Taxation of Income Earned from Selling Shares

1. Gains from Equity Shares

a. Short-term capital gains and losses

Seller may make short term capital gain or incur a short-term capital loss if equity shares listed on a stock exchange are sold withing 12 months of purchase.

The seller can make a   short term capital gain if shares are sold at a price higher than the purchase price.

Calculation of Short-term capital gain = Sale price(less)  Expenses on Sale (less)  Purchase price

b. Long-term capital gains and losses

The seller may make a long-term capital gain or incur a long-term capital loss if equity shares listed on a stock exchange are sold after 12 months of purchase,

Before the introduction of budget 2018, the long-term capital gain made on the sale of equity shares or equity-oriented units of mutual fund was exempt from tax under Section 10(38)

Under the Financial Budget 2018 provisions if a seller makes a long-term capital gain of more than Rs. 1 lakh on the selling of a mutual fund’s equity shares or equity-oriented units, the gain made would attract a capital gains tax of 10 percent long-term capital gains tax. Additionally, the seller will not get the value of indexing. Such provisions shall apply to transactions made after or on 1 April 2018.

capital gain,capital loss

2. Taxation of Gains from Equity Shares

a. Tax on short-term capital gains

Short-term capital gains are 15 percent taxable. What if the tax rate is 10 or 20 or 30 percent? A special 15 percent tax rate applies to short-term capital gains, irrespective of your tax level. Also, if your overall taxable income minus short-term gains are below taxable income i.e. Rs 2.5 lakh – this deficit can be balanced against your short-term gain. Remaining short-term gains will then be levied on it at 15 percent + 4 percent.

b. Tax on long-term capital gains

Long-term capital gains on equity shares listed on a stock exchange are non-taxable to the Rs 1 lakh mark.

According to the Budget 2018 amendments, the long-term capital gain of more than Rs 1 lakh on the selling of the mutual fund’s equity shares or stock-oriented units will incur a capital gains tax of 10 percent and the indexing profit will not be applicable to the seller. These provisions refer to transactions made on or after 1 April 2018.

3. Loss from Equity Shares

a. Short-term capital loss

Any short-term capital loss arising from the selling of equity shares can be compensated against short-term or long-term capital gain from any asset. If the loss is not completely balanced, it may be carried forward for an 8-year period and calculated against any short-term or long-term capital gains made over those 8 years.

It is worth noting that only if a taxpayer has completed his income tax return within the due date will be allowed to carry forward losses. Therefore, even if the total income received in a year is smaller than the required taxable income, filing an Income Tax Return is a must to bring such losses forward.

b. Long-term capital loss

Long-term capital loss from equity investments was considered dead loss before Budget 2018 – it can not be changed or carried forward. This is because profits from listed equity investments in Long Term Capital were excluded. Likewise, losses from them were not allowed to be set off nor carried forward.

4. Securities Transaction Tax (STT)

STT is applicable to all equity shares which are sold or bought on a stock exchange. The above-mentioned tax implications refer only to shares listed on a stock exchange. Any sale/purchase that occurs at a stock exchange is subject to STT. Such tax implications discussed above are therefore only for shares on which STT is paid.

5. Guidance for treating share sale as business income

Some taxpayers view shares gains or losses as ‘ business income, ‘ while others view them as ‘ capital gains. ‘It has been a matter of much discussion whether the gains/losses from the selling of shares should be viewed as business income, or be taxed under capital gains.

Typically your income is categorized as business income in the case of significant share trading activity (e.g. if you are a day trader with a lot of activity or if you trade frequently in Futures and Options).In such a scenario, you will be required to file an ITR-3 and your share trading profits will be shown under ‘ business & occupation income. ‘

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Avoid Payment of Capital Gains Tax On Property Sales In India

In India, you pay a capital additions charge on the closeout of a capital resource and a property is a capital resource. Along these lines, on the off chance that you have acquired a property for Rs 10 lakhs in 2008 and sold it in 2014 for Rs 30 lakhs, you have to make good on capital increases regulatory expense on property on the benefit of Rs 20 lakhs. Obviously, you need to mull over indexation.

How this capital additions is determined and what is the capital increases charge rate, we will see later.

What is capital additions charge on property and sorts of capital increases?

In the event that you sell the property at a benefit in under three years, at that point momentary capital additions charge will be relevant. Then again on the off chance that you sell the property following three years, at that point a capital additions duty of 20 percent will apply after indexation.

The administration gives you the advantage of indexation, as a result of expansion. There is an indexation adding machine that you should utilize. For instance, while the property obtained in 1980 may have gone up, so has expansion. Thus, you need indexation to touch base at the definite estimation for paying capital additions.

How to save money on capital gain charge?

Presently, as demonstrated you need to either pay present moment or long haul capital increases charge. Be that as it may, you can abstain from settling capital additions government obligation by completing one of the accompanying:

a) Reinvesting deal continues in another property

You can reinvest the whole deals continues in another private property. It would be ideal if you note, it is private and not business property. This must be done inside a 2-year time span. So ensure that after you sell, you start your chase for another property right away.

b) Construction of another property

The deal continues can likewise be utilized to build another private property and the room one gets is three years and not two years. This again must be arch inside the stipulated time allotment, to enable you to save money on capital additions charge.

c) Sale continues to be put resources into capital additions bonds

You can likewise put the sum in capital additions bonds. These are issued by two government possessed substances including the National Highways Authority of India and the Rural Electrification Corporation. There is a top of Rs 50 lakhs that has been fixed and one can’t contribute more than this sum. The loan cost on these bonds isn’t without question and is around the six percent mark.

The securities have been profoundly appraised and accompanied AAA/Stable by CRISIL and IND AAA(Stable) by India Ratings and Research. Regardless the odds of a default on these bonds is insignificant given the way that they are government upheld establishments.

These securities are not paying any incredible financing cost. Truth be told, the loan cost is only 6 percent, which makes them very ugly. Enthusiasm on the equivalent can continue changing and you have to check the most recent financing cost.

Best alternative to save money on capital gains

We trust that interest in the capital increases attach to spare charges isn’t appealing. It is ideal to utilize the returns to purchase or develop another house. The National Highways Authority of India capital additions securities, gives you a financing cost of only 6 percent consistently.

The best activity would be first to figure and see, how much capital increases you are probably going to pay. In view of that you should take a choice. On the off chance that the measure of capital additions payable to the specialists is somewhat high, you could well go for another house.

Pay taxes legitimately

It is ideal to pay your capital additions charge, in the event that you have depleted every one of the way to save money on them as referenced previously. There are people who get into confused arrangements to abstain from settling regulatory obligation. This isn’t the best activity and it is ideal to remain in consistence with the laws and the present rules. Work nearby a Chartered Accountant or a duty master in the event that the arrangement is actually huge and the risk that is emerging if there should arise an occurrence of clearance of property is huge ticket one.

Strikingly, even value offers would now pull in a long haul capital additions, expediting it standard with property and gold. This is a decent move by the legislature of India to treat all ventures on par as far as capital additions. Regardless one should be think about everything after the clearance of property.

Enquire with us for any queries related to income tax filing in Bangalore.

 

Interesting Facts About Aadhar

Aadhar being the key record now daily has such a great amount of installed in it to be as yet found. We as a whole have our UID cards issued and use it as a fundamental report of character in all areas. Regardless of whether it is tied in with opening another ledger, making some money related exchange, completing your international ID, applying some administration done and such different unlimited roads aadhar is the above all else introduced record. It gives a one of a kind personality to each resident of India having it. Today, We bring some fun realities about Aadhar which you without a doubt must have not been known to date.

The first Aadhar

We as a whole have our Aadhar, isn’t that so? In any case, do you realize who was the first among us to get it?? What’s more, in which city or state it was first issued? Indeed, the most importantly Aadhar for example UID number was issued on 29 September 2010. It was dispensed to an inhabitant of Nandurbar, in the territory of Maharashtra.

What number of Aadhars till date

Have you at any point thought about what number of Aadhar the UIDAI must have issued till date?? 1 Cr 2 Cr or more?? Estimate!! The number is far greater. Not the correct tally but rather amazingly, the nodal experts have so far issued in excess of 120 crore Aadhar numbers to Indian citiens. What’s more, the quantity of all out Aadhar enlisted goes upto 1,232,037,993. Though the information of updations is likewise very high going to 256,878,935.

UIDAI

We as a whole have heard some place or eventually of time about UIDAI (Unique Identification Authority of India). In any case, what number of us know more bits of knowledge about the equivalent?? All things considered, I didn’t before perusing this. UIDAI has its central station in New Delhi and it additionally has eight local workplaces crosswise over India.

Data Centers

The UIDAI (Unique Identification Authority of India) has two server farms in India situated at

  • Hebbal (Bengaluru), in the province of Karnataka and
  • At Manesar (Gurugram), in the province of Haryana

Age of Aadhar Holders

With regards to duty regularly the charge is taken by grown-ups or Man of the house however the information of Aadhar enrollment recounts a totally new story. Out of all out Aadhar distributions

  • Approx 4% has a place with those upto 5 years old
  • Around 23% to those having a place with the age gathering of 5 to 18 years and
  • At long last 73% to those over 18 Years of age

What’s more, one most fascinating thing told by measurements is that among every one of the classes to whom Aadhar have been dispensed till date about portion of the has a place with females. Presently we can see that India is truly proceeding, it is developing and everybody one is winding up part fo its example of overcoming adversity.