File ITR for Stock Market Income
Income derived from selling stocks comes under the stock market income domain and is taxed accordingly in the Income Tax Act. profits made from selling stocks, equities, or shares are treated either as capital gains or business income. Further capital gains are classified into two sub-categories which are solely based on the holding period of the share or stock.
In budget 2024, it was announced that there will be only two holding periods for capital assets. The short term will be the one which is held for 12 months and the long term is the one which is held for 24 months. The 36-month holding period is eliminated from the acts.
The holding period refers to the period for which any share or stock is kept or remains unsold. It starts on the day of acquisition and ends on the day of sale or transfer. However, the holding period is different for separate classes of capital assets. For example, the holding period for shares and securities is different from capital assets. It also varies from equity shares to mutual funds. The taxability of the same also varies.
Equity shares listed on a stock market exchange sold within 12 months of acquisition attract 20% tax applicable from July 2024. In budget 2024, the tax rates for long-term capital gains also increased from 10% to 12.5%.
Is Stock Market Income Business Income or Capital Gains?
Determining the category of gains from the sale or transfer of shares or equities is still a complex task under the taxation rules. The CBDT has laid down parameters to distinguish between stock income as capital gains and business income.
Stock market income
The intention of trading decides the nature of income, for example
- Whether one devotes a substantial time or a small time to the trading activity determines the category
- Whether such transactions continue in a financial year
- Whether the purpose of trading was to make a profit or for long-term appreciation/earnings dividends
Business income from the stock market
Taxpayer’s intentions determine the category. For example, if a taxpayer treats gains as business income, the gains arising from the stock market will be treated as business income.
Capital gains from the stock market
After holding a share for more than 12 months, if a taxpayer decides to treat the gains as capital gains, he is allowed for the same on the condition that he does not make a contrary decision later.
How TaxDunia File Your ITR?
- After Taxpayers have logged in to our platform, give us primary additional information so that we can know your requirements betterÂ
- Then you have to provide us with all the documents required for the particular service (as mentioned above in the article)
- Now it is time to pay the service fee which is auto-calculated based on the questions we asked you earlier
- As soon as the payment is made, TaxDunia assigns an expert to the client
- The expert evaluates the documents and starts the procedure on the respective government portal on behalf of the client
- If any specific documents are required later, the expert will communicate to you directly
- Based on the complexity of the task, the government sends approval for the aforesaid service
Our team is available from 10 AM to 7 PM on working days (Monday to Saturday), except public holidays. The expert is not responsible for the authorities’ judgment.
We keep the client informed about the current updates to make the procedures transparent. Credibility and confidentiality matter to us. Today is the most suitable day to start with TaxDunia.
