Short term gain tax on swing trading?

General
1

I am trading options intraday and doing swing trading (taking delivery of shares not more than 3-5 days)

I have to show options trading as business income , but can I take stcg @15% on my swing trading.
Is it allowed ?

I am have separate broker for swing trading of shares and another broker for options trading.

As stcg is 15 % on shares held upto 12 months. Income tax department has not specified any number of days.

Profit and gains from business will be charged normal slab’s (i.e 30% )
So i want my options trading to be taxed at 30% and swing trading to be taxed at 15%. Is it possible for me to take both the slabs.

2

Hi @md_imr

Although what you said can be done and in most of the cases, shouldn’t be an issue but in case, the trading activity is significant, there can be a dispute between IT dept and trader.

Check the below post by @Quicko on this topic.

And where there is ambiguity, it is always recommended to consult a CA to be on the safe side

3

Hey @md_imr,

Yes, the options trading can be reported under ‘Income from business and profession’ and income from Swing Trading can be reported as ‘Short Term Capital Gains’. However, the reporting also depends on the intention of trading. If the intention is of trading as a business, the same will be considered as business income, and in case the intention is capital appreciation, it’ll be considered as Capital gain.

1 Like
4

I want to hold stocks only for a week and reinvest sale proceeds.

Can I report it as STCG ?

5

Yes. Any holding period less than 12 months will come under STCG

You can also treat this as business income if you are doing this regularly. @Quicko will be able to share more insights on this

6

Holding period is less than week. I want to change position every week.

7

Hey @bharat1080,

Reporting of trading income depends on the intent. If you hold stocks with the intent of capital appreciation, the same shall be reported as capital gains.

However, if you engage in frequent buying and selling of stocks with the primary aim of earning profits, you can report delivery-based trading as your business.

Hope this clarifies!

8

I want to hold it only for a week. re-invest sale proceeds. Can I show it under Capital Gains? Is there any issue from IT DEPARTMENT?

STCG is 15 % only.

@Quicko

9

question is does Assessing Officer decide this or individual decide whether to show it as Business income or capital Gains ?

10

Hey @bharat1080,

As mentioned previously, reporting of trading income depends on your intent. Generally, delivery-based trading, i.e. your short-term and long-term gains are classified as income from capital gains and taxed at 15% and 10% respectively.

However, if you regularly engage in such transactions to earn short-term profits, you can report it as your business and in that case, the profits will be taxed as per the applicable slab rate.

Hope this helps!