STCG for non-salaried person

My wife is not salaried and started trading. The transactions are in STCG. Suppose if she makes 10L in a year, after deducting 2.5 L, whether I need to pay tax for 7.5L as per tax slabs (considering old scheme) or I need to pay 15% of 7.5L? Considering no intraday or F&O. Please clarify.

@Quicko can you.

Think tax on STCG is 15% fixed irrespective of tax slab if taxable income is above Rs.2.5 lakhs. So you pay 15% of Rs.7.5 lakhs.

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STCG is taxed at the rate of 15%, irrespective of salaried or not.
You can adjust your STCG (10 Lacs) against the basic exemption limit of 2.5 Lacs and pay 15% tax on balance 7.5 Lacs.

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Thank you all

Hey @justjaks

Short Term capital gains are special rate incomes and taxed at 15%, so after deducting the basic exemption of INR 2.5 lakhs, you have to pay tax on STCG at the rate of 15% on INR 7.5 Lakhs. Additionally, if you had any losses the previous year, you carry forward these losses and adjust it this year against the capital gains to further reduce your liability. You must also keep in mind that you will not be able to claim any chapter VI A deductions on the short-term capital gains that you earn, in order to reduce tax liability.

Hope this helps!

@Quicko you are forgetting one important thing. if @justjaks’s wife is not earning then what’s her source of income, where did she get the funds that were used for trading to result in STCG? Can you please explore the tax implications of the husband’s money used by the wife that resulted in capital gains, and what would be the taxation, who will be taxed, if this is the case?

Hey @rupeshmandal

Capital Gains earned by the wife with the use of the husband’s money will be taxed in the hands of the wife only. The wife can show money received from the husband as a gift (A gift received from a relative is exempt) or even as an unsecured loan and repay the same at a later stage.

Clubbing of Income will not come into the picture as the wife would have earned this income using her own skill set.

Hope this helps!

In case of a gift, a gift deed needs to be made. In case of a loan, there too paper work needs to be done. If I am not wrong.

These articles say otherwise on clubbing where the husband would be taxed if the returns from the activity of wife is intentional e.g. FD to earn interest, stock trading:-



The topic of clubbing is not as clear as it sounds.
Anyway should I bother? Neither am I married nor do I intend to. :sweat_smile:

You have mentioned about adjusting losses from previous year. What if you have losses in this same year? Can that be adjusted too?
Thanks.

@rupeshmandal @Quicko how about taxation if the invested capital is from son to mother and mother invests in stocks? This link https://cleartax.in/s/section-64-clubbing-income doesn’t cover that

as far as i know and I may be wrong. if I am @Quicko can correct me, a family = you, your spouse, and your kids (dependent). So in this case, you belong to your mother’s family, but since you are already an independent earning individual, you are not dependent on her. She may or may not be dependent on you. Dependent parents. In my opinion, if a son transfers funds to his mother, since within a family, close relationship, money can be gifted, so it would be considered as a gift (or a loan too depends). To be on safer side, keep paper trails ready, just in case ever IT Dept sends a notice. That clubbing clause was for spouse where usually husband intentionally transfers money to wife (in most cases when she has no earning) to reduce husband’s tax liability and to earn profit by putting that money in FD or trading etc.

You have mentioned about adjusting losses from previous year. What if you have losses in this same year? Can that be adjusted too?
Thanks

Hey @bitte97

You can set off your current year’s losses against the taxable income considering the set-off rules. The amount of loss remaining after set-off in the current year can be carried forward to future years.

Hey @justjaks

Money transferred by you to your mother will be considered as a gift and gift received from relatives are non-taxable in the hands of the recipient.

Moreover, If your mother invests that amount in stocks and earns profits by using her practical application of professional/technical skills, the profits from trading will be taxable in her hands.

Hope this helps!