Tax Liability when Profits are Reinvested

Taxation
1

@Quicko
How tax liability is computed in the following cases:
1.) Suppose I have profited 20 lakh rupees from my share investments in FY (2020-2021), and after selling those shares I bought other shares
a) in the same FY (2020-2021)
b) in next FY (2021 - 2022)
Do I have to pay taxes because I have reinvested the profits but did not withdraw it to the bank account ?

2.) Suppose 20 lakh profits were invested in a property
a) in the same FY (2020 - 2021)
b) in the next FY (2021 - 2022)
In this case off course money is withdrawn to the bank.

2

If you made profit. You have to pay taxes according to your tax slab.

One thing I don’t understand is people don’t take trading account seriously.

You can’t avoid paying taxes if you don’t withdraw your profit. It’s not about bank account. Everything is digital.

I have read this kind of question in many threads. If you made profit you have to pay tax you can reinvest remaining amount.

Don’t think that if you don’t withdraw this amount to bank account you can avoid paying taxes.

even companies submit high transaction details to income tax department. If you purchase shares worth of 10L or more in particular company.

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3

Hey @Stonecold

The liability to pay tax shall arise in the year in which the shares are sold and profit is earned irrespective of re-investment. Unless the investment was made to claim an exemption under certain sections. Hence in your case, the liability to pay tax shall be in FY 2020-21.

Hope this helps!

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