ITR filing: Detailed explanation of how stock market revenue is taxed

 ITR filing: Detailed explanation of how stock market revenue is taxed

Calculate your income tax: Income from the sale and acquisition of shares is classified as either business income or capital gain. Therefore, people who profited from the recent stock market boom must understand how their stock market income would be taxed. The holding time is used to determine stock market income, according to tax and investment professionals. The income will fall within the long-term capital gain category if the investor has held the shares for more than a year. However, the stock market income would be referred to be a short-term capital gain if the holding period was less than or equal to 12 months.

guidelines for income taxation of stock market participants

Sujit Bangar, the founder of Taxbuddy.com, commented on how income tax is applied to stock market earnings when he stated, "Income from the stock market is taxed either as company income or capital gain. It is not speculative to sell stocks with under line delivery. Taxes may be applied to this kind of transaction as ordinary business income or capital gains. The gain or loss resulting from the sale or acquisition of the shares you own in your trading portfolio is regarded as business income. Even futures and options trading is seen as non-speculative company revenue.

The expert at Taxbuddy.com continued by saying that company income is taxed at standard slab rates. In order to calculate your taxable profit, you may here deduct incidental costs from your company earnings. According to him, a stock market income is classified as either a short-term gain or a long-term gain depending on how long the stock is held.

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Gains from assets held for less than or equal to a year are referred to as short-term capital gains (STCG). Gains from STCG are normally taxed at a rate of 15%.

Long-Term Capital Gain (LTCG): LTCG is the outcome of owning assets for a period longer than a year. Without the advantage of indexation, LTCG on listed shares is taxed in India at a flat rate of 10%.

How is IPO money taxed?

Jitendra Solanki, a SEBI registered tax and investment expert, explained the income tax rule that will be applied to income from an initial public offering (IPO), stating that "In case of income from IPO, same income tax rule will be that applies but the duration of the holding period of the stock will not correspond to the date of investment but rather the date of credit of shares into the demat account after finalization of share allocation."

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In response to the question of why the date of application or the date of allocation cannot be regarded as the date of investment, Solanki said, "When you apply for the IPO, you are not owning the shares and so it cannot be the date of investment. Additionally, since stock hasn't been deposited to one's demat account, the date of allocation cannot match the date of investment.