Comment on Taxation Simplified

sairaj commented on 26 Jun 2013, 12:08 AM

Hello Zerodha,
Thank you very much for explaining everything in simple and clear language.

But I have one area of concern: the ambiguity and mixing about the idea of investment and trading.
As in my personal case,
I have bought and held shares for more than three years. I sold them last month and got a capital gain of 6 lacs.
But I opened zerodha recently and traded for couple of months heavily. In that process I have netted 50,000 loss.

Now, Ideally I should be treated as investor for the 6 lacs profit I got from the shares, right? (I have been holding that for much longer than a year) If that is the case, then the tax will be zero for that share sale. (Long term capital gain)

But because, I traded recently, why should I file ITR4 and show the 6 lacs (from sale of shares) as profit in business?
Then I have to pay 30% tax on the sale of shares as well because there is no long term capital gain concept for businesses.

Is there any solution for this?
1)can I treat the share sale as long term gain and trading loss as speculative business loss? (this would be the most advantageous for me)
2)Can I forget the short term trading loss and just file as an investor to get long term capital gain advantage on share of sales. (This will be the second best)
3)Should I file as business and show both trading loss and sale of shares as business income, effectively paying 30% tax on share sale ? (This is very disadvantageous.)

Can you please clarify this?

Thanks

View the full comment thread »