Wednesday, September 1, 2010

CAPITAL GAINS TAX ON SHARE TRADING

Dear Mahesh Ji,
Please give a brief description about "Capital Gains Tax" in your blog and how can we avoid it
Thank you in advance
Rajeev Daniel
In share market trading, for tax purpose 3 type of trading is there
A. intra day trading without delivery
B. F&O trading
C. cash market trading on delivery base. (With STT paying)
In Above 3 types type A. intra day without delivery trading and B. F&O trading treated at speculation income or business income so in these 2 type capital gain tax is not applied income from intra day without delivery and F&O treated as normal business income and this income add in your total income . on this income normal income tax rate apply in your tax slab.
Capital gains tax applied only where, there C type of trading means investing or cash market trading on delivery base. (With STT paying). In this type capital gains tax calculated as
a. long term capital gain tax
b. short term capital gain tax
If you buy a share and sell it after 365 days then this is called long term capital gain and long term capital gain tax is nil means you no need to pay any capital gains tax if you sell a stock after 365 day.
If you sell your stocks before 365 day then it is called short term capital gain and 15 % capital gain tax applied there.
HOW TO PROTECT SHORT TERM CAPITAL GAINS TAX: - this is simple sell a stock after 365 day otherwise I think no any other way to save it.

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