Gold ETF Trading – STCG or Business Income? (100 trades/year, delivery only, salaried)

[SG_13]

@Suresh_kumar4

Will profits from this be treated as Short-Term Capital Gains (STCG) at slab rates (capital gains schedule in ITR-2), or is there risk of reclassification as business income due to frequency/volume?

IMO, it’s actually the intent of the trade or investment and the consistency of its classification that determines if the gains are to be treated as business income or capital gains.

@SG_13

It is the intent and purpose for which the shares are held that determines how they are to be classified and taxed for Income tax purposes.

i.e., When the intent is to not hold on to the shares as an investment, rather to make quick profit from the price fluctuations, it is stock-in-trade and therefore the transaction will wholly be treated as a business income, rather than as capital gains.

I would classify this as business income simply because the intent here is not to hold the ETFs as an investment rather as a stock-in-trade considering the frequency of the trades.

However, if you do choose to classify it capital gains, remember to follow the same classification consistently for all such trades in the future, to avoid scrutiny.