Tax Calculations CNC & MIS

Taxation
1

How tax is caluclated for CNC & MIS for same day. Let say my positions for the day are as follows

CNC
P&L -50

MIS
P&L 350

Total 300

  • how tax is calculated i.e separate tax method foe delivery equity for CNC stock & delivery intraday for MIS stock
    *for MIS stock Net P&L is credited on the settlement day right
    *for CNC stock it P&L is calculated on holding right

let me know if am missing something here

2

@Quicko

3

Irrespective of the product type (CNC / MIS), the profits from all intraday transactions in equities have to be reported as speculative business income and it is taxed according to the tax bracket you fall under.

For example, say you bought 1L worth of stock X and sold the same for 1.2L on the same day using the CNC product type. This trade is still considered as an intraday transaction and you have to report the profits (20k in this example) under speculative business income. This 20k will be taxed according to the tax bracket you fall under.

The profits from delivery transactions (what is sold from your holdings) is considered as capital gains and taxed based on your period of holding. Short term capital gains is taxed at 15% and long term capital gains is taxed at 10% for equities and equity oriented funds.

You can go through the Markets and Taxation module on Varsity to better understand the taxation aspect of all your trades.

4

thanks for the reply here i bought the share for long term holding. let say i bought 1 share at 200 in CNC for long term holding and the ltp is 195 so it will be -5 for CNC and MIS profit is 50 so the final P&L is shown 45

5

The P&L will show a realised profit of 50 and and unrealised profit of -5 in this case. For taxation, you consider only what’s realised.

6

Hey Satish,

CNC - equity delivery trading

If income from equity delivery trading is considered to be a business income, turnover is the total sales value. It is taxed at slab rates.
If income from equity delivery trading is considered to be capital gains, turnover is not required to be calculated. It is taxed at 15% for STCG and 10% in excess of INR 1 lac for LTCG.

MIS - equity intraday trading

Income from equity is a speculative business income and turnover for the same is absolute profit i.e. sum of absolute values of profit and loss. It is taxed at slab rates.

Hope this helps :slight_smile:

7

Hi @Quicko

Suppose while filing my ITR for FY 20, I declare my equity delivery trading as business income. In this case, can I in the next year while filing ITR for FY 21 declare my equity delivery trading as capital gain? Can I do this? Thanks

9

Hey Praksy,
Income from equity delivery trading can be considered either as Capital Gains or Non-Speculative Business Income. However, the treatment should be consistent every financial year. You can read more about it here.