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New to Stock Market – Things should be aware of Taxes

(3 minutes read)

During the pandemic time most thinking about the extra sources of Income. From that majority started trading in Stock Market. Sure they are rewarded with handsome profits during the last financial year, 2020-21. But it is Tax time one should aware of basic things with regard to the Tax treatment related to transactions in the Stock Market.

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Keep records of your transactions:

Even though each and everything is available in the app keep the following records:

  • Shares you purchased
  • Number of shares purchased
  • Cost price
  • Dates of all transactions
  • Sale price
  • Brokerage and other expenses

Taxation for Equity Investments:

During the previous financial year, 2020-21, the majority of the person who traded in the Stock Market made fruitful returns. Investments are taxed if you sell the shares and realize it as a gain.

Types of Income from Equity Market

  • Short Term Capital Gains apply to profits you make from the sale of shares that you have held the shares for one year or less. These profits are taxable @15%

  • Long Term Capital Gains Tax applies to profits you make from the sale of shares you have held for more than one year. Tax treatment for long term capital gains are taxable as the 1st Rs. One Lakh is totally exempted and the balance after Rs. One Lakh is taxable @10%

  • One more is Profit from Intraday day transactions i.e. If you realize profits when the purchase and sale of shares occur during the same day. The profits realized from intraday trades are taxed under the head ‘Income from Business or Profession’

Offsetting gains with losses:

Short term and Long term losses can be carried forward for setting off up to 8 Assessment years.

Tax for dividends:

Any dividend received for the shares held is taxable under the head of Income from Other Sources/ Income from Business.

The writer of the Article is a Chartered Wealth Manager

Can be reached @ harikcwm@gmail.com


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July 2024