Taxation of Equity Shares

Taxation
1

Hi team,

Please let me know the taxation of equity shares if I am trading in equity shares with high value transactions where I am kind of doing swing trading and I hold scrips for 3-4 months…

I have consulted my CA and he is saying that it will be treated as business income…

Whether it will be treated as business income or capital gain?

2

Short Term Capital Gains (STCG) on Equity Shares:

  1. Holding Period: If equity shares are held for 12 months or less, any gains from their sale are considered short-term capital gains.
  2. Tax Rate: The STCG on equity shares is taxed at 15%, provided STT is paid. This rate is flat and does not change with the income slab of the taxpayer.
  3. No Exemption Limit: Unlike LTCG, there is no exemption limit for STCG. All gains, regardless of the amount, are taxed at the flat rate.

Please consider changing your CA.

3

Hey @Aditya_Agarwal3,

Reporting of trading income in the ITR depends on the intention of trading. In case you are doing swing trading with the intention of doing business, you can report the same as business income, otherwise, you can report it as short-term capital gains. The taxability on short-term gains is rightly mentioned by @arun_T.

4

Hey @Quicko

What do you mean by intention of doing business ?, I have only intention of appreciation of my capital, so how will I be taxed stcg or business income? Pls solve…

5

Hello @Aditya_Agarwal3,

The intention of doing business means frequent trades in the equity market, and entering into transactions with an intention of doing business and not capital appreciation and returns. Since your intention is capital appreciation, your gains will be taxed as STCG.

Hope this helps!