and carry forward the loss. File it before the due date in order to carry forward the loss.
Suppose, this year, if LTCG is ₹ 1.5 L; LTCL ₹ 70,000; STCG ₹ 50,000 ; STCL ₹ 20000 and ₹ 1.1 L income from business and profession. How should I report all this? – Use ITR 3, report long term capital gains of 80K(net) and short term capital gains of 30K(net) in Capital gains schedule.
Since, you are a law practitioner – you are eligible to report the income of 1.1Lacs under presumptive scheme i.e 50% of the receipts. Report the same in schedule PL.
These schedules will be relevant only if you are using the utilities provided by the Income Tax Department.
hi,
Is 1 Lakh separate for equities and mutual funds – meaning 2L in total? And is it only for LTCG in both cases?
Nithin,
I have retired and my source of income is interest from FD, NCD and ST/LT gain in shares. Recently Business Line carried an article on taxation from which I quote below.
“In case you have been trading in stocks, you will have to pay tax on short-term capital gains or long-term capital gains depending on how long you hold the shares. You also have an option to declare a part of these gains as business income. Based on circulars from the Central Board of Direct Taxes, you can segregate your portfolio by earmarking a portion of it to your trading activity (business income) and the rest to investing activity (capital gains).
Any income from the portfolio that pertains to the trading activity can be shown as income from business. While declaring business income, incidental expenses such as depreciation on computer, rent for office, internet costs, brokerage, securities transaction tax paid, etc. can be deducted from your turnover.
The other portion of your portfolio from investing activity can be shown as capital gains or losses. Income from this portfolio will be taxed as short-term capital gains if you have held the shares for 12 months or less, or long-term capital gains if held for more than 12 months. Tax on short-term capital gains on listed shares is taxed at 15 per cent, while tax on long-term capital gains is taxed at 10 per cent after an exemption limit of ₹1 lakh a year.”
– Can you guide as to which CBDT circular is being cited? and
– What is the basis of segregating the portfolio between trading activity (business income) and investing activity (capital gains)?
Your comments will be most helpful….thanks.
Sorry, should have mentioned that all my share trading activity is delivery based only…in all should have made about 300 transactions (buy/sell) in a year.
Hi Mayur,
– Can you guide as to which CBDT circular is being cited? – https://drive.google.com/file/d/1lLop0VPbt791jWk8qtA6kMuKSWThkDGx/view?usp=sharing
– What is the basis of segregating the portfolio between trading activity (business income) and investing activity (capital gains)?
It is explained in the circular.
Thank you, Sandeep. Most helpful.
Is there any report which gives me the cost price to be considered for taxation purpose if shares were purchased before the new long term capital gain tax was introduced.
Hi Sarfaraznawaz,
Check this…https://drive.google.com/drive/folders/1DapNqzH76tPpVx6XZEmsm6-BPvwp0ppP?usp=sharing
Hi ,
I have incurred a loss in long term (Rs 7395 )as per the statement i got from you and there is a short term gain of (Rs 9935). I wanted to ask if the longer term loss can be offset by short term gain for AY 2020-2021 .
Regards
Hi Suarabh,
I have incurred a loss in long term (Rs 7395 )as per the statement i got from you and there is a short term gain of (Rs 9935). I wanted to ask if the longer term loss can be offset by short term gain for AY 2020-2021.
No, Long term capital loss can be set off only against Long Term Capital gains.
However Short Term capital loss can be set off against both Short Term capital gains as well as Long Term Capital Gains.
Hope this helps
Hi Nitin
First of all thank you very much for such a precious knowledge shared by you and your team.
I have a question, one of my friend started trading this year and has no other income source being a housewife. She is making profit in STCG which is less than 2.5 lakhs annually (calculated in approximation).
Can she still take advantage of tax slabs and not paying tax… as she is not a salaried person. or she has to pay 15% tax even if STCG is very less.
Thanks and Regards
Vikas Kamboj
Hi Vikas Kamboj,
I have a question, one of my friend started trading this year and has no other income source being a housewife. She is making profit in STCG which is less than 2.5 lakhs annually (calculated in approximation).
Can she still take advantage of tax slabs and not paying tax… as she is not a salaried person. or she has to pay 15% tax even if STCG is very less.
Yes, you can take the benefit of basic exemption limit of Rs 2.5Lacs. There is no need to pay tax if STCG is less than or equal Rs 2.5Lacs.
Does income tax makes internal calculation on there website during filling ITR on long term debt capital gain with indexation.
Hi Shashank,
Does income tax makes internal calculation on there website during filling ITR on long term debt capital gain with indexation?
NO, the reason being you are asked to declare the values with INDEXATION itself under capital gains schedule. There is no option to declare year of sale and purchase and values without indexation.
Hi Nitin/San,
Thanks for sharing this knowledge. I have following query.
I am private sector employee and novice in share market. For FY 2019-20 (AY 2020-21), I am having Taxable Salary Income as Rs. 14.49 lakhs.
I had losses in equity as well as mutual funds. As per zerodha report, my equity Intra-day loss is -1206 (Turnover =1466.60), short term loss is -289.50 and Mutual fund loss is huge i.e. -69,924/-
Which ITR form should I fill..?? Also how can I carry forward my losses…??
Thanks and regards,
Rahul N.
Hi Rahul,
I am private sector employee and novice in share market. For FY 2019-20 (AY 2020-21), I am having Taxable Salary Income as Rs. 14.49 lakhs.
I had losses in equity as well as mutual funds. As per zerodha report, my equity Intra-day loss is -1206 (Turnover =1466.60), short term loss is -289.50 and Mutual fund loss is huge i.e. -69,924/-
Which ITR form should I fill?? Also how can I carry forward my losses??
You need to fill ITR-3.
Declare Salary Income under Schedule S.
Further,declare Intraday Losses under Schedule PL and Short Term Loss & Mutual Fund Loss under Schedule CG and 112A as applicable. (If loss is long term – use 112A)
Current year losses gets automatically carried forward if you file the return within the due date.
Hi,
Thanks for this useful topic. I have a doubt regarding calculating Capital gains. You have mentioned
“When calculating taxes on capital gains, STT can’t be added to the cost of acquisition or sale of shares/stocks/equity. Whereas brokerage and all other charges (which include exchange charges, SEBI charges, stamp duty, service tax) that you pay when buying/selling shares on the exchange can be added to the cost of share, hence indirectly taking benefit of these expenses that you incur.”
Can DP charges also be added to the cost of acquisition.
I also see that in my Zerodha tax p&l report I have the following
Being payment gateway charges debited for XXXX
AMC for Demat Account for 30-09-2019 to 30-12-2019
I am not sure if payment gateway charges are there for every transaction since it is very infrequently present.
Can these payment gateway charges and AMC for demat account adjusted for capital gains? Since they are not there for every transaction and common between STCG and LTCG I am not sure how/where to deduct them from CG. Kindly help
Found out that DP charges can be added to the cost of Acquisition. Since DP charges correspond to each sale it would be good if it is added in the Zerodha tax P&L report separately for STCG and LTCG. Since it is very difficult to split it between STCG and LTCG manually.
Also kindly clarify on AMC and gateway charges(since AMC is common between LTCG and STCG can we just add it to one of them(whichever is giving more profit) or split and add to both LTCG and STCG)?
Hi Nitin,
Say I made a profit in Intraday Trade of 10 Lacs & loss in Short term Trade as 5 Lacs where I have multiple trading & I wish to show all trade as business income & loss.
Will I have to pay tax on (10 -5=5 Lacs) & will it be clubbed with my other income or I have to pay tax on 10 Lacs in intraday & 5 lacs loss in STC Loss carried forward for next 4 years? Please suggest.
Thanks in advance.
Hi Shiv M,
Say I made a profit in Intraday Trade of 10 Lacs & loss in Short term Trade as 5 Lacs where I have multiple trading & I wish to show all trade as business income & loss.
AA] Will I have to pay tax on (10-5=5 Lacs) & will it be clubbed with my other income??
Yes, you can set off intraday profit with normal business loss and pay tax on net Rs 5 Lacs.
Also, go through this Income tax circular https://www.incometaxindia.gov.in/communications/circular/circular-no-6.pdf
BB] or I have to pay tax on 10 Lacs in intraday & 5 lacs loss in STC Loss carried forward for next 4 years?
You can treat Short Term Capital Loss as it is and carry forward the loss for 8 years.
Hi Simha,
Also kindly clarify on AMC and gateway charges(since AMC is common between LTCG and STCG can we just add it to one of them(whichever is giving more profit) or split and add to both LTCG and STCG)?
Divide it proportionately between LTCG & STCG and add it.
Hi Nitin/San,
I have a question regarding fractional shares entitlement taxation.
I used to have Bharat financial inclusion shares purchased in FY 2014-2015 which got merged in to IndusInd Bank in FY 19-20. so I received Indusind bank shares upon merger but as per merger calculation the shares were not a whole number but ended up having 0.4 fractional share entitlement which was sold by the appointed trustees and the cash deposited in my account. I have following questions.
1. is this tax free? whats the tax treatment of these cash received? which schedule and where do I report them in my ITR2?
2. if its STCG/LTCG then what will be the cost of acquisition and date of purchase?
3. if this is LTCG and needs to be reported in schedule 112A?
4. the cash that I have received – is that after deducting brokerage and other taxes/charges and is STT paid on it?
Would appreciate your expert guidance on same.
Thanks,
I have made a short term Capital loss of Rs. 50k And long term gain of Rs 1lakh in the same year. Now, as per notified rules the long term gain is exempt up to the limit of 1 lakh. My query is –
.1. Is it possible for me to claim the exemption on long term capital gains made during this year Of 1 lakh and Not set off the STC loss of this year and carry forward the Same to next year Since I know that I have made STC gain next year
Or it is mandatory to set off the short term losses first and claim the exemption on the remaining amount of LTCG.
Hi Sunil,
I have made a short term Capital loss of Rs. 50k And long term gain of Rs 1lakh in the same year. Now, as per notified rules the long term gain is exempt up to the limit of 1 lakh. My query is –
Is it possible for me to claim the exemption on long term capital gains made during this year Of 1 lakh and Not set off the STC loss of this year and carry forward the same to next year since I know that I have made STC gain next year Or it is mandatory to set off the short term losses first and claim the exemption on the remaining amount of LTCG.
Short Term Capital Loss of 50K is first adjusted against LTCG of Rs 1Lacs and then you get the exemption on the balance 50K.
If i transfer shares of Rs. 2 lakhs (market value) hold for more than one year (10 yrs) through Delivery instruction slip to my brother, it attracts LTCG.
Hi Ashok V Desai,
If you are treating it as Gift and not received any consideration – then no LTCG attracts.
If you receiving any consideration for sale of shares – then LTCG attracts.
Sir I am new to the trading I started trading in August 2020 so as of now my loss is 130000
And a turnover of 13crore (because of margine)
Should I pay income tax?
Should I file ITR?
Should I need an audit?
Please help me
Hi DeviPrasad,
I am new to the trading I started trading in August 2020 so as of now my loss is 130000
And a turnover of 13crore (because of margin)
Should I pay income tax? – No need to pay tax as you have incurred loss.
Should I file ITR? – Yes, because your turnover is above the threshold limit.
Should I need an audit? – Yes, audit is applicable as your turnover is above the threshold limit.
I assume you have calculated the turnover as per the prescribed method.
Will i be taxed STCG if i sell my holdings with in one year and keep cash in funds with broker: Zerodha??
Hi Ashish,
Will I be taxed STCG if I sell my holdings with in one year and keep cash in funds with broker: Zerodha??
Yes, you will be taxes STCG irrespective of whether you hold the cash with broker or withdraw. The same applies to LTCG and Speculative Income as well.
Suppose in a FY, I decide to withdraw more than 3lacs from a non-equity oriented fund that I held for less than 3 years and my annual income is less than 2.5lacs (tax lab = 0)
Do I have to pay taxes on the withdrawal?
Hi Rahul,
Suppose in a FY, I decide to withdraw more than 3lacs from a non-equity oriented fund that I held for less than 3 years and my annual income is less than 2.5lacs (tax lab = 0) Do I have to pay taxes on the withdrawal?
There is no need to pay tax on withdrawal of investment.
Hi,
In case, I want to transfer shares from Sharekhan account to Zerodha account, what is the process and what all charges applicable on both accounts?
Thanks
I have a loss of 60k in F&O and 15k profit from STCG, do i need to show anything in the ITR forms, since it has offset or there is some place to show both profit and loss? Also, if I have 50k profit in STCG but i don’t remove the fund from Zerodha (or re-invest it in other stock) do i still need to show STCG in ITR?
I have
Short term realized profit
4.41L
And I don’t have any other income
Do I need to pay tax
And how much
Hi Pratik Purohit,
I have a loss of 60k in F&O and 15k profit from STCG, do I need to show anything in the ITR forms, since it has offset or there is some place to show both profit and loss? Also, if I have 50k profit in STCG but I don’t remove the fund from Zerodha (or re-invest it in other stock) do I still need to show STCG in ITR?
You need to use ITR-3 and declare FNO transactions under Schedule PL and STCG under Schedule CG.
Yes STCG earned can be set off against FNO Loss.
You need to declare STCG irrespective whether you will withdraw the investment or not.
Hi Hareesh,
I have Short term realized profit 4.41L
And I don’t have any other income
Do I need to pay tax And how much?
Short Term Capital gains attract 15% tax plus (surcharge if applicable) and 4% cess.
On 4.41Lacs – it will be Rs 28650/- (15% of 4.41Lacs). Since your overall income is less than 5 Lacs – you will get a rebate of Rs 12,500/-; thereby reducing your tax to Rs 16,150/-.
On Rs 16,150/-, 4% cess will be levied. Total tax will be Rs 16800/- (rounded off)
I reinvest my business profit in my business, how much tax I pay ?
I have a question?
If we do trading , then after selling the shares the invested amount and profit comes to demat account but instead of transferring this amount to bank account we reinvest it and buy some other shares and the process continues without the money invested or profit coming to the bank out , do we have to pay the the taxes? as the money or profit actually never came in bank account and was used in trading ?
HI Dhaval,
I reinvest my business profit in my business, how much tax I pay ?
Individual’s business profits or income are taxable as per slab rates. Refer – https://zerodha.com/varsity/chapter/basics for tax rates.
Hi Arshid,
If we do trading , then after selling the shares the invested amount and profit comes to demat account but instead of transferring this amount to bank account we reinvest it and buy some other shares and the process continues without the money invested or profit coming to the bank out , do we have to pay the the taxes? as the money or profit actually never came in bank account and was used in trading ?
Irrespective of whether you withdraw the amount or not – you need to pay tax if you have earned capital gains.
hi nitin😊
just tell me one thing.Are you deducting 15% of capital gains tax in STCG category from our short term profit on sale of shares; in your final P/L statement in console as POA is with you.
thanks
Hi Durga Shankar,
Are you deducting 15% of capital gains tax in STCG category from our short term profit on sale of shares; in your final P/L statement in console as POA is with you.
No, Zerodha won’t deduct 15% capital gains tax on STCG. Onus is on the individual to pay tax.
Can DP charges be deducted from STCG/LTCG?
Hi G R Pillai ,
Can DP charges be deducted from STCG/LTCG?
Yes, DP charges can be deducted from Cap Gains.
I am a house wife and I have a demat account with zerodha. My net profit is 1.5lac per year. Should I have to pay any taxes. This is the primary source of income for me. Please help
Hi Geeta,
I am a house wife and I have a demat account with zerodha. My net profit is 1.5lac per year. Should I have to pay any taxes. This is the primary source of income for me.
For an Individual – tax liability arises once your income crosses Rs 2.5 Lacs. Since your net profit is 1.5 Lacs – no need to pay taxes.
Can an exemption of 1 lakh of LTCG be claimed separately for stocks and equity mutual fund each or is the exemption limit of 1 lakh applicable to combined LTCG from stocks and equity mutual funds?
Hi Apurva Gaurav,
Can an exemption of 1 lakh of LTCG be claimed separately for stocks and equity mutual fund each or is the exemption limit of 1 lakh applicable to combined LTCG from stocks and equity mutual funds?
It is applicable to combined LTCG from stocks and equity mutual funds and not separately.
Suppose Current value of my shares is 4 lacs (bought for 2 lacs a year ago, so profit is 2 lacs). Can I transfer half the shares (2 lacs worth, so profit is 1 lac) to my Brother’s Dmat a/c and Claim LTCG upto 1 lac (Sec 112a) benefit in both accounts and avoid tax???
Where can I see the report that is mentioned under 4.5 – Days of holding?
Hi Nikhil Khedkar,
Where can I see the report that is mentioned under 4.5 – Days of holding?
In Console – Under Tax PL – Download trade-wise Tax P&L report for all segments.
Further Under TRADE WISE EXITENTRY 2021-03-31(this is for April 20 to March 21) sheet, Column (L) Period of Holdings
So three questions:
1) If I have income from STCG and my entire income (including STCG) is less than 2.5l, then do I have to pay tax for the SGCT?
2) For the advance tax, if I reinvest the entire profit I have made back into stocks before the due dates, then I will not need to pay tax right?
3) What if I reinvest the money into other avenues, not stocks before the advance tax due date?
Say I declare a presumptive income at 30% of turnover this year and file ITR 4S.
Next year, suppose my FNO earnings are less than 30% of turnover. Say, 15%.
Next year, do I still need to declare the presumptive income at 30% or do I use the actual percentage, 15%?
Hi Adithya Anil,
AA] If I have income from STCG and my entire income (including STCG) is less than 2.5l, then do I have to pay tax for the SGCT? – No need to pay tax as your income (STCG) will be less than the threshold limit of 2.5 Lacs.
BB] For the advance tax, if I reinvest the entire profit I have made back into stocks before the due dates, then I will not need to pay tax right? – No, you need to pay tax if you re-invest the profits made back into stocks.
CC] What if I reinvest the money into other avenues, not stocks before the advance tax due date? – Still you need to pay advance tax.
Hi Mark D,
Say I declare a presumptive income at 30% of turnover this year and file ITR 4S.
Next year, suppose my FNO earnings are less than 30% of turnover. Say, 15%.
Next year, do I still need to declare the presumptive income at 30% or do I use the actual percentage, 15%?
You need to file ITR-4 for declaring income under presumptive taxation scheme.
As per the provisions of the Income tax act, you need to declare minimum 8% profit on turnover.
There are no issues if you declare 15%.
If i sell the stock as stcg and same day i bought another share without hitting cash transaction to my bank account. Will it attract any tax?
Hi NK,
If I sell the stock as stcg and same day I bought another share without hitting cash transaction to my bank account. Will it attract any tax? – Yes, tax applicable on the share which you have sold.
Mr.Nithin i have a query..If I sell shares worth Rs.15 Lakhs after 1 year and if iam salaried falling under 10% tax slab then should my share profit of around 10 Lakhs to be clubbed with my income & will my tax slab be changed ???or is it ok if I pay 10% LTCG for my shares alone & IT for salaried separately as per my tax slab??..I.e. Will LTCG gain affect my income tax slab? …Or both can be differentiated while filing IT returns?
Hi R S Vishnuprasaath,
if I sell shares worth Rs.15 Lakhs after 1 year and if I am salaried falling under 10% tax slab then should my share profit of around 10 Lakhs to be clubbed with my income & will my tax slab be changed ???or is it ok if I pay 10% LTCG for my shares alone & IT for salaried separately as per my tax slab??..I.e. Will LTCG gain affect my income tax slab? …Or both can be differentiated while filing IT returns?
Both incomes are assessed separately. LTCG is taxed at 10% irrespective of the slab in which you fall. Your income slab won’t change because of capital gains.
Sir demate acount transation main tax lgta hai kya
Hi Arvind,
Demat account transaction main tax lgta hai kya? – Securities Transaction Tax(STT) is applicable on transactions. More about charges…https://zerodha.com/charges#tab-equities…Income Tax on capital gains earned should be made by the Individual.
I have account with Zerodha. I do trade for short term and long term except F & O and intraday. Whatever the expenses incurred for trading like dp charge, telephone expenses etc. Can I show it in p and l account and prepare balance sheet for the same. Please suggest me
HI Raghu S,
I have account with Zerodha. I do trade for short term and long term except F & O and intraday. Whatever the expenses incurred for trading like dp charge, telephone expenses etc. Can I show it in p and l account and prepare balance sheet for the same?
For FNO – you can claim all the expense related to trade like dp charges, stt etc., Further internet expenses, depreciation of computers(if used for trading), advisory fees etc.,
For STCG – you cannot claim STT as expense.
As per income tax rule Up to Rs. 2,50,000 there is no need of paying tax. But if I earn more than 100000 in share market I have to pay 10%tax. What does this mean
Hi Dinesh,
As per income tax rule Up to Rs. 2,50,000 there is no need of paying tax. But if I earn more than 100000 in share market I have to pay 10%tax. What does this mean?
Incomes are taxed as per slab rates as well as at special rates.
Long Term Capital Gains exceeding Rs 1 Lacs are taxed @ 10%.
If you have earned LTCG of Rs 2 Lacs; Upto Rs 1 Lac is exempt and balance 1 Lac is taxed @ 10%.
Since, your overall income is less than 2.5 Lacs – no need for paying that 10% tax also.
The interesting thing to note in regards to 20% after indexation for non-equity oriented or debt funds: Most of these funds return between 8 to 10% and typically inflation in India has been around that for the last many years. So with the indexation benefit, you typically won’t have to pay any tax on LTCG of non-equity oriented funds.
Can u explain this ?
My question is either STCG or LTCG, would it be deducted and mentioned in the contract note on the day of sell off ? Or does it need to be filled seperately along with overall Income tax filing ??
Hi Gayatri,
My question is either STCG or LTCG, would it be deducted and mentioned in the contract note on the day of sell off ? Or does it need to be filled seperately along with overall Income tax filing ??
STCG or LTCG needs to be declared separately at the time of filing Income Tax return and pay tax accordingly.
HI Team,
Please help to answer my below queries.
1. Tax Audit is applicable if Turnover > 5 crores or Profit < 6% of Turnover. For Intraday my Profit is greater than 6 percent however for FnO, profit is less than 6 percent of turnover.
a) Is tax audit applicable for me?
b) Should I sum both intraday and FnO turnover and profit and then check the condition for 6 percent or separately I need to consider?
2. For Intraday, can I claim all charges along with internet expenses, online course expenses?
3. For FnO, can I claim all charges along with internet expenses, online course expenses?
4. I'm salaried employee and I do intraday, FnO and Equity delivery based investments as well. Which ITR form is applicable for me?
5. Do I need to pay 15 percent tax on my STCG before 15 March? Else will penalty be imposed?
Hi Shashank Pendyala,
1. Tax Audit is applicable if Turnover > 5 crores or Profit < 6% of Turnover.
Yes, Tax Audit is applicable if your turnover is more than the threshold limit. Tax Audit in case of profit less than 6% of turnover is applicable in the below scenario:
Suppose, if you had FNO Income for any previous years and you were declaring under presumptive scheme under section 44AD; (meaning currently you are in presumptive scheme upto FY 2019-20)
now if you are opting OUT of presumptive scheme in FY 2020-21 and your FNO Income is less than 6% (meaning either in loss or in profits less than 6%) but total income is greater than basic exemption limit; then you have to maintain books of accounts and get the AUDIT done.
For Intraday my Profit is greater than 6 percent however for FnO, profit is less than 6 percent of turnover.
a) Is tax audit applicable for me? – Please check your turnover.
b) Should I sum both intraday and FnO turnover and profit and then check the condition for 6 percent or separately I need to consider? – Yes.
2. For Intraday & FNO, can I claim all charges along with internet expenses, online course expenses?
Yes, you can claim all the expenses attributable to trading. You can claim internet and online course expenses.
3. I'm salaried employee and I do intraday, FnO and Equity delivery-based investments as well. Which ITR form is applicable for me? – ITR-3 is applicable for you. Declare equity gains under Schedule-CG and 112A, FNO and Intraday gains under Schedule-PL.
4. Do I need to pay 15 percent tax on my STCG before 15 March? Else will penalty be imposed?
Advance Tax is applicable if your tax liability is more than Rs 10K. If the tax liability is more than 10K – Pay advance tax before 15th March 2021.
If advance tax is not paid; Interest will be levied.
Hi San,
Your answer for Question 1 is not clear, let me ask you with all details.
1. Firstly I’m summing up both Intraday and FnO trades, my turnover is less than 5 crores and my profit is less than 6 percent. Is tax audit applicable?
2. This is my first year for trading/investing, can you help me understand what is presumptive scheme?
3. What exactly happens when you say tax audit is applicable? Do I need to maintain any records or books?
Hi Shashank Pendyala,
1. Firstly I’m summing up both Intraday and FnO trades, my turnover is less than 5 crores and my profit is less than 6 percent. Is tax audit applicable? – Tax Audit is not applicable for you because turnover is less than the threshold limit.
2. This is my first year for trading/investing, can you help me understand what is presumptive scheme? – Presumptive scheme is one of taxation scheme designed to provide relief for small tax payers from the tedious job of maintaining books of account and from getting the accounts audited.
Under this scheme, income is computed on presumptive basis at the rate of 8%(cash transactions) and 6%(digital – non cash transactions) of the turnover or gross receipts of the eligible business for the year.
Eg: If your turnover is Rs 60 Lacs – you can declare 3.6 Lacs and pay tax accordingly.
3. What exactly happens when you say tax audit is applicable? Do I need to maintain any records or books? – Tax audit is done by Chartered Accountant. Yes, you need to maintain books of accounts if tax audit is applicable.
Tax Auditor(Chartered Accountant) will examine all your transactions from an income tax viewpoint. He will check compliance of various provisions of Income Tax.
Tax auditor shall furnish his report in Form 3CB.
Question 1: My total income is 0. I have a STCG of 50k. I fall under less than 2.5L slab which is 0%. How much of tax should I pay for the 50k of STCG?
Question 2: I hold Zerodha account and do all my trading and investment here in equity and MF. Is there a good summation of all my STCG, LTCG at any instance? That I can download and pay the calculated advance tax at any point of time? That would be a great to have feature.
HI Ramakrishnan,
Question 1: My total income is 0. I have a STCG of 50k. I fall under less than 2.5L slab which is 0%. How much of tax should I pay for the 50k of STCG?
There is no need to pay tax on STCG of Rs 50K as your overall income is less than basic exemption limit of Rs 2.5Lacs.
Question 2: I hold Zerodha account and do all my trading and investment here in equity and MF. Is there a good summation of all my STCG, LTCG at any instance? That I can download and pay the calculated advance tax at any point of time? That would be a great to have feature.
Yes, it is available – you can download here… https://console.zerodha.com/
Sir i am 24 years old currently preparing for competitive exam. Sir, i am doing swing trading and recently booked profit of 8000 Rs on the investment of 40000 Rs in 15 days. Sir, will i have to pay short term capital gain tax on it as i don’t have any other source of income as i am not crossing 2.5 lakh per annum limit
Hi Shrikant Dnyaneshwar Khatale,
Sir i am 24 years old currently preparing for competitive exam. Sir, i am doing swing trading and recently booked profit of 8000 Rs on the investment of 40000 Rs in 15 days. Sir, will i have to pay short term capital gain tax on it as i don’t have any other source of income as i am not crossing 2.5 lakh per annum limit?
No need to pay tax as your taxable income is less than the threshold limit of Rs 2.5 Lacs.
Filing of Income Tax return is also optional as income is below threshold limit.
Will I be taxed if my salary is nothing, but I earned over 2.5 lakhs last year from equity-based trading alone? What if that amount is less than 2.5 lakhs?
Hi Shashank Srivastava,
Will I be taxed if my salary is nothing, but I earned over 2.5 lakhs last year from equity-based trading alone? What if that amount is less than 2.5 lakhs?
If your income consisting of STCG(equity-based trading) is less than 2.5Lacs; there is no need pay tax as overall income will be less than the threshold limit.
If it crosses 2.5 Lacs, you need to pay 15% on such portion crossing 2.5 Lacs.
Sir i am salaried person income above 8 lkh/yr. zerodha provide all my transactions done by me in stocks. And can i show this income as investment or bussiness and how i file my stcg tax. Can i file my return myself in efiling portal.
Hi Sumit Kumar,
Sir i am salaried person income above 8 lkh/yr. zerodha provide all my transactions done by me in stocks. And can i show this income as investment or business and how i file my stcg tax. Can i file my return myself in efiling portal?
Income earned from equity based delivery based trades can be shown as Investment Income or Business Income.
Business Income is taxable as per the applicable slab rates.
Investment Income can be categorized as Short Term Capital Gain(STCG) and Long Term Capital Gain(LTCG).
STCG is taxed @ 15%. LTCG exceeding Rs 1 Lacs is taxed @ 10% – upto Rs 1 Lacs is exempt.
Yes, you can file the return by yourself.
Refer this for instructions…https://www.incometaxindiaefiling.gov.in/eFiling/Portal/StaticPDF/Instructions_ITR2_AY2020_21_V1.pdf
Hi,
You mentioned that we need to pay advance tax 100% by 15th March.
If I book large profit (STCG) between 16th March – 31st March, will it result in any penalty?
Hi,
I have 12 lakhs as gross salary. On my zerodha ac only i have made 22 k as short term delivey based equity trading profit. 188 k unrealised profit from invst less thn 1 year.. 77 k loss by delivery based option trading… So will my equity profit be sett off by option loss… Or I can carry forward my options loss..
Hi Niksha,
I have 12 lakhs as gross salary. On my zerodha ac only i have made 22 k as short term delivey based equity trading profit. 188 k unrealised profit from invst less thn 1 year.. 77 k loss by delivery based option trading… So will my equity profit be sett off by option loss… Or I can carry forward my options loss..
You can set off your option trading loss of 77K with short term gains of 22K and carry forward the loss.
Nicely explained above but I have a query even after reading above topics.
My father purchased Unit linked insurance plan. Joining from May 1998 and Maturity May 2008.
20 Installments of 3750/- with Maturity amount 75000.
It’s debt fund.
At present maturity value is Rs 4,81,610/-
My question is
How to calculate Cost inflation indexation in this case and what will be my profit after applying CII ?
Sir if a housewife have total income from trading inc itraday,stcg from delivery and dividents is 400000. How and what will be tax. Plz clarify
Hi
When zerodha deducted STG taxes.
at year end or at the buy /Sell time
2.
STT and STG both same?
Thanks
Ashish
Hi Ashish,
When zerodha deducted STG taxes at year end or at the buy /Sell time?
STT and STG both same?
Zerodha or Brokers won’t deduct STCG taxes. Responsibility of paying tax on short term capital gains is on the individual.
STT will be deducted at the time of buying and selling as applicable.
Hi Sandeep,
Sir if a housewife have total income from trading inc itraday,stcg from delivery and dividents is 400000. How and what will be tax. Plz clarify
Intraday Gains and Dividends are taxed as per the slabs applicable. STCG is taxed at 15%.
Refer this link…https://www.incometaxindia.gov.in/pages/tools/income-tax-calculator.aspx
Hi,
My father purchased Unit linked insurance plan on my name when I was I minor. Joining from May 1998 and Maturity May 2008.
20 Installments of 3750/- with Maturity amount 75000.
I didn’t require money so I kept it like that only.
It’s debt fund.
At present maturity value is Rs 4,81,610/-
My question is
How to calculate Cost inflation indexation in this case and what will be my profit after applying CII ?
Good article.
However it is not clear from above if the income is added to net taxable income? As an example, if someone has a net taxable income of say 49L and earns 2L as LTCG – will his/her net taxable income changes to 49+1 = 50L which then will end up attracting surcharge? Or will it remain 49L on which tax is to be paid as per slab and for LTCG of 1L (less 1L deduction allowed) – to be paid at the required rate (20%)?
Good article.
However it is not clear from above if the income is added to net taxable income? As an example, if someone has a net taxable income of say 49L and earns 2L as LTCG – will his/her net taxable income changes to 49+1 = 50L which then will end up attracting surcharge? Or will it remain 49L on which tax is to be paid as per slab and for LTCG of 1L (less 1L deduction allowed) – to be paid at the required rate (20%)?
When calculating taxes on capital gains, can we deduct DP charges from capital gains?
Hi Chetan,
When calculating taxes on capital gains, can we deduct DP charges from capital gains? – Yes, you can deduct DP charges from Capital Gains.
Hi Anil,
However, it is not clear from above if the income is added to net taxable income?
As an example, if someone has a net taxable income of say 49L and earns 2L as LTCG – will his/her net taxable income changes to 49+1 = 50L which then will end up attracting surcharge? Or will it remain 49L on which tax is to be paid as per slab and for LTCG of 1L (less 1L deduction allowed) – to be paid at the required rate (20%)?
Irrespective of the category or head of income – all the incomes attract surcharge if it exceeds 50Lacs.
However, maximum surcharge for capital gains is 15%.
Going by your example = Upto Rs 49 Lacs; tax will be charged as per applicable slab & LTCG of Rs 1 Lacs will be charged @ 10%. Further, tax as per applicable slab and tax on LTCG will be increased by surcharge of 10%.
Hi Prafula,
My father purchased Unit linked insurance plan on my name when I was I minor. Joining from May 1998 and Maturity May 2008.
20 Installments of 3750/- with Maturity amount 75000.
At present maturity value is Rs 4,81,610/-
My question is How to calculate Cost inflation indexation in this case and what will be my profit after applying CII ?
You should calculate Indexed cost for each installment.
Indexed Cost of each installment paid will be Rs 3750 * (CII for the year of sale/ CII for the year of purchase)
Hai Nithin,
I have raised a ticket in ZERODHA SUPPORT on 18.03.2021 bearing no-202103182888611 regarding clarrification on the differnce between the consolidated figure and the sum of individual figures of charges like STT,GST,Ex tran etc. under equity tab in P&L Tax statement in Zerodha. Even after one week,your people are not able to answer me…! Instead they have simply “updated” the complaint ….
Ridiculous…Please look into it
no answer…!!!! hahaha………….
I bought some N100 ETF shares on zerodha via NSE Exchange but NO STT was deducted in the transaction (due to the reasons mentioned https://support.zerodha.com/category/account-opening/charges-at-zerodha/articles/stt-etfs).
Can you please tell if this will mean a higher LTCG tax?
Hello sir,
Is long term exemption is on single stock or entire net profit. For example if I have four shares with profit of 50k each, will all of this be exempted or do I have to pay tax on rest 1 lakh ?
ty
Just for example l want to know If I earn by STCG profit of Rs 900000 in 1 financial year but l don’t transfer money in my bank account and rather keep it in demat account or invest it again then do I have to pay tax. Please reply
Hi Mohit,
I bought some N100 ETF shares on zerodha via NSE Exchange but NO STT was deducted in the transaction (due to the reasons mentioned https://support.zerodha.com/category/account-opening/charges-at-zerodha/articles/stt-etfs).
Can you please tell if this will mean a higher LTCG tax?
ETFs are taxed are as follows:
If it is Long Term (held more than 36 months) – Gains on Gold, Debt or International ETFs will be charged at 20% with indexation benefits.
If it is Short Term (held less than 36 months) – Gains will be charged as per the applicable income tax slab rates.
Hi Ihesh,
Is long term exemption is on single stock or entire net profit. For example if I have four shares with profit of 50k each, will all of this be exempted or do I have to pay tax on rest 1 lakh ?
Exemption of Rs 1 Lacs is on the entire long term capital gains and not individual scrip basis.
Hi Ritam Kumar,
Just for example l want to know If I earn by STCG profit of Rs 900000 in 1 financial year but l don’t transfer money in my bank account and rather keep it in demat account or invest it again then do I have to pay tax. Please reply
Tax is payable irrespective of whether you withdraw the amount or not.
Hi,
Suppose I brought 100 shares of xyz company and sell it after 3 months with 15% profit and now I just reinvest all amount in ABC company and pattern of reinvestment continues month on month. By the end of financial year all the money is still invested in market.
Still I need to pay taxes for the profits I earned throughout the year? If yes how will be the calculations?
Thanks
Ravi
Hi Ravi Kumar,
Suppose I brought 100 shares of xyz company and sell it after 3 months with 15% profit and now I just reinvest all amount in ABC company and pattern of reinvestment continues month on month. By the end of financial year all the money is still invested in market.
Still I need to pay taxes for the profits I earned throughout the year? If yes how will be the calculations?
After setting of all the losses – if you end up in profit at the end of the year; you need to pay tax irrespective whether you have reinvested the amount or not.
Hey Nithin anna,
I’m an Engineering student who doesn’t have any form of income yet.
If I bought a few stocks in Jan 2021 and sold it in say October with profits of say ₹40,000
-What % of taxes will I have to pay?
-Where and how to pay?
( I don’t know how and where to pay taxes yet.)
Thank you Sir!
Respected sir,
I Palash Sarkar having approx. STCG of Rs 3000 for the FY 20-21.How can I pay tax for this profit?
Thanking you,
Palash Sarkar
Hi Mithun Shenoy,
I’m an Engineering student who doesn’t have any form of income yet.
If I bought a few stocks in Jan 2021 and sold it in say October with profits of say ₹40,000
-What % of taxes will I have to pay? – Your holding period is less than 12 Months; you have earned Short Term Capital Gain. STCGs are taxed @ 15%.
-Where and how to pay? – You can pay here…https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp. Select CHALLAN NO./ITNS 280.
Please note there is no tax liability if your overall income is less than ₹2.5Lacs.
Respected sir,
I Palash Sarkar,a salaried person.I have appx. Rs. 3000 STCG in FY 20-21.My salary is more than 2.5 lakh but not taxable after rebate. In this situation shall I be taxable?
Hi Palash Sarkar,
A salaried person.I have appx. Rs. 3000 STCG in FY 20-21.My salary is more than 2.5 lakh but not taxable after rebate. In this situation shall I be taxable?
You will be get rebate of ₹12500 provided if your taxable income is less than 5Lacs.
If your tax liability is more than 12500 including tax on STCG – then you have to pay tax.
Respected sir,
I Palash Sarkar,a salaried person having some STCG .shall I be eligible to get the standard deduction u/s 16A?
Hi Palash Sarkar,
A salaried person having some STCG .shall I be eligible to get the standard deduction u/s 16A?
Yes, if you have salary income – you are eligible for standard deduction of 50K u/s 16.
Hi sir,
In para. 4.4, you said, “STCG is applicable only when the income exceeds the minimum tax slab of Rs 2.5lks/year.”
But in para. 4.5,In given example,you mentioned, “For shares bought on June 1st, Gain = Rs 100 (920-820) x 50 = Rs 5,000/- (STCG and hence 15% tax).”
Hence in example STCG gain of 5000/- does not exceeds limit of 250000/-. Then why this 5000/- is taxable for 15% tax.
Respected sir,
I Palash Sarkar a salaried person and have some STCG from stock market. I have a question that TDS is applicable on salary but I don’t know is it also applicable on STCG?
Hi Palash Sarkar,
I Palash Sarkar a salaried person and have some STCG from stock market. I have a question that TDS is applicable on salary but I don’t know is it also applicable on STCG?
TDS is not applicable on STCG earned by a resident; no TDS will be deducted by the broker.
Short term gain tax
Is deducted during the transaction
When we sell our holdings
Or do we need to pay it in our ITR
Respected sir,
I Palash Sarkar have a demat account on zerodha. There is AMC charges for this account. My question is that can I deduct this AMC charges amount from STCG?
Hi Vipin Chauhan,
Short term gain tax; Is deducted during the transaction when we sell our holdings
Or do we need to pay it in our ITR?
Tax on Short Term Capital Gain needs to pay at the time of filing ITR.
Sir, i have made a short term capital gain 0f 1.5k and i am a student with no any other source of income. so will i have to pay tax on this short term capital gain of 1.5k?
Hi sir,
I Palash Sarkar have an demat account with zerodha. Can I deduct AMC charges from STCG?
Hi Rahul,
i have made a short term capital gain 0f 1.5k and i am a student with no any other source of income. so will i have to pay tax on this short term capital gain of 1.5k?
No need to pay tax as your overall income is less than 2.5 Lacs..
Hi Palash Sarkar,
I Palash Sarkar have an demat account with zerodha. Can I deduct AMC charges from STCG?
Yes, you can deduct AMC charges from STCG.
Hello!
I file tax according to the old income tax regime. I would like to know whether the long term capital gains is when the shares are sold after one year from they are credited to the Demat account? Or from the date when the shares were purchased. ie- Purchase date + 365 days or Credit to demat account + 365 days?
Please clarify at the earliest for me to able able to take the informed decision.
Good Afternoon Nitin, can you please clarify whether i can claim previous years “Long Term Capital Loss” if i opt for new Tax Regime in FY 20-21. Im from India.
Regards
Hi Ajoshi,
I file tax according to the old income tax regime. I would like to know whether the long term capital gains is when the shares are sold after one year from they are credited to the Demat account? Or from the date when the shares were purchased. ie- Purchase date + 365 days or Credit to demat account + 365 days?
Period of Holding should be calculated from Date of Purchase.
Respected sir,
I Palash Sarkar a salaried person have intraday profit 314.75 FY 20-21. In expenditure coloumn of speculative activity which can be included?
Thanking you.
Hi,
Do I have to pay income tax (based on the slab) in addition to LTCG or STCG tax ?
For example, if my STCG is 1lakh, is it the case that 15 % of 1lakh is 15,000 alone needs to be paid or based on income tax slab (let’s say I am in 30% slab) I need to pay another 30k as part of income?
Sir do i have to pay tax on my intraday income if i exceed the limit of 10 lac because zerodha is already cutting various taxes on my income
Hi Gaurav,
Sir do i have to pay tax on my intraday income if i exceed the limit of 10 lac because zerodha is already cutting various taxes on my income
Yes, you need to pay tax on your intraday income as Zerodha is not deducting any tax as per Income Tax Act.
Hi Senthil Kumar,
Do I have to pay income tax (based on the slab) in addition to LTCG or STCG tax ?
For example, if my STCG is 1lakh, is it the case that 15 % of 1lakh is 15,000 alone needs to be paid or based on income tax slab (let’s say I am in 30% slab) I need to pay another 30k as part of income?
You need to pay tax @ applicable rates i.e 10% for LTCG and 15% for STCG irrespective of the slab in which you fall.
Going by your example – you need to pay ONLY Rs 15K tax on Rs 1 Lac STCG. No need to pay additional Rs 30K if you are falling in 30% tax slab.
HI Palash Sarkar,
I Palash Sarkar, a salaried person have intraday profit 314.75 FY 20-21. In expenditure column of speculative activity which can be included?
Intraday profit falls under the head Business Income; you can claim the expenses related to the transaction.
I have 3000 profit from trading in 1 year and i have no other income so do i need to pax tax. I am a jobless person.
Hello,
Gains/Losses
Lets say I Purchase 250 shares of Reliance Today in cash.
After 2 months I see reliance shares are going down. Should I sell the stock and buy on dip or sell the futures instead?
If I sell the stock I get 15% STCG and If I sell a future I get 30% tax correct?
Hi Ameer K A,
I have 3000 profit from trading in 1 year and i have no other income so do i need to pay tax. I am a jobless person.
If your income is less than the basic exemption limit of INR 2.5 Lacs – no need to pay tax.
Hi Madhan,
Lets say I Purchase 250 shares of Reliance Today in cash.
After 2 months I see reliance shares are going down. Should I sell the stock and buy on dip or sell the futures instead? – This is your individual choice.
If I sell the stock I get 15% STCG and If I sell a future I get 30% tax correct? – Yes, 15% tax is applicable on STCG and FNO Incomes are taxed at applicable slab rates.
I have no salary and
If i get STCG of 1,00,000 gow much will i be taxed ?
Hi Yash,
I have no salary and If i get STCG of 1,00,000 how much will i be taxed?
STCG are taxed @ 15% plus 4% cess. However, if your income consists of only STCG and if it less than basic exemption limit i.e 2.5 Lacs; there is no tax liability.
Hi,
Thanks for this module! Really appreciate it.
I had a question about the 1 Lakh LTCG exemption bit. Would it be possible to please elaborate on how it is computed — i.e. is it per-year, per-portfolio, for full portfolio but for that FY or something else? Alternatively, how will I be taxed in the following cases (hypothetical):
A. Bought Equity MF worth 6 lakhs on May 1, 2018. Sold for 12 lakh on May 10, 2020. Would LTCG tax be (6 – 1) * 10% or (6 – 2) * 10% (i.e. 1 L per year)?
B. Bought Equity MF worth 6 lakhs on May 1, 2018. Sold for 8 lakh on May 5, 2019. Bought again, and sold for 12 lakh on May 10, 2020. Would LTCG tax be [(8 – 6) + (12 – 8)] * 10% == (6 – 2) * 10%?
C. Bought 2 Equity MFs each worth 3 lakhs on May 1, 2018. Sold each for 6 lakhs on May 10, 2020. Would LTCG tax be (6 – 1) * 10% or (6 – 2) * 10% (i.e. 1 L per investment)?
Adding further..
D. Bought 2 Equity MFs each worth 3 lakhs, one on March 30, 2018, and another on April 2, 2018. Sold respectively on March 31, 2020, and April 3, 2020. Now since the financial year changed, will it be taxed at (6 – 2) * 10%?
in FY 19-20 I booked a loss of 1.51L and paid 84.17K in charges. But, when I uploaded the transactions file from Zerodha to calculate STCG to carry forward in my ITR, it only considered 1.51L and didn’t include the charges of 84.17K. What could be the reason for this?
Also, there was an intraday loss of 21.23k, it didn’t carry forward it as Speculative loss as well
Sir,
Thank you very much for explaining in very simple words. You made understanding of taxation as piece of cake.
I have not claimed my losses in ITR (STCG+Speculative,non-speculative) for the financial years 2017-18, 2018-19, 2019-20. Will I be able claim this losses for the ITR for the financial year 2020-2021 .
Regards,
Arun
Hi William,
I had a question about the 1 Lakh LTCG exemption bit. Would it be possible to please elaborate on how it is computed — i.e. is it per-year, per-portfolio, for full portfolio but for that FY or something else?
It is 1 Lac exemption for the whole year irrespective of the no of portfolios held.
Alternatively, how will I be taxed in the following cases (hypothetical):
AA] Bought Equity MF worth 6 lakhs on May 1, 2018. Sold for 12 lakh on May 10, 2020. Would LTCG tax be (6 – 1) * 10% or (6 – 2) * 10% (i.e. 1 L per year)?
In FY 2020-21; you will be taxed Rs 6 Lacs – 1 Lac(exemption) @ 10%
BB] Bought Equity MF worth 6 lakhs on May 1, 2018. Sold for 8 lakh on May 5, 2019. Bought again, and sold for 12 lakh on May 10, 2020. Would LTCG tax be [(8 – 6) + (12 – 8)] * 10% == (6 – 2) * 10%?
In FY 2019-20; (8-6) 2 Lacs minus 1 Lac(exemption) @ 10%
In FY 2020-21; (12-8) 4 Lacs minus 1 Lac(exemption) @ 10%
CC] Bought 2 Equity MFs each worth 3 lakhs on May 1, 2018. Sold each for 6 lakhs on May 10, 2020. Would LTCG tax be (6 – 1) * 10% or (6 – 2) * 10% (i.e. 1 L per investment)?
In FY 2020-21; you will taxed 6 Lacs minus 1 Lac(exemption) @ 10%
DD] Bought 2 Equity MFs each worth 3 lakhs, one on March 30, 2018, and another on April 2, 2018. Sold respectively for 6 lacs on March 31, 2020, and April 3, 2020. Now since the financial year changed, will it be taxed at (6 – 2) * 10%?
In FY 2019-20; (6-3) 3 Lacs minus 1 Lac(exemption) @ 10%
In FY 2020-21; (6-3) 3 Lacs minus 1 Lac(exemption) @ 10%
Hope this clarifies.
Hi Arjun Agarwal,
in FY 19-20 I booked a loss of 1.51L and paid 84.17K in charges. But, when I uploaded the transactions file from Zerodha to calculate STCG to carry forward in my ITR, it only considered 1.51L and didn’t include the charges of 84.17K. What could be the reason for this? – STT is not an allowable expenditure while computing STCG. That could be a reason. However other charges are allowable. You can file a revised return before 31st May 2021; if you have filed your original return before the due date.
Also, there was an intraday loss of 21.23k, it didn’t carry forward it as Speculative loss as well? – As said above, If you have filed your income tax return within the due date – you can file a revised return as the due dates for filing the revised return have been extended till 31st May 2021.
Sir, If my stock rises 100% from my buying price and i sold 50% quantity i.e. I removed my invested amount and let the profit run for long term. Do I need to give tax (STCG) on the amount I retrieved ?
Hello,
I have a question.
My father had purchased 100 shares of XYZ company in physical form 20 years back. Recently, say 5 years ago, he converted them into demat form.
Now today he wishes to sell all his 100 XYZ shares through online trading.
So, how would his LTCG be calculated? How do I know at what price did he purchase them 20 years back?
Thanks
Hi Neetesh Jain,
Sir, If my stock rises 100% from my buying price and i sold 50% quantity i.e. I removed my invested amount and let the profit run for long term. Do I need to give tax (STCG) on the amount I retrieved ?
Yes, you need to pay tax on STCG earned irrespective of whether you reinvest it or not.
Sir,
If I sell share ( short term capital gains) & the amount is not withdraw to bank account from the demat account. The amount is reinvested in buying share. DO I NEED TO PAY TAX.
Hi Rohit,
If I sell share ( short term capital gains) & the amount is not withdraw to bank account from the demat account. The amount is reinvested in buying share. DO I NEED TO PAY TAX?
Yes, you need to pay tax irrespective of whether you reinvest or not.
Also, you need to pay tax even if you don’t withdraw from the demat account.
while computing income tax payable, Are we allowed to adjust Demat charges against STCG equity
Hi Varun P,
While computing income tax payable, are we allowed to adjust Demat charges against STCG equity?
Yes, you can adjust demat charges against STCG.
If I define myself as an investor… can’t I touch intraday and F&O at all ??
I generally take delivery but sometimes square off my position the same day if profits are good… What am I- Invetor or Trader?? And which ITR form is to be used in this case(Capital gain+Intraday profit) ?
Hi George,
If I define myself as an investor… can’t I touch intraday and F&O at all ?? – Yes, you can do Intraday and FNO. If you define yourself as Trader – all your gains will be treated as Business Income. In case of Investor – it will be treated as gains will be treated as STCG and LTCG.
I generally take delivery but sometimes square off my position the same day if profits are good… What am I – Investor or Trader??
Intraday gains will be always treated as speculative income irrespective of you being a Investor or Trader.
And which ITR form is to be used in this case(Capital gain+Intraday profit) ? – Applicable ITR form is ITR-3.
I have an interest income of 25k, Options loss of -91k, Dividend income of 90K, Equity Short term capital gain of 7Lacs. Will I be able to include options losses while calculating STCG ? ALso will I be able to take benefit of 2.5Lac exemption ?
Hi AK,
Interest income of 25k,
Options loss of -91k,
Dividend income of 90K,
Equity Short term capital gain of 7Lacs.
AA] Will I be able to include options losses while calculating STCG ? – Yes, Options loss falls under the head PGBP/Business Income; As per Income tax provisions, current year business loss can be set off against all other heads except Salary.
So, you can set off option loss of ₹91K with STCG of ₹7Lacs.
BB] Also will I be able to take benefit of 2.5Lac exemption? – Yes, you can take the benefit of basic exemption of 2.5Lacs.
I have no salary income and if i earned 3 lakh short term capital gain then do i need to pay 15% tax on stcg profit or not ?
Hi Kuldeep Singh,
I have no salary income and if i earned 3 lakh short term capital gain then do i need to pay 15% tax on stcg profit or not ?
Tax applicable on STCG is 15%. If your overall income is 3 Lacs; upto 2.5 Lacs – there is no tax payable and on balance 50K you need to pay 15% tax i.e 7.5K You can claim rebate u/s 87A upto 12.5K.
So, there will be no tax payable.
Suppose
My total income is 2 lakh
Out of which 150000 is salary
STCG is 30000
Intraday is 20000
Should i pay any tax??
Shoul i pay advance tax?
Hi,
Just to clarify, SEBI charges, Stamp Duty, Transaction charges can be deducted while calculating STCG, right? How about the GST paid on the brokerage fees? When I see the STCG report from my brokerage firm, the STCG shows on simply the the Sell Value – Buy Value (and the sell and buy values shown are net of brokerage, but not net of brokerage + GST on brokerage).
Hi Nithin
Is it necessary to file ITR if total income is less than 2.5lks including STCG/LTCG/INTRADAY and other incomes?…
Hi Febin,
Suppose my total income is 2 lakh
Out of which 150000 is salary; STCG is 30000; Intraday is 20000
Should i pay any tax?? Should i pay advance tax?
No need to pay taxes as your overall income is less than the basic exemption limit of ₹2.5 Lacs.
Since, the tax liability is NIL – no need to pay advance tax.
Hi Ishaan,
Just to clarify, SEBI charges, Stamp Duty, Transaction charges can be deducted while calculating STCG, right? How about the GST paid on the brokerage fees? When I see the STCG report from my brokerage firm, the STCG shows on simply the the Sell Value – Buy Value (and the sell and buy values shown are net of brokerage, but not net of brokerage + GST on brokerage).
Yes, SEBI charges, Stamp Duty, Transaction charges and Brokerage including GST can be deducted while calculating STCG.
Basically – you can claim/deduct all the expenses relating to the sale except STT to arrive STCG.
Hi Charanjit Singh,
Is it necessary to file ITR if total income is less than 2.5lks including STCG/LTCG/INTRADAY and other incomes?
Filing of ITR is OPTIONAL if your total income before considering chapter VI-A deductions like 80C, 80D, 80TTA etc., and capital gain deductions under Section 54/54B/54D/54EC/54F etc., is less than the basic exemption limit.
Kartik,
Can we deduct add debit/ credit charges to the cost also while paying tax on STCG
Hi team,
I have a quick doubt regarding taxation
Do we have to pay IT (LTCG or STCG) on the profit booked on a trade or on the amount that is withdrawn to your bank account?
Dear Nithin, I come under 30% tax slab by virtue of my salary. My total income is, say X. I booked STCG of 90k, Intraday profit of 99k and LTCG of 200k; all in equity. What tax should I pay category wise? Should I fill the income tax form stating equity as an investment or business? Please advice.
Hi, what is the tax rate on dividends from share (listed companies in India) for Resident Indians ?
Hi Nooruddin,
Can we deduct add debit/ credit charges to the cost also while paying tax on STCG?
You can deduct all the expenses relating to sale except STT while calculating STCG.
HI Ronak Madhnani,
Do we have to pay IT (LTCG or STCG) on the profit booked on a trade or on the amount that is withdrawn to your bank account?
Tax on LTCG or STGC is payable on profit booked. Tax is payable irrespective of whether you withdraw or not.
Hi Sanjeev,
I come under 30% tax slab by virtue of my salary. My total income is, say X. I booked STCG of 90k, Intraday profit of 99k and LTCG of 200k; all in equity. What tax should I pay category wise? Should I fill the income tax form stating equity as an investment or business? Please advice.
STCG is taxed @ 15%, LTCG in excess of 1 Lac is booked @ 10%.
Intraday profit is taxed as per the tax slab applicable to you.
Use this for tax calculation..https://www.incometaxindia.gov.in/pages/tools/income-tax-calculator.aspx
It is best to declare as business income if done frequently.
Hi Brajesh,
Hi, what is the tax rate on dividends from share (listed companies in India) for Resident Indians ?
With effect from 1st April 2020 – Dividend incomes are taxable as per the applicable slab rates.
Will 1. DP and 2. Call & Charges go under cost of acquisition for an investor or we can’t claim that as cost? Similar to STT
Hi Prince,
Will 1. DP and 2. Call & Charges go under cost of acquisition for an investor or we can’t claim that as cost? Similar to STT
You can claim it as expenses related to sale.
Suppose I earned 1.1 lakh rupee less than one year from selling of shares. And I didn’t filled income tax in past(because I don’t have any other source of income) . But as per tax slab upto 2.5 lakh tax will be zero. So if I shall earned upto 2.5 lakh within one year from stock market. My tax will be zero or levied by 15%? Please reply sir
Hi Rahul Gupta,
Suppose I earned 1.1 lakh rupee less than one year from selling of shares. And I didn’t filled income tax in past(because I don’t have any other source of income) . But as per tax slab upto 2.5 lakh tax will be zero. So if I shall earned upto 2.5 lakh within one year from stock market. My tax will be zero or levied by 15%? Please reply sir
No need to pay tax if your overall income is less than ₹2.5 Lacs.
I am normally buying and selling stocks by keeping them for couple days. I know that this type of activity comes under STCG.
There some buy and sell actions, which I have completed on the same day. I am not doing any trades in futures and options. I request you to clarify whether this type of transaction comes under STCG or Trading.
I have noticed that from AY 2021-22, ITR-3 is not allowed for this type of purpose. New IT portal suggest that I have use ITR-2. I don’t where I can update intraday data in ITR-2. I am also having some losses from previous years.
Request to clarify.
Hi Panchami,
I am normally buying and selling stocks by keeping them for couple days. I know that this type of activity comes under STCG.
There some buy and sell actions, which I have completed on the same day. I am not doing any trades in futures and options. I request you to clarify whether this type of transaction comes under STCG or Trading.
I have noticed that from AY 2021-22, ITR-3 is not allowed for this type of purpose. New IT portal suggest that I have use ITR-2. I don’t where I can update intraday data in ITR-2. I am also having some losses from previous years.
If you have bought and sold the scrips on the same day – it is known as Intraday. Gains from Intraday are known as speculative gains.
You can declare the speculative gains under Schedule PL in ITR-3.
With regards to previous year losses – update the same under Schedule CFL. Utility takes care off the setting off previous year losses.
Hello Mr Nitin,
My intraday profit for the year 2020 is Rs 12lakhs. My total sales value under Short term CG is Rs 30 crores. I am currently not in employment. Do I need tax audit ?
Please clarify.
Thank you
If I have shares of two different companies for more than 1 year, now I sold them. From first company’s share I made a profit of 1,60,000 and from second I made a profit of 1,70,000. So LTCG tax will be separately for two different transactions, means paying tax 10% each on 60K and 70K or combined 10% on (1,60,000 + 1,70,000 – 1,00,000)
These taxes are applied on the amount that is transferred to bank account? For instance, with Zerodha, if investment is done using Coin and intraday trading is done using same account and I make ₹10000 profit from intraday trading and ₹100000 short term profit from redemption of my mutual funds, however, transfer only ₹5000 to my bank account. How would I be taxed?
Hi i just made a sale of units of equity mf worth 10000 .. The unrealized profit was about 3755 .. Entire amount of 13755 got transferred to my account with deduction of stcg…. I just want to know how to pay my stcg… Is there a platform to pay… Or will it get deducted yoy…
Hi Akash,
Hi i just made a sale of units of equity mf worth 10000 .. The unrealized profit was about 3755 .. Entire amount of 13755 got transferred to my account with deduction of stcg…. I just want to know how to pay my stcg… Is there a platform to pay… Or will it get deducted yoy…
Tax is to be paid by the individual.
Instructions for payment of tax are as below:
A] Go to this link https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
B] Click on “CHALLAN NO./ITNS 280”
C] Select 0021 – Income Tax (Other than Companies) and 300 – Self Assessment Tax [ 100 – if you are paying advance tax ]
D] Input you PAN and Select the relevant Assessment Year
E] Select Banking Channel and make payment.
Hi Prabhat Kumar N,
These taxes are applied on the amount that is transferred to bank account? For instance, with Zerodha, if investment is done using Coin and intraday trading is done using same account and I make ₹10000 profit from intraday trading and ₹100000 short term profit from redemption of my mutual funds, however, transfer only ₹5000 to my bank account. How would I be taxed?
Tax is payable on both 10K Intraday Profit and as well as 100K STCG.
Tax is payable irrespective of whether you have withdraw the profit or not.
HI Abinash Mishra,
If I have shares of two different companies for more than 1 year, now I sold them. From first company’s share I made a profit of 1,60,000 and from second I made a profit of 1,70,000. So LTCG tax will be separately for two different transactions, means paying tax 10% each on 60K and 70K or combined 10% on (1,60,000 + 1,70,000 – 1,00,000)
LTCG will be payable on combined 10% on (1,60,000 + 1,70,000 – 1,00,000).
Hi Sam,
My intraday profit for the year 2020 is Rs 12lakhs. My total sales value under Short term CG is Rs 30 crores. I am currently not in employment. Do I need tax audit ?
If you are treating STCG as Business Income, then tax audit is applicable; reason being turnover is more than threshold limit of 10 Crores.
If you are NOT treating STCG as Business Income, then tax audit is NOT applicable; provided turnover from speculative activity is less than 10 Crores.
Further, audit is required/applicable
AA] if your turnover crosses the threshold limit in the current year. (FY 2020-21) or;
BB] if you are opting OUT of presumptive scheme in the current year(FY 2020-21) (meaning you had opted for presumptive scheme in the previous year) and your net FNO Income in the current year is less than 6%(meaning either in loss or in profits less than 6%) but total income is greater than basic exemption limit; then tax audit is applicable.
I am bit confused in two things
First if in. F.y 20-21 an individual salary income is below 4,00,000 and he gain stcg of about 30000 total income is 4,30,000
Is he liable to pay any tax, as upto 5,00,000 you are not able to pay any tax because of the rebate
Second – is earning from stcg should be separated from your general income tax slab,
So my question is
Whether a person is earing 3,00,000 or above but less than 5,00,000 through his salary income
If he gain any stcg in the that year than he have to file itr-2 as it is separated from above salary income
Hi Sahil,
AA] In Fy 20-21 an individual salary income is below 4,00,000 and he gain stcg of about 30000 total income is 4,30,000
Is he liable to pay any tax, as upto 5,00,000 you are not able to pay any tax because of the rebate.
Please note that max rebate amount u/s 87A is only ₹12500.
Not in all cases; there is no tax if one’s income is less than ₹5Lacs
Suppose, if your income is 5 Lacs and it consists only STCG[taxable @ 15%]; then there is no tax payable upto ₹2.5 Lacs and on balance there is taxable of ₹37500. Applying 87A, you will get rebate of ₹12500 and you need to pay balance tax of ₹25000.
In the given example of ₹4.3 Lacs Income consisting of 30K STCG and balance income taxable @ normal rates – there is NO tax payable.
BB] – is earning from stcg should be separated from your general income tax slab,
So my question is
Whether a person is earing 3,00,000 or above but less than 5,00,000 through his salary income
If he gain any stcg in the that year than he have to file itr-2 as it is separated from above salary income
Yes, you have to file ITR-2 if you have STCG and Salary Income despite overall income being less than ₹5Lacs.
STCG is not separated from general income tax slabs.
Hi,
Consider this example, i had bought some shares worth 10,00,000 and made a profit of 1,00,000 ( Swing trade so STCG ),within the year and i did this with the help of my friend to whom i paid 30,000 as consulting fees and he has also given me a bill for that.
Now, can i claim with that bill of 30,000 and pay only 15% tax ( STCG ) on the balance 70,000 which i’m left with ?
Hi Praveen,
Consider this example, i had bought some shares worth 10,00,000 and made a profit of 1,00,000 ( Swing trade so STCG ),within the year and i did this with the help of my friend to whom i paid 30,000 as consulting fees and he has also given me a bill for that.
Now, can i claim with that bill of 30,000 and pay only 15% tax ( STCG ) on the balance 70,000 which i’m left with?
You can deduct/claim all the expenses relating to sale/transfer against STCG except STT and cost of acquisition/improvement as per Income Tax Act.
The said consulting fees of ₹30K does not fall neither under the category of transfer charges nor under the category of cost of acquisition/improvement. Hence cannot be claimed. You need to pay tax @ 15% on ₹ 1 Lacs.
Hello,
I am a Freelancer and my Gross Receipts for FY20-21 are ₹680,000. I also made an STCG of ₹408 and a Speculation income of ₹0.50 because I was just trying out the Zerodha App. I want to opt for Presumptive Taxation, can I do so? As I cannot see the Capital Gains column in ITR 4. And I also earned some interest in Savings Account. But my doubt is only about saving tax from Presumptive taxation but unable to do so because of STCG. Please guide me on this.
Thank You
Hi Himanshu Garg,
I am a Freelancer and my Gross Receipts for FY20-21 are ₹680,000. I also made an STCG of ₹408 and a Speculation income of ₹0.50 because I was just trying out the Zerodha App. I want to opt for Presumptive Taxation, can I do so? As I cannot see the Capital Gains column in ITR 4. And I also earned some interest in Savings Account. But my doubt is only about saving tax from Presumptive taxation but unable to do so because of STCG. Please guide me on this.
You can still get the benefit of presumptive taxation scheme by filing ITR-3.
Declare your income under Schedule PL – Item#62.
if i made 50 Lakh profit in STCG by buying & selling of Share.
how much tax i need to pay.
Flat 15% + 4% Cess or As per Tax Slab
please clear my doubt.
Hi Adil,
if i made 50 Lakh profit in STCG by buying & selling of Share.
how much tax i need to pay. Flat 15% + 4% Cess or As per Tax Slab
Tax payable on STCG is @ 15%.
You need to pay tax @ 15% and not as per applicable slab if your income consists of only STCG.
I believe this article needs to be updated big time… Need corrections based on grand fathering clause for LTCG and the calculations based on it. LTCG based on Fair Market Value as on 31-01-2018
Sir, Whether interest paid on loan taken for investment in equity can be set off against short term capital gain ?
Sir, As I am salried and do have loss and gains from shares I need to file ITR3, But it seems that on Income tax portal ITR3 form is not available.
Is this form not made avialabel for filing yet??
Suppose I have maded a profit of 30 lakh in STCG so do I have to pay 15 percentage tax or 30 percentage as per the tax slab ?
Hi Sumit,
Suppose I have maded a profit of 30 lakh in STCG so do I have to pay 15 percentage tax or 30 percentage as per the tax slab ?
You have pay tax @ 15%.
In the provided example considering indexation, LTCG = Rs 300,000 – Rs 205128.21 = Rs 94871.79/-, which comes below 1 lakh after indexation and would it be taxable considering the clause “0% for first Rs 1lk”. or indexation is not considered in this scenario?
Hi Sujith,
In the provided example considering indexation, LTCG = Rs 300,000 – Rs 205128.21 = Rs 94871.79/-, which comes below 1 lakh after indexation and would it be taxable considering the clause “0% for first Rs 1lk” or indexation is not considered in this scenario?
1 Lac exemption is not applicable in case of sale of unlisted shares where indexation is applied.
1 Lac exemption is applicable in case of sale of listed shares where STT is paid.
Is the STCG profit shows on Tax P&L report Net taxable Profit after losses and charges deducted. Or do we have to show the loss and charges separately.
I have a few doubts:
Is this chapter up to date and relevant in Q2 2021? If not, what has changed?
Suppose my salary is 4LPA and my STCG is at 50k, do I need to pay the STCG on 50k + income tax on 2L (1.5L above the 2.5L slab + Stcg)?
Thanks a TON in advance!
Me a pensioner.
Loss on FNO 12 lac
STCG 11.50 lac
LTCG 3 Lac
Not pd any adv tax.
Wish to Show all above as Buisness income.
Comment pl If I Could.
Hi, Can I subtract DP charges from the gains?
Your gains are after paying for the DP charges.
Can I set off the gains of bank interest on FDs and the dividends of current year against the FNO losees (reported as business) of the last year?
Can I set off the STCG gains of current year against the FNO losses of last year (FNO last year reported as business)
I want to know, while selling a stock either short term or long term and if the capital gain earned is taxable at tax slabs, so who pays the tax or how tax is deducted. Does Zerodha recovers the tax and pays to govt or individual files the return later and pays it at the time of filing return.
Regards.
Kindly advise when a Capital gain Account With PSU bank has to be opened for Long term gain from house porpoerty. Especially when Date of filing of return is getting extended )( Section 54 )
HI Naveen,
I want to know, while selling a stock either short term or long term and if the capital gain earned is taxable at tax slabs, so who pays the tax or how tax is deducted. Does Zerodha recovers the tax and pays to govt or individual files the return later and pays it at the time of filing return?
Tax needs to be paid by the individual.
Zerodha does not recover any tax on STCG, Intraday Gains and FNO Incomes.
Hi Jitendra S Gandhi,
Kindly advise when a Capital gain Account With PSU bank has to be opened for Long term gain from house property.
Especially when Date of filing of return is getting extended )(Section 54)
Capital Gains should be deposited in CGAS account before the due date of filing return.
The extended date will be applicable; if due dates are extended.
Dear Mr Nitin
Do we need to pay extra tax on any stock sold within a year or zerodha deduct the taxes already for any investment sold off within a year?
If a self-employed/profession Having income under 2.5 lakh and if make some capital gain around 25k how does this gonna add up and how tax will be applied?
I have purchased stocks in 2015. And accumulated over the period.
All holding are more than 365 days.Now i gifted these stocks to my spouse who have zerodha account.
If stocks are sold from new account how will capital gain tax be calculated?
Transfer/gift stock to spouse will keep stock purchase date as old one or date in which transfer happen.
Hello Nitin sir,
while determining short term capitals gains are the amounts deducted towards exchange transaction charges and SEBI turnover fees from the sale proceeds of shares(by the brokerage house) eligible for being treated as exempt-expenses or should they be added back to the net amount paid to the seller?
Thanks and regards.
The tax rules have changed this needs to be updated
IN THIS CHAPTER FO R TAX ON DEBT FUND YOU SAID IT WOULD BE(TAX) 20% WITOUT INDEXATION ,I THINK IT SHOULD BE 10 % WITHOUT INDEXATION.
In section 80c, there is ELSS and Mutual Fund for examption seperately,
My question is if i invest in BLUECHIP Mutual Fund(instead of ELSS), can i get tax examption for 1.5lac according to 80c?
Hi Nitin,
Is there a definite date by which we need to pay the STCG or is it done how other Advance taxes are paid (by 15th June, 15th Sept, 15th Dec or 15th Mar) based on when the shares are sold. Also, is the net STCG 17.16% (adding surcharge and cess) if income is below 50 Lks per year?
Regards,
Sumanth
Hi Nithin
Is the tax on STCG is always flat 15% even if I come under the 30% tax slab?
Hi Samik Mehta,
Is the tax on STCG is always flat 15% even if I come under the 30% tax slab?
Tax on STCG is always flat 15% even though your overall income crosses 10 Lacs and falls under 30%.
Hi Sumanth Rao,
Is there a definite date by which we need to pay the STCG or is it done how other Advance taxes are paid (by 15th June, 15th Sept, 15th Dec or 15th Mar) based on when the shares are sold. Also, is the net STCG 17.16% (adding surcharge and cess) if income is below 50 Lks per year?
Tax is usually paid at the time of filing income tax return.
Advance Tax is paid every quarter (by 15th June, 15th Sept, 15th Dec or 15th Mar) if tax liability is more than 10K; in order to avoid Interest.
Suggest you to advance tax every quarter.
Also, for income less than 50 Lacs; no surcharge shall apply. Total Tax will be 15.6% (15% plus 4% Cess)
Thank you so much for the content. Please update the taxation details for the current AY so that many of us can benefit from it. If you can give me a chance I can help too since I am a semi-qualified CA as well as an investor.
For FIFO follows if there is purchase /sale trade in MTF /Margin positions. This transaction scripts shares if available in demat holding for long period will be square up first or what.pls explain.
I have accounts in both zerodha and notional. While zerodha gives separately capital gains and intraday trading,. Motilal gives combined statement. How to segregate speculate income or loss
I
If our gains is less than 2.5 lakhs and also investment is less than 2.5 lakhs do we need to declare IT
Hi John,
If our gains is less than 2.5 lakhs and also investment is less than 2.5 lakhs do we need to declare IT
Filing of Return is optional if your overall income is less than 2.5 Lacs. However, suggest you to file.
If a Person makes 5 Crores per Annum in Trading(Short term),
Which is only one income source he have, what is the tax slab applicable to that person.
Does he is Still, only have to pay Stcg 15%+Surcharge37% +Cess4?
30%+surcharge 37%+Cess4%?
Hi Anvar,
If a Person makes 5 Crores per Annum in Trading(Short term),
Which is only one income source he have, what is the tax slab applicable to that person.
Does he is Still, only have to pay Stcg 15%+Surcharge37% +Cess4?
30%+surcharge 37%+Cess4%?
No, for Capital Gains and Dividend Income – the surcharge is capped @ 15%.
Tax on STCG for more than 5 Cr will be 15%+15% Surcharge+4% Cess.
Thank You So Much Sir, For Fast Reply
If I do a OFF MARKET DEBIT TRANSACTION from one demat account to another DEMAT ACCOUNT of mine, then should I have to pay LTCG or any kind of tax ?
If I do a OFF MARKET DEBIT TRANSACTION from one demat account to another DEMAT ACCOUNT of mine, then should I have to pay LTCG or any kind of tax for this transaction?
Hi Nithin,
Could you please help me with tax implications (STCG/LTCG) for the stocks that went through a corporate action (spinoff/merger/demerger) eg Guj. Borosil?
If I have 1,00,000/- profit in stocks and 1,00,000/- in MFs. If I sell both for LTCG. Do I get benefit of 0% tax upto 1 Lac in both?
Response to Laxman Kandalgaonkar: LTCG is considered on a gross basis for taxation basis, i.e, LTCG from both equity oriented mutual funds and stocks will be considered together. Hence, in your case, out of the total 2lac gain, tax of 10% will be on 1,00,000 (Gain upto 1lac is exempt from LTCG tax).
Response to Ronak’s question – Hi team,
I have a quick doubt regarding taxation
Do we have to pay IT (LTCG or STCG) on the profit booked on a trade or on the amount that is withdrawn to your bank account?
Answer: Booking of profits attract capital gains tax. Booking of profits means you exit/sell the position. You may or may not choose to then transfer the money to your bank account but this does not deny the fact that you have booked the profits. Short answer: All gains are applicable to STCG/LTCG when it is realized, i.e, you have sold the position and does not matter if the cash has then been transferred to your account.
Hi,
You mentioned STCG of 15% is levied if the transactions (buy/sells) are executed on recognized stock exchanges. Is it applicable even if the total income doesn’t exceed the minimum tax slab of Rs 2.5lks/year ?
Response to Venkata – If you don’t fall in any tax bracket (less than 2.5 lacs), then the STCG tax will not be applicable. If STCG was already paid in the form of advance tax, while filing your returns you can claim a refund.
Hi, one follow-up question, if answer to above it NO, do I still need to do Tax filing?
I have questions related to 15% short term capital gains tax
Suppose I buy a stock ‘A’ at 1000 and sell it at 1100, so I have profit of 100 rupees, now using that 1100 rupee I buy a stock ‘B’ and I am holding that stock.
Do I still have to pay the tax on 100 rupees
Response to Venkata – Ideally, the filing of returns is not mandatory if one does not fall in the tax bracket. However, as Karthik mentioned, filing of returns is our way of declaring to the government our income. In such a scenario (especially when capital gains are involved), I would advise one to still go ahead and file the returns if possible. Do remember, in order to claim any refunds, you will need to file the returns first.
Response to Baharul – Yes, the 15% STCG tax will be applicable. Remember, LTCG/STCG taxes are applicable on all ‘realized’ profits. Realized profits are the ones that have been booked. It does not matter if the gain has subsequently been withdrawn to the bank account or reinvested.
I am looking at structuring my Long term trades as LTCG but the short term equity delivery based trades as Business Income. I don’t have any intraday trades or F&O trades.
I do have other business income and I was wondering if I Can I use the losses from short term trade to offset other business income??
In the advance tax part you say that it’s best to pay that is made up till now but what if suppose I paid tax on stcg made up till 15 June then I book more profits .. then how much am I suppose to pay on 15 sept … 45% of total stcg booked or 45% on the stcg booked after 15 June and before 15 sept
Hi Nitin,
As I am finding it difficult to gather information related to scrips of Mutual Fund and I don’t wish to avail the benefit of Grandfathering provision for the Stocks/MF bought on/before 31 January, 2021. Therefore, is it possible to file the LTCG of such equity (i.e., bought on/before 31.01.2018) in the place available for equity bought after 31 January, 2021 in a consolidated form. Please assist.
Thanks and regards
Hi Nitin,
I have a zerodha demat account for almost an year. I have one question in my mind from several day a no one clear my doubt in this.
Suppose I purchase a 1 lac of stock and every year that stock increase with a 50 percent of profit but I do not book profit. After 5 yrs I sold them so 1lac principle and 2.5lac profit(50k each yr). So would I be applicable for tax or not as I have yearly gained 50K.
How is capital gain calculated on shares transferred off market? Which Date is taken as date of acquisition?
Sir i want to know that if my STCG is less then 2.5 lakh and i have no other income. Means in entire financial year i have only this income. Do i need to pay any tax on that gains. And if my income from STCG EXCEED above 2.5 lakh but below 5 lakh then do i have to pay 5% of 2.5 lakh. One more question can a trader also save under 80C
Hi ,
I am salaried employee with 5LPA and this year I got LTCG of 6L by selling TATA Elexsi stocks.
So i need to pay LTCG tax as 10%of (6-1)L. Correct ?
Suppose if I paid the LTCG as per the above logic as 50k, then do I need to add the profit 4.5L to my total income ?
So that my total income for this year will become 9.5L(5L+4.5L) and tax slab will change ?
Please advise me.
Hi Ram,
I am salaried employee with 5LPA and this year I got LTCG of 6L by selling TATA Elxsi stocks.
So i need to pay LTCG tax as 10%of (6-1)L. Correct?
Yes; you need to pay 10% tax on 5 Lacs. Rs 1 Lac is exempted.
Suppose if I paid the LTCG as per the above logic as 50k, then do I need to add the profit 4.5L to my total income?
So that my total income for this year will become 9.5L(5L+4.5L) and tax slab will change ?
Yes; 6 Lacs will be added to your total income and your tax slab will change.
If there is any income like Income from Other Sources – then it will be taxed @ 10%; 15% and 20% depending on your regime.
If I have earned profit of rs. 100000 and after brokerage and everything my net realized profit is 50000. I have to pay tax on 50000 or 100000?
Hi Divya,
If I have earned profit of Rs 100000 and after brokerage and everything my net realized profit is 50000. I have to pay tax on 50000 or 100000?
For STCG, you can claim all the expenses relating to sale except STT.
You need to pay tax on net STCG. In your case 50K.
Hi, I have made some STCG in a few stock in FY22. I have also made some STCG in Paytm. I want to hold onto Paytm shares for long term. Will I be able to book capital loss in Paytm if I sell and buy on the same day, to offset againt the STCG I made else where? – or do I have to wait for T+2 to buy the shares back?
Sir if I got 4.5 lakhs profit by selling shares within one year. I don’t have any other income source. So my total income for the financial year is 4.5 lakhs only. Can I claim the 2.5 lakh deduction while filling tax and also as income less than 5 lakhs can i file zero tax or should I pay 15percentage flat tax on whole 4.5 lakh.
Hi
Hi, I have made some STCG in a few stock in FY22. I have also made some STCG in Paytm.
I want to hold onto Paytm shares for long term.
Will I be able to book capital loss in Paytm if I sell and buy on the same day, to offset againt the STCG I made else where? – or do I have to wait for T+2 to buy the shares back?
If you sell the existing shares and buy the same in the same day – it amounts to Intraday and you cannot set off with STCG made elsewhere.
Hi Chaithanyan,
Sir if I got 4.5 lakhs profit by selling shares within one year. I don’t have any other income source. So my total income for the financial year is 4.5 lakhs only. Can I claim the 2.5 lakh deduction while filling tax and also as income less than 5 lakhs can i file zero tax or should I pay 15percentage flat tax on whole 4.5 lakh.
Yes, you can claim the benefit of 2.5Lacs. You cannot file Zero tax return because tax applicable on the balance 2 Lacs is 30K.
However; you can claim rebate u/s 87A upto 12.5K. You need to pay tax of Rs 17.5K + Cess applicable.
I have bought share of different companies and told them in 3-4 month time and made 15.20 k as realised profit ( +14.23 K as net realised profit)
But in Future and Option had loss of -6.35K (Net realised Loss is -12.32K)
What will be my net profit and on what amout will I have to pay taxes. ??
Hi Mohit Ashwani,
I have bought share of different companies and sold them in 3-4 month time and made 15.20 k as realized profit ( +14.23 K as net realized profit)
But in Future and Option had loss of -6.35K (Net realized Loss is -12.32K)
What will be my net profit and on what amount will I have to pay taxes??
You can set off the current FNO Loss of 12.32K with Short Term Capital Gains and pay the balance tax on 1.91K.
Tax will 15%(+4% Cess) on 1.91K
All these rules rules are they valid even now in FY 20- -21? If I sell off market transferred shares from my joint account where my wife is the first owner will I get the benefit of LTCG if sold within one month after transfer? The share were being held more than 5 years in joint account and she is not a tax payee.
HOW DID THE SHORT TERM GAIN APPLY AFTER TRANSFERRING THE PROFIT TO MY BANK ACCOUNT OR IT WILL BE APPLICABLE EVEN IF I KEEP THE PROFIT IN MY TRADING ACCOUNT AND BUY ANOTHER SHARE AGAIN?
HI Sayyed Mehmood,
HOW DID THE SHORT TERM GAIN APPLY AFTER TRANSFERRING THE PROFIT TO MY BANK ACCOUNT OR IT WILL BE APPLICABLE EVEN IF I KEEP THE PROFIT IN MY TRADING ACCOUNT AND BUY ANOTHER SHARE AGAIN?
Irrespective of whether you withdraw profit or not (once realized) – you need to pay tax on capital gains.
When is your capital gain becomes taxable?
As soon as you sell the stock with gains
Or until you bring that profit out in your bank account?
Hi BSN,
When is your capital gain becomes taxable?
As soon as you sell the stock with gains
Or until you bring that profit out in your bank account?
It is taxable as your as you have earned it.
Irrespective of whether you withdraw or not – it is taxable as soon as you book it.
Hi Nithin,
In section 4.4, it is mentioned that STCG is applicable only if annual income exceeds 2.5 LPA. Kindly please help me understand what to do in each of the following cases:
1. Suppose I have a business and no salary income, and my combined income from my business and delivery based equity trading (and all other income sources) doesn’t exceed 2.5 LPA, am I exempted from paying any STCG? (Assuming I am going to show my income from delivery based equity trading as STCG and not non-speculative business income.) Also, which ITR from do I use?
2. Suppose I have only business income and no other salary income and it doesn’t exceed 2.5 LPA, and I have losses in the current FY from delivery based equity trading, which exceeds the income from my business, is it beneficial to show my trading losses as STCG losses or business income losses? Also, which ITR from do I use?
3. Suppose I have only losses from my business and also from delivery based equity trading, and I have no other salary income, is it beneficial to show all my losses as non-speculative business losses or separate them into business losses and STCG losses? Also, which ITR from do I use?
4. A general question, does business income also get taxed as per income tax slabs for salaried employees? Or there’s a separate taxing system for business income? (I have a partnership firm)
If the above questions are too specific and needs more information as to how the income tax was filed in the previous years, I had a corporate job in 2017 and 2018, that’s when I started earning and paying income tax. I quit my job in the ending of 2018 and started a partnership firm in the middle of 2019. I have no business income or other salaried income since then (and had only losses each year which I didn’t show or carry forward due to being unaware) and I started stock trading in only delivery based equity segment after April 2021 and all I have are losses. Hoping to get a response to all my questions above. Thanking you from the bottom of my heavy heart in advance. Please help :’)
I have STCG, lets say of 1 lakhs but have not transferred this amount from my zerodha wallet to my bank account. I continue investing this amount into more stocks. Will I still be liable to pay the tax and declare it in my ITR or should it only be after i transfer the gains into my bank account?
suppose, i have a loss of 70000 in future and option intraday trading in financial year 2019-2020 and loss of 20000 in commodity intraday trading in the same financial year. Now i have profit of 300000 in intraday commodity trading in the financial year of 2020-21, then what will be my taxable amount (If i am a sallaried person)
Whether TDS applicable on brokerage income..
Query:
1. Have a profit of ₹25,000 as short term capital gains (15% of profit amount) in the current financial year.
2. Have sold a scrip at the loss of ₹25,000 in the same financial year.
3. What would be my Capital Gains tax in this scenario?
a) No tax since I can net off my losses incurred against the 15% of the profit accrued
b) Is there any cap on the amount should I need to consider the loss amount
c Short term capital losses can be set off only on Long term capital Gains
d) Short term capital losses can be set off on Short term capital Gains
While calculating tax from tax p&l statement in console, should I deduct the total charges and other credit/debit from short term capital gains? Suppose my Short term capital gains is 20k, other charges is 1k, and other credit/debit is 1.5k. How much tax should I pay?
Reiterating again that if investing/trading on the markets is the only source of income, and even if you are trading with moderate frequency, it is best to classify income from all your equity trades as a business income instead of capital gains.
here in yes investing/trading is the only income i get..
why we should consider delivery based trades as bussiness income instead of capital gains.
asuume, a person is in 10% tax slab,then he gets 1 lakh of deduction under capital gains right?
can a person change his decision of paying tax on bussiness income & capital gains year on year?
or doesn’t he have chance of changing decision as he pays bussiness income in previous FY & now(i.e present FY) he wishes to convert it to capital gains?
hi nitin sir
can i get set off of future lot loss against equity STCG.
Hi
I have 2 questions viz:
(1) As per the tax loss harvesting report, i have a Realized STCG of 1.06L but an unrealized STCL of 2.34L. Will i still need to pay STCG tax of 15% tax on 1.06L?
(2) As per the tax loss harvesting report, i have a realized LTCG of 3.1L but an unrealized LTCL of 2.06L. Since 1L is tax free for LTCG, do i still have to pay any tax (3.1L loss – 2.06L = 1.04L) since the Console for my account is showing 2.06L as the Long term tax-loss harvesting opportunity.
Please advise asap. Thanks in advance.
~ Abhishek
Suppose if I make long term capital gain of Rs1,50,000 on equity mutual fund and a long term capital loss (indexed) of Rs60,000 in liquid/income (any debt) mutual fund. Can the amount of Rs60,000 be offset against Rs1,50,000 thus paying no long term capital gain?
Hi,
Where I have to pay tax on selling shares and also process of paying tax on selling of shares in demat account ? Please guide me
If I buy Sovereign gold bonds (SGB’s) via secondary market (Zerodha in my instance) on 31.3.22 (trade date) & it’s get settled on T+2 days i.e 2.4.22, my queries are
1. From income tax point of view which date is considered “Trading date” or “Settlement date” for report in ITR purpose & tax calculation purpose
2. From RBI 4kg maximum allowance of SGB’s per FY per PAN user point of view which date is relevant ” Trading date” or “Settlement date”.
Thanks
I am Zerodha member.RH1390.
My total income for the FY 2021 22 is given below :
I am a Sr Citizen.
1.Co Divided 106000
2.Rent income 90000
3.Other income 31000
4.STCG 885300
I want to know my tax liability.
I have made investment Rs 150000
Whether STCG will be charged at 15%flat. Or I will get benefit of slab rate ?
Sir STCG is 26000 in current year 2021-22. No other income. Can fill the ITR compulsory. and paid the 15% Tax.
will the Trading platform automatically deduct the STT charges or does the person has to pay it separately to govt.?
Sir, In itr2 one condition is to be fulfilled,i.e. the total all quarters of respective CG must be equal to the final figure of BFLA. But negative value is not allowed in any of the quarter. Suppose I have a short term gain of Rs. 1000 with a quarterly break up of 500,1000,300,200,(-1000). Where to fill this (-1000) in the quarterly break up table of CG?
Hi,
In my Zerodha P&L report, Realized P&L is 3 lakhs and Net realized is 50K with 2.5Lakhs as charges&taxes. When I file for taxes, should I pay taxes on 3lakhs which is realized profit or pay taxes on net realized profit which js 50K..Appreciate your help.
Thanks!
If I keep my money in zerodha wallet as a saving purpose ( not to buy or sell of stocks and shares) , do i have to pay tax at the time of withdrawal ?
Sir i am new to market suppose I made stcg of 50000 and I have to pay tax on 15% , so my question is does the tax is taken directly by brokerage company or I have to file itr
Hi,
I am a student, I am not falling under any tax slab I have some capital which I use to buy and sell shares in short term. Do I need to pay STCG on my profits?
Hello sir.
Are brokerage charges and other charges (other than STT) deductible as allowed expenditure whether in Capital Gain or in Business Income for Intraday Trading and Short Term Trading..
Please help sir.
Thank you.
Can you update us on intra day trading taxation slabs for both profits & losses.
Thanks
Sir
I have LTCG of 10Lakhs on Mutual funds In April 2022 in my Zerodha account. I do not have any other income. I may or may not have additional Capital gains in the remaining Financial Year.
How much Advance Tax I shall pay by June 2022. Should I pay 15% on 90k (Tax on 10L capital gain) or shall I pay the whole amount now itself.
Suppose if I book another 10 Lakhs Capital gain in August, should I pay entire 1.9lakhs tax by Sept 15th or only 45% of it.
Taxation makes sense if you invest in the best short-term stocks. You can see the best short-term stocks on our website- https://investhub.agency/blog/short-term-stocks/
Is advance tax applicable only on business income and STCG? Is it not applicable on LTCG realized during the year?
I trade using zerodha account. In ITR-3,
(1) where the profit in gold EFT has to be shown
(2) in STCG, where expenses like STT, SD,DP charges are to be shown
(3) whether we have upload the zerodha tax p& l file in ITR3
Hi Vyas,
Is advance tax applicable only on business income and STCG? Is it not applicable on LTCG realized during the year?
Advance Tax is applicable on LTCG as well.
HI Sudhakar,
(1) where the profit in gold EFT has to be shown – If it is short term, you need to enter the details under Item #6 under Schedule CG and if it is long term, you need to enter under item# 10 under Schedule CG
(2) in STCG, where expenses like STT, SD,DP charges are to be shown – you need to enter item # 1 b iii(Expenditure wholly and exclusively in connection with transfer) . Further you cannot claim STT as deduction.
(3) whether we have upload the zerodha tax p& l file in ITR3 – you cannot upload Zerodha Tax PL in ITR 3
If I add 3 lakhs to my zerodha account now and use it for trading in futures & after a month I decide to withdraw that 3 lakhs from my demate account. Will it be taxable ?
Can I lend my shares in vinati organics ltd to my friend with out any monetary gain
Hi Girish,
If I add 3 lakhs to my zerodha account now and use it for trading in futures & after a month I decide to withdraw that 3 lakhs from my demat account. Will it be taxable ?
If you have earned any profit, then it is taxable.
Dear Sir,
Currently, I am an employee at a family business and getting a salary from the business.
I have some agricultural land from which I get some other income.
I also trade options regularly and have income from that. I do not trade equity and If I buy a stock I usually sell it after 1-2 years or very rarely.
So my options income gets classified as business income and is taxed at 30%. How do I tackle my options income? I know it is taxed at 30%. But what else can I do about it? Can I claim expenses on this? If I subscribe to sensibull and get laptop repairs etc can I claim that expense ?
Hi Kalsum,
Currently, I am an employee at a family business and getting a salary from the business.
I have some agricultural land from which I get some other income.
I also trade options regularly and have income from that. I do not trade equity and If I buy a stock I usually sell it after 1-2 years or very rarely.
So my options income gets classified as business income and is taxed at 30%. How do I tackle my options income? I know it is taxed at 30%. But what else can I do about it? Can I claim expenses on this? If I subscribe to sensibull and get laptop repairs etc can I claim that expense ?
Yes your options income gets classified as Business Income. It is taxed as per the slabs rates applicable. It the net profit from options trading is more than 10 Lacs and 15 Lacs in old and new regime of taxation – then it is taxed @ 30% of profit exceeding 10 Lacs and 15 lacs.
You can claim all the expenses relating to options trading like subscriptions/laptop expenses/STT charged/SEBI turnover fees etc.,
What if a person makes short term share profit of more than one lakh and he is not tax assesse. I mean doesn’t pay tax for past decade and is new in stock market say 6 months but made profit more than one lakh.
When income tax will catch him
I mean immediately next financial year or after 5 years
Iam new to stock market plus not tax assesse
I made profit in short term (less than 1 lakh) should i have to pay tax if the profit made is less than 1 lakh? and my annual income is less than 2 lakh?
Capital gain in excel sheet
This regarding below section.
4.5 – Days of holding
For an investor, the taxation difference between LTCG and STCG is quite huge. If you sold stocks 360 days from when you had bought, you would have to pay 15% of all gains as taxes on STCG. The same stock if held for 5 days more (1 year or 365 days), the entire gain would be exempt from taxation as it would be LTCG now.
** Instead of 5 days, we need to hold 6 days to fall on LTCG, recent income tax AIS statement is treating like this, be careful **
In tax P&L report, the taxable profit is shown to be just the difference of sale and purchase value. It does not account for other charges. Does it mean that taxable capital gain is just the realized gain and not the ‘net’ realized gain??
Also please elaborate on the turnover in the tax P&L report. I am asking from capital gains perspective.
What would be LTCG calculation for holding sold after more than 2-3 years with profit? How tax should be calculated? On flat net profit or on average profit per annum?
Would like to know the total income in ITR is the income after adjusting all exemptions and previous losses or is it the total income earned during the year?
For applying for the credit cards, they will ask us the total income as per the ITR filed. What are we supposed to do?
Acknowledgement on ITR portal shows the total income as the net income after adjusting all the exemptions and the previous capital losses. Is it not supposed to be what is earned during the year? Is it not the sum that credit card providers will be interested into? For credit card, the proof of income is ITR and ITR ack shows the total income as the net after all adjustments towards exemptions and previous years’ losses.
Sir the pdf button to this module is still downloading the old file please please can you update that I downloaded and printed the old version
Hello Nithin,
I am a NRI PIS customer. I already pay huge brokerage and other reporting charges per transaction. I don’t have any income in India. Why is STT charged @15% though my earnings in India is less than 2.5 lakhs? Any way to avoid it?? Please advise.
Hi Sankalp rao,
I am a NRI PIS customer. I already pay huge brokerage and other reporting charges per transaction. I don’t have any income in India. Why is STT charged @15% though my earnings in India is less than 2.5 lakhs? Any way to avoid it?? Please advise.
The deduction is not STT, it is Tax deducted @ source (TDS) as per Income Tax Act. You can claim refund by filing the Income Tax return in India if your income is less than 2.5 Lacs.
will the tax amount on STCG deducts during the withdrawal of the money?
Sir,
I am.new in stock market and recently i have gained 1.2 lack by selling different shares from my portfolio..my question is that will my broker directly cut the tax from my available funds or the tax will get cut once i transfer that 1.2 lack in my saving bank account…plz ellaborate
Sir, My father in law had been purchased some shares of a company in before 2000. Last year , with devidend it’s quantity is increased 4 times of shares. He is retired persons and have agriculture land.
Last year, he needs some funds on his health issue so he sold some quantity of shares .( Last year to last month)three times and got some amount( Approximately amount of Rs.1 lac x 3= 3 lac) and now , he wants to paid advance tax then kindly suggest me that how many advance tax should be paid before 15 th Sep 22.
I have some profits in options.. Trading bank nifty
Does zerodha is deducting any income taxes for profits on daily base..
Please reply…
My account is resident normal account
What will be the LTCG and STCG, if i buy and sell through my private limited company or llp?
For Suppose am without leverage in a day A stock buy @156 and sold it 159 at end of the day 3:25 . quantity 1000 .
Wt will be the taxation?..
Suppose I purchase 100 shares of company A @Rs.50 in year 2018 in demat account D1. Again I purchase 50 shares of same company A @Rs 70 in year 2022, but in different demat Account – D2. Now if I sell 50 shares of company A @Rs60 today from demat account D2, will it be “short term capital loss” or “LTCG”??
Can dividend income be set off against short term capital loss
Nithin,
I have 35 lic shares @904 and current price is 680 after 90 days, now I’m in loss of around 25%
Suppose I gift those 35 stocks to my spouse.
1) can i show this 25% loss in my ITR ?
2) If my spouse sells the stocks within 365 days of gifting, will it be considered LTCG or STCG because I came to know that 904 will be considered the buying price even if the stocks are gifted?
Is it complusory to pay advance tax or can we pay the tax at the year end
Hi I have an account in Zerodha, wanted to known
1. If Loss of LTCG can be set off against profit of STCG while calculating Advance tax for the Qtr gone by and
2 If Total Charges and other credits and debits have to be minus from STCG profit and then that amount is to be taken for calculating advance tax. Is this right ?
The interesting thing to note in regards to 20% after indexation for non-equity oriented or debt funds: Most of these funds return between 8 to 10% and typically inflation in India has been around that for the last many years. So with the indexation benefit, you typically won’t have to pay any tax on LTCG of non-equity-oriented funds.
Does this indirectly mean, We shouldn’t expect good returns on Debt Funds?
My friend is a broker. Trades from zerodah any pays taxes as per profit earned from options trading.
I am a salaried person. Suppose i have him X lakhs rupees on my behalf to invest in stock market. And he returns me y amount per month in my bank account through online transaction. Will that y amount per month of mine be taxable?
Note: friend already pays taxes for all kind of profit earns.
HI Roktimjit kakoty,
My friend is a broker. Trades from zerodha and pays taxes as per profit earned from options trading.
I am a salaried person. Suppose i gave him X lakhs rupees on my behalf to invest in stock market. And he returns me y amount per month in my bank account through online transaction. Will that y amount per month of mine be taxable?
No, it will not be taxable in your hands. But you should be give justification for the credits received in Bank Statement.
If your broker friend is treating as “Y” transfers are expense – then you should declare it as Income.
Hi,
I need help in understanding the taxation for investors. When we buy and sell shares there are few addition costs that we incur such as brokerage, exchanges charges, etc and I have added all the possible charges below.
While Buying a share
Brokerage
Exchange transaction charges
CGST
SGST
IGST
STT
SEBI Turnover fees
Stamp Duty
While selling a share
Brokerage
Exchange transaction charges
CGST
SGST
IGST
STT
SEBI Turnover fees
Stamp Duty
DP charges
I understand that we cannot claim STT as an expenditure in capital gain. However can we claim other charges as an expenditure. I would appreciate if you could specify the list of charges that we can add as an expenditure.
Also, can we claim these expenditure for both buying and selling of a share. For ex: If my buy brokerage is Rs. 10 and sell brokerage is Rs. 15, can I add expenditure as Rs 25 or just Rs. 15.
Thank you
Hi Raghunandan,
You can claim both side expenses except STT.
Hello
I have made a STCG of 1.6L , so I should pay 15% for tax
Same time I have holdings in my account which are losses . Is there any way that I could book the losses and do something ?
Same time I’ve got dividend of 50000 in this financial year that got reflected in my bank account . Should I show this as an income and pay tax for this also ?
Hi Dhananjeyan,
I have made a STCG of 1.6L , so I should pay 15% for tax – Yes, you should pay 15% tax on STCG
Same time I have holdings in my account which are losses . Is there any way that I could book the losses and do something ? – You can go for Tax Loss Harvesting
Same time I’ve got dividend of 50000 in this financial year that got reflected in my bank account . Should I show this as an income and pay tax for this also ? – Yes, Dividend Income is also taxable.
Namaskar
I had a short term capital loss of 2,00,000 between 01-04-2022 to 31-03-23.
The questions:
1) Should I have to file that loss before 31-03-2023 or can it be filed after 31-03-2023 for it to be carried forward for further years?
2) Actually under which filing year does that loss fall, under AY 2022-23 or AY 2023-24 ?
Thanks
Praneeth
HI Praneeth,
I had a short term capital loss of 2,00,000 between 01-04-2022 to 31-03-23.
The questions:
1) Should I have to file that loss before 31-03-2023 or can it be filed after 31-03-2023 for it to be carried forward for further years? – You need to file before 31st July 2023 to carry forward the losses for future years.
2) Actually under which filing year does that loss fall, under AY 2022-23 or AY 2023-24 ? – Loss falls under AY 2023-24 (FY 2022-23)
Namaskar
Thanks San, your response was quite helpful !!
So, I was trying to file that loss (ITR-2) through Quicko, I went al through the steps untill last step i.e “e-file”, where I had downloaded the Json file, but may I know what is the next step?
Thanks
Praneeth
Hey San
I am sorry please ignore my previous question, while consider the below question.
I was trying to file that loss (ITR-2) through Quicko, I went all through the steps until last step i.e “e-file”, where could not download Json file.
Please help me how to download Json file and proceed further in filing for AY 2023-24.
Thanks
Hi Praneeth,
I was trying to file that loss (ITR-2) through Quicko, I went all through the steps until last step i.e “e-file”, where could not download Json file.
Please help me how to download Json file and proceed further in filing for AY 2023-24.
Haven’t used Quicko.
As on today, only ITR Forms/Schema have been notified; Income Tax department is yet to release Utility.
https://www.incometax.gov.in/iec/foportal/downloads/income-tax-returns
STCG tax which is 15%, is this applicable same to all irrespective of gender?
Hi Sanjay,
STCG tax which is 15%, is this applicable same to all irrespective of gender? – Yes, it is 15% irrespective of gender.
If I have income from stocks only and profit earned by selling the stock is t less than slab limit of income tax. Do I need to pay tax as it comes under capital gains?
Hi Harsh,
If I have income from stocks only and profit earned by selling the stock is t less than slab limit of income tax. Do I need to pay tax as it comes under capital gains?
No need to pay tax if the capital gains is under the basic threshold limit of 2.5 Lacs.
Hi Nithin Kamath
If the LTCG is less than 1 lakh, am I forced to offset the loss from previous year or do I have the option to carryover or carry forward the old loss (for 8 years) to a year when the gain is more than 1 lakh and hence taxable?
Hi HM,
If the LTCG is less than 1 lakh, am I forced to offset the loss from previous year or do I have the option to carryover or carry forward the old loss (for 8 years) to a year when the gain is more than 1 lakh and hence taxable? – LTCG first gets set off with carry forward loss irrespective of the amount and then exemption of 1 Lacs gets applied.
For taxation, can I:
(1) show short-term gains as business income &
(2) show long-term gains as capital gains,
in the same AY?
Hello Folks,
What will be the capital gain tax treatment on private limited and llp company. I mean will they be considered as same STCG AND LTCG? please clear
Hi Prateek Bansal,
What will be the capital gain tax treatment on private limited and llp company. I mean will they be considered as same STCG AND LTCG?
For Private Limited Company – It will be unlisted shares.
STCG
Period of Holding will be less than 24 months unlike Listed Company shares where it is less than 12 months.
STCG will be taxed as per slab rates unlike Listed Company shares where it is taxed @ 15%
LTCG
Period of Holding will be more than 24 months unlike Listed Company shares where it is more than 12 months.
LTCG will be taxed @ 20% after indexation unlike Listed Company shares where it is taxed @ 10% without indexation.
Hi,
I have a salaried income and fall in 30% tax bracket. If I make a stcg of 200000 please confirm
1)how much i need to pay .
A) 30k
B) 60K
2)By when I need to pay
why does zerodha not show the charges in tax pl while showing details of short term and long term txn details. Only amount appeared in purchase,sale and profit column. How can we calculate exp which can be shown in itr
Hi, Mr Kamath. I came across this informative article and read the comments too. Glad to.note that you are pErsonally replying.
Me and my wife have accounts with Zerodha. Last year I gifted shares online tomy wife. I have been requesting for statement of gifts made as per requirement of IT but the same has not happened till now. Also I had to literally bang the customer care team to change the buy cost of gifted shares to that 9f original date(which wasput as transfer date). Had very hard time getting it done. I would Like your help in having a statement on gifted shares for the sake of IT.
Thanks 8n anticipation…
I got some stocks which are no more traded.can I show total value as loss and reduce it from my income.
Hi Navin,
I got some stocks which are no more traded. Can I show total value as loss and reduce it from my income.
You cannot do that because you will be having your rights in those shares.
Do a off market transfer and book loss and then adjust it against your incomes.
In section days of holding, you have written that by holding the stock for five days more you will be exempt from paying tax but my question is it will still count for long term so it means we have to pay tax 10%. so the benefit we get is 5%. Am i right?
This is very helpful blog articles I have ever read. Continue your great work. Thanks for blog commenting opportunity. I really like this post and republish from my website. Please link to my websites and publish your another articles on my websites. Thank you again.
Financial Advisor in India
Why long-term and short-term capital gains losses are not cleared off in the current year, and why they are carried forward to next years?
Tax benefits while dealing in stocks as firm or as an individual
Hi,
Suppose i am in higher tax slab means 30% so for STCG(Equity fund like parag parikh flexi cap) do i need to pay 15% or 30%?
Hi sir,
If salary income 4.9L (after all deduction and exemption) and short term capital gain Rs. 30k so i will paid 15% on short term gain. So 87A rsbate is applicable in this case or not.
Hi
Does zerodha deduct STCG from profits ?
For listed share, if I do the transfer off-market, this will qualify for indexation benefit, correct?
Hello,
I hold 200 HDFC shares in my Zerodha account. (Long term since 3 years now).
Now if i GIFT this to my father’s ZERODHA account and he books profit then do i pay 20 % LTCG on this? or it will be considered under normal rate of LTCG 10 %?
Moreover, can you throw some more light on GIFTING stock how the taxation works? will it have more STT or brokerage charges on both sides?
I have a doubt here so i have earned 10 lakh ruppees and invested 8 lakh in equity mutual fund now i have 2 lakh so my question here is do i need to pay the tax for earned money even if i invested 8lakh rupees in mutual or not.plz answer
Sir i am student but not residential and my total earned income 2 lakh earned through stcg In a financial year. So,I will need to pay any tax
I want to invest in a foreign index ETF and wondering if the Zerodha (kite) tax PNL report includes the indexation benefits for the returns?
My question is related to LTCG on gifted mutual fund units, such that if
Year 2020
MF bought by father for INR 50,000
Year 2022
MF transferred to me when price is INR 1,50,000
Year 2023
I sell MF for INR 2,00,000
Will my LTCG be considered to be 2L, 50k or 1.5L? Also will my father incur any tax at all from this transaction?
Hi, I want to know what are credits and other charges in tax profit and loss report and why it is showing a negative value in my case like (-2888) and the realised profit shown in the website is including all the taxes and charges or do I have to minus the taxes and charges from that amount to see my actual profit.
I have short term capital gain of 2.83 lakhs and long term gain of 1.5 lakhs. No other income or deduction.how much tax I have to pay
For capital gain of 19.5 lakhs from stocks, how much tax should I have paid before 15th December 2023?
Thanks.
Taxation For STCG/LTCG Equity SHARE
capital gain altogether with other income-
1. not exceeds 2.5L For old regime and 3L For new regime is not taxable.
2. exceeds 2.5L or 3L- taxable as per existing tax rate.
Post your views on this.
Hi Sir,
I would like to know if i have short term capital gain of Rs 90,000-/ & Long term capital gain of Rs 90,000-/. do i have to calculate separately tax for both heads or i have to sumup both gains? what is the proceedure . pls advise
Hi Sir,
please advise if i have both short term & long term capital gains of rs 80,000-/ each in the same year. what is the process to calculate the tax.
Stock I sell 1st march for the purpose of tax harvesting, can I buying it after 2 days.
Where to show the expenses or brokerage charges, stamp duty charges paid etc for selling of equity shares in ITR 2 ?
Hi There!
Under P&L report asan example,
Realised P&L
+26.63L
Charges & taxes
3.14L
Other credits & debits
-6.2k
Net realised P&L
+23.42L
Does this 3.14L includes STCG and LTCG already or I will have to pay those on Net realised P&L 23.42L?
Thanks.
Sir If am a salaried person and belong to 30% tax slab. I have LTCG is 1.2Lakh. Is this 30% tax slab will implemented to my whole LTCG or 1 lakh LTCG is lax free and remaining 20 k will be taxed to 10%.
Can we deduct interest charged by a broker on a marginal trading facility while computing my capital gains? What if I disclose my trading activity as my business income? In that case, will I be able to deduct the same? Kindly provide solutions for both scenarios.
If not deductible, why? Please provide appropriate reasons and rules. Additionally, is there any case or judgment on the disallowance of interest expense for capital gains since it is purely used for acquiring shares?
Also find the refer to the case of Tishul Investments ltd where the madras high court has given the judgement in the favor of the assessee where the interest can be part of the cost of acquisition while computing capital gains.
I wanted to know if we can still rely on these judgements and consider interest expense to be part of cost of acquisition while computing capital gains?
[Trishul investments Ltd]
(Commissioner Of Income-Tax vs M/S.Trishul Investments Ltd on 12 July, 2007)
(https://taxguru.in/wp-content/uploads/2016/04/Fritz-d.-silva.pdf)
Nithesh, its best if you consult a qualified CA. But here is the thing – All Cost which you have Incurred to acquire Capital Asset is allowed as Cost of Aquisition. It will be part of Purchase itself. Not only Interest for example if you take Subscription of Some Equity Advisor as well.
Only thing is allocation towards each Stock need to accounted Properly.
Dear Shri Nithin ji,
I need clarification on the following two points:
1. I have carried forward short term capital Loss Of Rs. 1,29,110 and short term capital loss of Rs. 2,27,631 during FY 2023-24. As such, Total short term capital loss as on 31/03/2024 works out to Rs. 3,56,741/-. I have long term capital profit of Rs. 21,93,712 during the year. Can I adjust short term capital loss of Rs. 3,56,741 against the long term capital gain of Rs. 21,93,712?
2. I had purchased the following bonds at the premium during the FY year 2019-20:
Date of Purchase Maturity Date
9.05% L&T Finance Ltd. 2027 INE027E07AL1 09-May-19 15-Apr-27
9.45% State Bank of India Perpetual INE062A08199 08-May-19 22-Mar-24 ( date of call option)
8.97% Rural Electrification Corporation 2029 INE020B08BP90 08-May-19 28-Mar-29
Now SBI has exercised its call option on 22/03/24. Can I treat the premium paid on purchase of the above three bonds as expenditure during the FY 2023-24?
Regards
Yuvaraj Patil
Hi Yuvaraj,
1. I have carried forward short term capital Loss Of Rs. 1,29,110 and short term capital loss of Rs. 2,27,631 during FY 2023-24. As such, Total short term capital loss as on 31/03/2024 works out to Rs. 3,56,741/-. I have long term capital profit of Rs. 21,93,712 during the year. Can I adjust short term capital loss of Rs. 3,56,741 against the long term capital gain of Rs. 21,93,712? – Yes, you can set off Short Term Capital Losses are allowed to be set off against both Long Term Gains and Short Term Gains.
2. I had purchased the following bonds at the premium during the FY year 2019-20:
Date of Purchase Maturity Date
9.05% L&T Finance Ltd. 2027 INE027E07AL1 09-May-19 15-Apr-27
9.45% State Bank of India Perpetual INE062A08199 08-May-19 22-Mar-24 ( date of call option)
8.97% Rural Electrification Corporation 2029 INE020B08BP90 08-May-19 28-Mar-29
Now SBI has exercised its call option on 22/03/24. Can I treat the premium paid on purchase of the above three bonds as expenditure during the FY 2023-24? – You cannot claim as expenditure against Interest Income.
How to calculate Tax on sale of Liquid Bees?
HI Mumtaz Doongerwala,
How to calculate Tax on sale of Liquid Bees?
Tax for Debt ETFs (Bought on or after 01.04.2023) – Irrespective of holding period: Taxable at slab rates.
Tax for Debt ETFs (Bought before 01.04.2023) –
STCG: Taxable at slab rate (Held up to 36 months)
LTCG: Taxed at 20% after indexation benefit. (Held more than 36 months)