Hi

I am new to Zerodha trading. I would like to understand how much will be the income tax amount for the trade done for a year. Considered below example for one trade day.

Example:

Tatamotors Future contract for Sep24 - Buy qty - 1000 at Rs.320 and sell qty - 1000 at Rs.321.

In this above trade as per zerodha brokerage calculator with all charges will be Rs.133.10.Brokerage alone is Rs.40 and other charges are Rs.93.10. Profit earned from above trade MTM is Rs.1200. So net gain from this trade is Rs.1067.

Lets say the tax slab is in 5-10lakhs range and taxable income other than trading is 6lakh. So for this trading gain please clarify which calculation method is correct,

Method 1

All other Income - 600000

Trading futures income - MTM - Rs.1200

Total income - 601200

Income Tax for the following,

0-2.5lakh - 0

2.5-5lakh - Rs.25000

5-10lakh - Rs.20240

Total Tax is Rs.45240.  Tax for trading income is Rs.240.

Method 2

All other Income - 600000

Total income - 601067

Income Tax for the following,

0-2.5lakh - 0

2.5-5lakh - Rs.25000

5-10lakh - Rs.20213

Total Tax is Rs.45213. Tax for trading income is Rs.213.

Method 3

All other Income - 600000

Trading futures income - MTM-Brokerage -  1200-40=Rs.1160.

Total income - 601160

Income Tax for the following,

0-2.5lakh - 0

2.5-5lakh - Rs.25000

5-10lakh - Rs.20232

Total Tax is Rs.45232 Tax for trading income is Rs.232.

Please clarify which method is correct for calculation of tax.

Method 2 is the best option.

Check this module: http://zerodha.com/varsity/module/markets-and-taxation/