Multiple buyback

Kindly do help out with this scenario.

  1. selling shares from the holdings buying it on the same day.
  2. selling it again and buying it back 3.30 pm.

Consequences related to the above process??
Is that okay to carry out. ?

Not an expert or have full knowledge, but I do not think there will be any restriction except that your transaction will be considered as Speculation and will be taxed accordingly.

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both trades will be intraday trades and will be charged according and also as pointed out earlier… for taxation purposes this will be speculative income and will be taxed according when filing taxes… there’s nothing to worry about… it’s normal to do this when one has opportunity to gain shorting holdings…

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Usually new SEBI rules says, we can buy back 80% shares after selling it from the holdings. Since only 80% of sale credit will be credited on the day of selling.

But while buying the shares back on the same day, if you execute your order to buy back you are able to acquire 100% of shares that you have sold.

((Say for example, I sell 100 shares , I will be credited with worth of shares, when you are trying to buyback 50 shares first and another 50 shares after that. You are able to buy back entire quantity )) ??? @siva @ShubhS9

And do we get any penalty if we sell holdings and buying it back and then again selling buying it back on the same day ???

When you sell shares from your holdings, only 80% of the sale proceeds will be credited to your account.

If you want to buy back the shares sold, and don’t have any additional cash other than the funds received from selling holdings, then you’ll be able to buy back only 80% of the shares sold. If you’ve sufficient funds, you can buy all the shares.

Yes you will be penalized unless you have additional money, so don’t buy back full 100% back in small quantities, also finally if you sell that will be okay.

HI Sai-Maheswaran
Just curious, why would you want to sell shares, buy them back, sell, buy them back. What is the benefit of doing it. I have heard of people doing it for something called tax loss harvesting.
Would like to know the real reason for doing this.

Hi Neha,

Buying it back on the same day gives us opportunity to even reliase gains when a stock falls down.
Say If a stock trading at 100 rupees, if you know that the stock will go to 95 you just sell the stock at 100 and buy it back at 95 . So you will be benefited with 5 rupees profit.

Likewise, assume when the stock again goes back to 100 from 95 on the same day, when you come to know about the stock fall once again just short and buy at lower level.

So double benefit.
But your prediction should be right.

In cash segment if you are trying to implement this strategy, you should have sizable quantity, next you shoukd hold it for more than one year to get some tax benefits before doing this. I think professionals do it in f & o segment as cash requirement is lower and quantity high. In cash segment its quite a difficult task to time it.
I dont think any investor will do this in cash segment

Neha, Appreciating you. You are more concerned about paying taxes.
My view is that don’t look to save taxes if you come to active investing in stock markets.
You may think about saving taxes in ELSS. and in other schemes.
Money making is important than saving taxes ( ofcourse you only pay as a percentage of profits)

Yes you re right. One should do in huge quantities to make profits in either sides.

I was trying to make a point that there would a tax element of 15 percent plus cess out of your profits which should be accounted for as well along with brokerage plus govt fees.
Anyways all the best.

I got your point Neha, but even on intraday gains ( speculative gains ) you have pay taxes according to your tax slabs.

So if one’s yearly income exceeds above 20 L it is better to be taxed under non speculative tax regime ( STCG ) rather than speculative income.