Income from Short term gains

Income Tax Income from Business or Profession
1

Hi!
I have over 50 short term trades from which I have incurred some losses. I have gains from equity intraday. Also I have some gains from long term investments. I am a full time trader. So,

  1. Do I have to file all of these gains as my business income.?

  2. Can I file my short term and long term gains as STCG and LTCG? ( Is 50 trades a lot to report as STCG?)

  3. Can I file my short term + intraday as business income and gains from long term investments as LTCG?

2

@Sakshi_Shah1 could you help with this ?

3

Hello @dan

  1. You can report equity delivery trading as either capital gains or business income. You can read more about it here - Capital Gain on Sale of Shares

  2. You can report your profits from equity delivery trading as Capital Gains. The loss from short term trades can be set off against profits from long term investments. You can carry forward the remaining loss for 8 years and set it off against future STCG or LTCG.

  3. The treatment of equity delivery trading should be either Capital Gains or Business Income since it is difficult to prove the intention to acquire such securities to the Assessing Officer. As per our advise, it should either be treated as capital gains or as non-speculative business income.

If treated as capital gains, loss cannot be set off against intraday profits. If treated as non-speculative business income, loss can be set off against intraday profits.

1 Like
4

Could you please guide me as to which ITR must be filed if I have short term capital gains from mutual funds.

5

Hey Harshil,

In case of Short Term Capital Gains from Mutual Funds, you should file ITR 2. However, if there is Presumptive Income in addition to the Capital Gains, then you need to file ITR 3. Check out our tool to know which ITR Form to file.

6

I my gross salary is 3.5 lakh means not taxable and my yearly equity share profit is 20,000 then i want to know is that will i pay 15% stcg tax on 20,000 or not ?

7

Hi @Kuldeep_Singh

Yes, there will be a tax liability on your STCG Income since the total income exceeds the basic exemption limit. However, if you are a resident individual you will get a tax Rebate u/s 87A since your income is less than 5 lakh INR.

8

My gross salary is 4,50,000 (only 2,00,000 taxable income from salary) and earn stcg profit is 20,000 and my age is 35…

  1. As per stcg exemption limit, no tax on
    Resident individuals who are below 60 years of age with an annual income of Rs. 2.5 Lakh.
    here 2.5 lakh what , total income or total taxable income amount ?

total income = 4,50,000 + 20,000 = 4,70,000
total taxable income = 2,00,000 + 20,000 = 2,20,000

  1. my gross income is 4,50,000 and my stcg profit is 20,000.
    Do i need to pay stcg 15% tax or not ?

  2. is Tax audit required or not ? when it is required

KS

9

Hi @Kuldeep_Singh

  1. 2.5 lakhs refers to your total income.
  2. There will be a tax liability of STCG, however, you will get a rebate u/s 87A. Post rebate if there is any amount payable then you need to pay that amount.
  3. Tax audit applicability comes into the picture when you have Income from Business & Profession (includes intraday and F&O). You can check if the audit is applicable or not here.
10

POINT 1. you mean to say, my total income is 4,70,000 which is higher than 2,50,000. am i right ?

11

Hi @Kuldeep_Singh

Yes Sir

12

my total income (4,70,000) > exemption limit (2,50,000) then i am liable to pay 15% STCG tax…
but your point2 reply is “There will be a tax liability of STCG”. How ?

13

Hi @Kuldeep_Singh

You can adjust your capital gains for any shortfall in the basic exemption limit to reduce your income tax outgo. However in the above case since your other income is more than basic exemption the tax shall be calculated on the same as well as STCG. And then the rebate shall be applied.

You can check out our Income Tax Calculator

14

ok , indirectly maximum limit is 5,00,000 which including rebate u/s 87A …am i right ?

15

Hi @Kuldeep_Singh

Yes if your income is below 5 Lakhs INR.

16

my salary income is 200000 and stcg was 542258 for FY 20-21, how is my tax calculated ?

17

is STCG(short term capital gains) applicable if trading in Nifty/BankNifty (Indices) & carryforward the position? , i.e buy nifty lot on day ‘1’ & sell that on day ‘4’.

18

Hi @godara8706, you can add your income situation in the below income tax calculator to know your tax liability under the old & new tax regime.

19

@AkashJhaveri @Divya_Singhvi @Laxmi_Navlani @Kaushal_Soni @Saad_C can you help with this

20

Hello @ignorant007 ,

Any gains/losses from trading in Futures & Options (F&O) shall be considered as your business income/loss and will be taxed under the head Profit & Gains from Business & Profession.

It won’t make any difference if you carry forward your F&O position from day 1 to day 4. The resulting profit/loss shall be still considered as your Business Income and not Capital Gains.

Hope it helps!