How to determine tax liability for Share Trading in India

Many of the tax payers is having confusion regarding treatment of Share Trading activities due to complexity in nature of transactions and activities. Details tax treatment prevailing as per Income Tax Act is as given below:

live-delayed-pricing

Purchase and sale of shares in delivery

  • The profit/loss is assessable as Capital Gains if shares are held as capital assets i.e. investments.
  • The profit/loss is assessable as Business Income if shares are held as stock-in-trade.

Purchase and sale of shares without delivery i.e. Intra-day trading (cash segment of share market)

  • The Profit/loss is assessable as Speculation Income (Turnover in this case shall be addition of profit and loss of each transaction for the purpose of 44AB)

Purchase and sale of Derivatives/ Futures and Options i.e. without delivery

  • The Profit/loss is assessable as Business Income.

Purchase and sale of commodities in Future Markets i.e. without delivery (MCX India Ltd.)

  • The Profit/loss is assessable as Speculation income/loss.

Purchase and sale of commodities in Cash Market i.e. with delivery (MCX India Ltd.)

  • The Profit/loss is assessable as Business Income if commodities are held as stock-in-trade.
  • The Profit/loss is assessable as Capital Gains if commodities are held as capital assets i.e. investments.

Purchase and sale of currency futures at MCX Stock Exchange Ltd. and in NSE/BSE

  • The Profit/loss is assessable as Business Income.