Classification of sale of equities

Income Tax Income from Capital Gains
1

Hi, I am trying to understand the classification of sale of equities as business income or capital gains. The transactions in question are all delivery stocks
i.e. equities held for more than a day but less than a year. As per the following article Income Tax on Equity Share Trading - Learn by Quicko, when there is significant trading activity, such activity is classified
as business income. My question is how is “significant trading activity” determined? How many trades done in a year qualify as significant trading activity?
Is it 10 trades per year or 20 or 50 or some other number. Can someone please clarify. Thank you, Venkat

2

Hi @vrrv101,

There is no clear definition as to how many trades a year will be considered as Significant Trading Activity. Income Tax Department has issued a Circular stating the intention of the taxpayer will be considered to decide if it is Business income or Capital Gains. If the intention is to earn profits by simply buying and selling the shares it will be considered a Business Income but the intention is to earn Dividend Income by holding the shares it will be treated as Capital Gains.

Hope this helps!