Can STT be claimed as business expense? [Clarifying confusions]

General
1

I am a trader who does both STCG and F&O. In this case can I claim STT as part of expense? In some place, people say ‘it can’, in some place ‘can’t’. So I am confused. Here is the narration,

1000 shares of ICICI bought for 250 and sold for 270.

Charges 550 (in this STT 520)

Realized profit 19450 (not 20000)

So I need to pay 15% of 19450 as Short term capital gain tax. You can assume that in F&O, I will be making 5 lakhs, so we can discard standard deduction here.

Please clarify.

2

The STT is not a allowable expenses means you cant deduct if you classify under Capital Gain. If you Claim at Lower tax rate for your gain then STT is not a Cost.  And you Can classify this activity for an Investor. 

For a Trader who classify under Business & profession chosen the normal tax rate , so all the expenses associated with the trading can be claimed. So STT is a cost here which can be deducted from the Income. 

1000 shares of ICICI bought for 250 and sold for 270. Charges 550 (in this STT 520) Realized profit 19450 (not 20000)

In your example if you are Investor you need to pay tax on 20000-30= 19970 Capital Gain tax @ special rate.  

If You a Trader you will add this Income to Normal Income and income will be 19450 

Hope Its clear 

3 Likes
3

Great. Thanks for the clarification.

4

Just wanted to re-confirm:

  1. STT is allowed as expense and treated under business expense for FnO trades?
  2. But STT is not allowed as expense in STCG?
  3. Are points 1) and 2) valid for FY 2014-15 (does anyone know)

Reason I ask the above questions is my IT officer is saying that “since you incurred losses in FnO you cannot treat STT as expense”. I doubt it.