Taxes for day trading in equities

I read that day trading in equities is not treated as short term capital gains but considered as speculative business income. Hence, attracts different and higher taxes. I am not able to get a clear information on this. As I am not familiar with tax laws very well, can someone clarify the below please? :

  1. Is it true that day trading in equities is considered speculative business income with higher tax rates?
  2. Are there any online tool where I can enter these turnover, P&L etc and get the applicable taxes?
    3.Do we have to pay Minimum alternative tax ?
  3. Is it better to trade in F&O to avoid higher speculative tax implications? But, this would force us to take higher risk as we have to trade in lots unlike few shares in equities for a smaller amount.
  4. Though I have been trying to learn trading for more than a year, I never came across this speculative tax thing so wondering many other equity day traders are unaware and are exposed to huge tax risks ?

@Nithin can some one from zerodha please clear the fog here ? :slight_smile:

whether its treated as speculative income or short term investments, I am NOT GOING TO PAY 30%. fuck the govt in the ass, bloody bastards.

  1. Yes speculative business income. But you have to pay taxes as per the income tax slab you are in. IF you are in the highest slab, then yeah 30%.
  2. Suggest you to go through this
  1. F&O is non-speculative business income, taxed similar to intraday - as per your tax slab.
  2. Do go through the module, all your taxation questions will be answered.

how to know or at what stage it is business income and not investment income in intraday and f&o and also if it applies to long term holding too .please someone help.


Nothing is going to stop you from day trading.

But note that every day you trade, you are paying taxes to the govt and they are only going to increase in the form of cess and other duties apart from GST.

And on top of that if you are profitable for the year, you must again pay income tax on that.

Hence for day traders , this is double taxation , but somehow this is just fine by traders. So if you are happy to pay taxes irrespective of your PNL, then taxes shouldn’t matter to you.

My suggestion to every day trader - either do short term(1-3 months) trading or invest. But then it looks like day traders on Zerodha are very profitable.

What do you mean by that?

Intraday = 30% or as per slab

FNO = 30% or as per slab

(But if you hold your FNO over days, you can use a good CA to get it considered under short term tax slab which is 15% - I heard this some where)

Short term holding = 15%

Long term holding = 10%

Fo can’t be clubbed into 15% short term gains

Fo is a contract so irrespective of other factors, you have to show as business income.

The 15% is applicable to equity
Buying & holding share from cash mkt