Can Equity LTCG and STCG be shown as business income?

Taxation
1

If one has an LTCG loss, a STCG gain and some fno income, can the equity LTC loss and STCG be shown as business income?
In previous years, ITR 3 has been filed with fno as business income and LTCG/STCG has been filed as capital gains income.
Secondly, if one holds SGB, then on maturity the gains are not taxable as it is exempt from capital gains.
However, if one shows the equity LTCG and STCG as business income, will one have to show gains from SGB also as business income , thereby making it taxable? @Quicko

2

I’M not an expert but still try to answer - Yes u are correct, it is generally shown in ITR 3 as business income whenever you file the tax. Also gains from F&O are taxed under the respective income tax slab of that person.

Also, one can setoff their LTCG losses with LTCG gains & try to reduce their tax liability.

@Quicko for more details

3

Hey @ron94,

Reporting of trading income depends on the intent. If you hold stocks with the intent of capital appreciation, the same shall be reported as capital gains. However, if you engage in frequent buying and selling of stocks with the primary aim of earning profits, you can report delivery-based trading as your business.

In the case of SGBs, as they are held for a longer period with the purpose of investment, you can report them as capital gains. They will be tax-free if redeemed on maturity.

Hope it helps!

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4

Thank you for your reply. Also, is there a rule that states that if I report LTCG and STCG equity trades as business income, then I will have to continue reporting all equity trades as business income in future years and will not be able to go back to reporting equity trades as LTCG or STCG?

5

@ron94
Hi,
There is no rule per se but there is a caselaw of Govind Purohit which we have been using for reporting in Capital gain or business vice versa as per the client requirement. You can go through it online.

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6

Hey @ron94,

There’s no such rule and as mentioned previously, you can report them based on the intent with which you traded in a relevant FY.

Hope it clarifies.

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