I have some long term holdings and holdings which I intend to hold for over a year. I am an investor for the most part. However, I also want to be able to book profits on shares (held for less than 1 year) when I feel further upside is capped. I understand that long term gains is tax free and short term capital gains (STCG ) has effective tax rate of about 15.5%.
I want to know is there any limit in terms of number of Short term trades I can execute for me to be classified as an investor and pay 15.5% tax instead of being classified as a business and taxed as per income slabs. Also I want to ensure that my long term holdings remain tax free when I sell them. For example: If I execute 50 trades in 1 Year, will i still pay 15.5% on ST trades and keep long term holdings tax free?
There is no standard formula for the Number of trades makes you classify under business/ Investor. The intent need to be clear for earning Dividend. http://www.incometaxindia.gov.in/communications/circular/circular-no-6.pdf
This circular will help you in defining the activity.
Anyone who does short term trading (only equity delivery) pls clarify this. Do you pay 15% tax or are you taxed as per tax slab?
If you are resident then you get basic slab of 2.5 Lacs and then straight 15% for STCG