I read quicko team’s article that taxpayer has to choose (first time share market taxpayer) between how he wants to treat selling or shares - either has business income or short term capital gain …is this still true?
What if taxpayer has both income from selling of shares (due to this bull run) and also have options/intraday income ?
A taxpayer can file only 1 return on one PAN. And that return shall mention all the incomes of the taxpayer from different heads. It is at the discretion of the taxpayer to treat Income from Equity as Business Income or Short term Capital Gains.
So if you wish to continue to treat income from delivery based trading of shares as Capital Gain the same shall be mentioned under the head Income from Capital Gains. And the profit/loss from options/futures/intraday trading shall be reported under the head “Income from Business & Profession”
Ok so taxpayer can elect how to treat short term gain from delivery based trading - between capital gain vs business income.
Let’s say she choose to treat as business income than there will not be 2 different heads …but if you wants to choose it has capital gains than there will be 2 different heads in one return (not 2 returns)
But I also read that if she chooses to treat as business income (instead capital gain) she has to continue to do that for coming years …she can not change that.
Also, what is your advise …should she treat as business income or capital gain?
Yes, it is at the discretion of the assessee to choose the treatment of delivery-based trading as capital gains or business income. If he/she considers delivery based trading as business income the same shall be mentioned under the head “Income from Business & Profession”
As per the CBDT Circular, the treatment of income from the sale of shares should be consistent each year. The only condition is to follow the same method continuously in subsequent years. The taxpayer shall not be allowed to adopt a contrary approach in subsequent years.
