Hi,
Can someone please explain when STT charges can be deducted as business income.
I have some STCG (short term capital gains), and correspondingly have paid huge STT charges (almost 10% of gain). Can these STT charges be deducted as business expenses (and pay 15% tax on STCG)? I have some gains/losses in Intraday and FNO as well.
Thanks,
As per Sec 36 of Income Tax Act 1961, STT can be claimed under income tax if the STT amount which you have paid is allowed as business expenditure provided you are showing share income under the head “Profits/Gains from Business and Profession” i.e. if trading of stocks is being made as a professional choice and is being carried out from business point of view.
However if an assessee is a salaried or self-employed person who deals in stock transactions only for investment purposes and trading in securities is not what he does as his main line of profession, then Gains or losses in such cases can be grouped as short-term capital gains or long-term capital gains depending upon the period for which the stocks are held. And such people cannot claim STT under Income Tax.
Hey @edude,
Yes, you can claim STT as an expense while reporting your income from trading as a business. This would include the STT paid for any F&O or intraday trades.
However, the STT paid w.r.t short-term capital gains which will be reported under the income head ‘income from capital gains’ is not an allowable expense.
Hope this helps!