I would like to understand if a non-working / non-earning person would still have to oblige the Long term and Shortness Term Capital Gain taxes? If so, what exactly are the terms?
I have read a Zerodha article which explains this:
For stocks/equity: 15% of the gain
It is 15% of the gain if the transactions (buy/sells) are executed on recognized stock exchanges where STT (Security transaction tax) is paid. STCG is applicable for holding period over 1 day and not more than 12 months.
If the transactions (buy/sells) are executed via off-market transfer (where shares are transferred from one person to another via delivery instruction booklet and not on the exchange) where STT is not paid, STCG will be taxable as per your applicable tax slab rate. For example, if you are earning over Rs.10,00,000/- per year in salary, you will fall in the 30% slab, and hence STCG will also be taxed at 30%. Also STCG is applicable only when the income exceeds the minimum tax slab of Rs 2.5lks/year. So if there is no other income for the year and assuming there was Rs 1lk STCG, it would not entail the flat 15% tax.
Does this mean I can create an account in my mom’s name and start trading?
Raj Pawan G
First, what do you mean by a non-working/non-earning person? How can an idle person pay tax if he has no income? No income -No tax
According to IT act your total income upto2.5 Lac (Doesn’t matter how u have earned, either by Dividend, LTCG or STCG bla bla) is tax-free.
If ur income is more than 2.5 lac then u may need to pay tax if u r not applying for 80C deduction ( up to 1.5 lac).
** (you cant get benefit of 80c on Income by dividend/LTCG/STCG)**
- Dividend up to 1 lac from MFs are tax-free.
- Dividend up-to 10 lac from equities are tax-free.
Corrections and suggestions are invited.
Thanks for your response! My question was very specific to non-earning because LTCG taxation is flat 10% over and above 1 lakh of profit and STCG has a flat taxation of 15% on profit. This is something which we already know.
However, as per the above extract which I have shared, the 10% (above 1 Lakh profit) in LTCG and 15% in STCG is applicable for someone who is already in a tax slab. But my doubt now is, the rule should be different for a non-earning class - i.e. someone who does not have any other source of income definitely there has to be some relaxation on LTCG and STCG.
The Zerodha resource I shared above clearly explains it, but I just wanted to get some confirmation that my understanding is right. Few other sources of references confirming the same fact would be great actually.
Raj Pawan G
As I said, you have tax relaxation up to 2.5 lac. If u r earning more than that it means u have a proper income source. They don’t care how do u earn weather by trading or by investing. IT dept will consider LTCG/STCG as ur income source. So there is nothing like earning and a nonearning class what matters is only how much u gain in a FY.
Eg. if u have 3 lac LTCG (As u said no other income except CG) in a FY then u have to pay around 5000 rs (after nullifying the grandparenting effect ie capital gain is calculated after 31st Jan )
(3 - 2.5= 0.5 Lac@10%)
- Im not sure if we can claim medical expenses over CG
would like to know regarding the STCG & LTCG TAX on my turnover. Is it possible to check my TAX on my Turnover On KITE App? What is the payable Capital Gains taxable amount till date. How do i check.