Tax percentage between Salaried vs Trader

Income Tax Income from Business or Profession
1

Hi,

Assume we have following Scenario.
**PersonA = He is Salaried having yearly income of 20Lacs. **
PersonB = He is a Equity Swing Trader, making yearly income of 20Lacs.
PersonC = He is a earning 20Lacs through Salary and 20Lacs through Equity Swing Trading.

My question is

  1. I was told that Salaried person is Taxed more than Trader. In the above case, obviously PersonA will come under 30% Tax bracket. I was told by my Auditor and PersonB will pay 15% Tax. Is it True?

  2. How is the Tax calculated for PersonC?

Thanks for your time.
-Prashanth

2

Hi @Prashanth,

  1. Salary is taxed at the applicable income tax slab rate
  2. Short term capital gains are taxed at a flat 15% rate

Now, when you have income from both salary and equity trading, the income will be taxed based on the income head they fall under.
Therefore, in this case, for Person C INR 20 Lakh from salary will be taxed at the applicable slab rate and the other INR 20 Lakh will be taxed at a rate of 15% for the STCG.

You can use the Income Tax Calculator to know the tax liability under both New & Old Tax Regime

3

Thanks a lot Nireka.
Appreciate your reply.
It was helpful.

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