Hi @Quicko i do swing trading and intraday only in the cash equity segment. Swing trades are usually more as compared to intraday. So the tax P&L which i get from zerodha shows me my speculative gains/loss and short term gains/loss.
My query is that should i just take the speculative gains from tax pnl and show them under my tax bracket and Short term gains under stcg or i will need to select either stcg or the tax bracket under which my income comes?
Both your incomes must be reported in the Income Tax Return and applicable tax must be paid on it.
STCG should be reported under the income head ‘Capital Gains’. If there is a profit, tax should be paid at 15% after setting off any losses (STCL) under this income head. If there is a loss, you can adjust it against LTCG and carry forward remaining amount for 8 years.
Speculative Income should be reported under the head ‘PGBP’. If there is a profit, tax should be paid at applicable slab rates after setting off any losses. If there is a loss, you can carry forward it for 4 years.
You must file an ITR-3 that covers both these income heads.
Read more about it here - Tax on Equity
Thanks. Can we deduct STT from the speculative trades profit to calculate the net P&L?
STT (Securities Transaction Tax) can be claimed as a valid business expense and thus be adjusted against speculative profits to calculate the net P&L. However, STT on equity delivery cannot be claimed as an expense if such income is treated as Capital Gains.
Even individuals can claim stt as an expense for intraday trades or its only for people with corporate accounts?
Individuals can claim if they are showing trading income as business income
Equity Intraday Trading is considered to be a speculative business income. Individuals can also claim STT as a valid business expense.
Ok understood but i am not a full time trader. I take a mix of intraday and swing trades. Trading is not my main source of income. So will it be ok for me to deduct STT from only the intraday trades as am not a full time trader. Sorry for bothering you with so many questions.
Reporting Income and availing the deductions has nothing to do with whether you are full time trader or not.
Intraday traders are termed as Speculative Business in terms of Income Tax and you can claim STT as a deduction on that.
Regarding other trading allied expenses like internet charges etc you shouldn’t deduct them if you are not full time trader.
Thanks for the clarification
Hey @vips124
Equity Intraday Trading is classified as a Speculative Business Income as per the Income Tax Act. Eventhough you’re not a full time trader, it is still considered as business income. STT is a direct expense connected with the trading business and thus can be claimed as a valid business income.
While most of the comments here are true to me, I believe that when it comes to finding genuine information about income tax, you better get in touch with a CPA. They are the most qualified people to help you with all queries related to income tax.