Comment on Taxation Simplified

Nithin Kamath commented on 06 Feb 2013, 08:35 AM

Thanks Anamika,

1.For a trader, the long term capital gain is a tricky thing, it depends on how you have treated the investment on the books. If you are trading as a business, you would have marked profits/losses on all your investments when you are filing your returns at the end of every year. In this case you have to pay a long term capital gain tax. If you haven’t taken this benefit on the stocks that is lying in your demat account, you could probably discuss it with your CA and show all these investments from before under separate book of accounts and get benefit of zero long term capital gain.

To explain you as an example. Assume you bought 100 shares of Reliance at 1000 in June 2012, you are also an f&o trader and assume you made a profit of 1lk in 2012-2013. On 31st march, assume Reliance is at 900, so your notional loss is Rs 10000. When filing your return you can net off this notional loss on the stock with your trading gain and hence you pay tax only on Rs 90000 ( 1lk – Rs 10000 loss on reliance). You are supposed to do this as a trader and in such cases your long term capital gain tax will not be zero.

Hopefully this clarifies.. This is a pretty tricky subject..

2.Intraday equity trading is considered speculative. If you make speculative profits it is clubbed with f&o/short term equity trading and taxes paid. If you make speculative losses it cannot be net off against profits in f&o/short term equity trading.

Hope this clarifies..

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