Short Capital Gain Tax V/s Intra day Tax
- Whether day trading is considered as short term trading and the same tax rate is applicable?
- What about the short term capital gains on profit made by me on intraday trading in stocks ?
- How and when would i have to pay the short term capital gains. Is it allowed to deduct the STT paid, broker charges and AMC charges from my tax liability?
NO there is difference between the two day trading is considered as speculative income and you have to pay more on day trading as compared to short term gains.Share Trading is not speculation but Day Trading Square off the transaction in same day in Shares in speculation.Profit from delivery transactions and derivative trades is Non-speculative while profit or loss from jobbing is speculative in nature.Intraday trading in Cash segment is deemed as speculation, same as lottery or betting on horse racing.The tax rate applicable on profits from speculation income is flat 30%.
For calculating income-tax on short-term capital gain of listed securities, you are governed by section 111A of the Income-tax Act, 1961. Section 111A of the Income tax Act provides that those equity shares or equity oriented funds which have been sold in a stock exchange and securities transaction tax is chargeable on such transaction of sale then the short term capital gain arising from such transaction will be chargeable to tax @10% upto assessment year 2008-09 and 15% from assessment year 2009-10 onwards.
If you derive short-term loss, the same can be adjusted with short-term capital gain. The cost of the bonus shares will be treated as Nil while calculating the capital gains.
The intraday trading income has to be separately calculated and has to be adjusted with intraday trading loss
No loss shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.
http://www.incometaxindia.gov.in/acts/income%20tax%20act/73.asp
Do i need to get audited my accounts if i made turnover above 40 lakhs
IMP: TAX AUDIT IS ONLY REQD FOR BUSINESS INCOME I.E FOR INCOME FROM DERIVATIVES/FUTURES AND OPTIONS. Not from Income from Capital Assets or Speculation Income. So you may have a income of any type from Delivery/Intraday but no need for Tax Audit.
Section 44AB
AUDIT OF ACCOUNTS OF CERTAIN PERSONS CARRYING ON BUSINESS OR PROFESSION.
Every person, – (a) Carrying on business shall, if his total sales, turnover 711 or gross receipts, as the case may be, in business exceed or exceeds forty lakh rupees in any previous year, or
(b) Carrying on profession shall, if his gross receipts in profession exceed ten lakh rupees in any previous year, or
(c) Carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD or section 44AE or section 44AF, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year, get his accounts of such previous year audited by an accountant before the specified date and furnished by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed 714 :
Provided that this section shall not apply to the person, who derives income of the nature referred to in section 44B or section 44BB or section 44BBA or section 44BBB, on and from the 1st day of April, 1985 or, as the case may be, the date on which the relevant section came into force, whichever is later :
Provided further that in a case where such person is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and furnished by that date the report of the audit as required under such other law and a further report in the form prescribed under this section. 716
Explanation : For the purposes of this section, - (i) “Accountant” shall have the same meaning as in the Explanation below sub-section (2) of section 288;
(ii) “Specified date”, in relation to the accounts of the previous year relevant to an assessment year means, - (a) Where the assessee is a company, the 30th day of November of the assessment year;
(b) In any other case, the 31st day of October of the assessment year.
Actually intraday trading income will be treated as trading income. (Business income).
Income from capital gains (short) will be taxed @15% and not 10% (Now 15% Tax)
Income from Trading will be added to regular income and will be taxed as per slab rates. In your case as per your income 3.2 lakhs, it will be taxed @20%.
Since the amount is small, if you want to take some minor risk, you can show both the incomes as short term capital gains and can pay tax @15% flat rate.
If you want to be perfect, then you have to submit your returns in ITR-4. In this case you have to take the help of some tax consultant.
For short term gains you can deduct STT, brokarate and AMC.
For trading income, you can claim many expenses which your tax consultant will tell you.