There is already a surge in posts in taxation section, so I have a question too.
I would like to know what amount is taxable under capital gains from trading in stock market. Let’s imagine a scenario:
Mr. X bought shares of XYZ company and made a profit of Rs. 10,000, in the same year he reinvested the profit and made a loss of Rs. 4000, so he exited from his positions and got Rs. 6000 back.
Now Mr. X is worried about filing ITR for this year, how much should he declare as his capital gains? The gross amount Rs. 10,000 or the net amount Rs. 6000?
Mr. X will be taxable for the net amount of Rs. 6000 and tax rate will be 10% over and above Rs 1 lakh(if its ltcg) and 15% (if its stcg). As the profit & loss occured in the same year so loss is set off against profit & if the loss occured next year then in that case loss will get carried forward and can set off again profit made in next year.
The ITR form itself helps with solving this confusion: it does not ask Mr.X what his capital gains are, in so many words. Instead, it asks him for the following amounts:
The gross amount he spent in purchasing the shares, minus the STT paid on the purchase
The gross amount he received when he sold the shares, plus the STT paid on the sale, minus the brokerage and all other charges/taxes paid on the sale
Any amounts that he spent solely towards improving his sale price for the shares of company XYZ. If Mr.X (like me) has no idea what this means for shares of company XYZ, he can leave this as zero.
The ITR form then ruminates on these numbers and tells Mr.X the taxable amount that he gained/lost.
So, as long as Mr.X knows the gross amounts he paid and received, and the STT that he paid, he doesn’t have to worry: the form is smart enough to figure out his taxable gains. Also, he only has to know these numbers for the (purchase, sale) pairs corresponding to the sale transactions that he made in the relevant FY.
Previously he only needed to know the total amounts across the entire FY; I think now the form also asks for per-transaction numbers. But again, these are just the total purchase and sale numbers; the extremely hard work of calculating the capital gain is automatically done by the form.
Ltcg(long term capital gains) for investments greater than 1 year : taxed at 10% for equity investments
Stcg(short term capital gains) for investments lesser than 1 year : taxed at 15% for equity.
Some ppl do tax harvesting by booking loss at the end of the year and buying back soon after.
