Option short stock term trading tax
Income tax department clarifies that these transactions are to be separately assessed under different heads: Income Derived from intraday trading is regarded as speculative business transaction.
Loss from intraday trading can only be settled from other speculative income only. If the purpose of the trades was to invest in the securities then it will be assessed under the head capital gains. Guidelines for business income are as follows:. Is set off available in case there is a loss from sale of shares!! As the nature of loss is Business income hence it is available for setoff first from any other business income intra head setoff.
If after that unabsorbed loss is there it can be set off through other heads except income from salaries. If After that too any loss remains unabsorbed then the loss can be carried forward for next 8 years if the return is filed before due date. Is set off available in case there is a loss from derivative trading!! The answer to the setoff is NO as section 43 5 which exempts derivative trading from speculative business but is not covered by section 73 which allows setoff.
So not even intra head setoff as allowed. Tax on long term capital gains: Income tax on sale of long term equity shares is exempt. Guidelines for business income are as follows: If the total turnover of trading of shares exceeds Rs. If the total turnover of trading does not exceeds Rs. Turnover in case of cash market transactions is the total monetary value of shares sold during the financial year. So it is now clear that if trading is done through recognized stock exchange then it is treated as normal business income.
In that case too ITR 4 will be filed. In the case of profit from derivative transactions, tax audit will be applicable if the turnover from such trading exceeds Rs. So whether there is profit or loss it has to be treated as turnover. Suppose there is a loss of ITC futures is Rs.
Turnover in case of Options is aggregate sum of premium received from sale of options. Unlike in other systems, they are exempt from any form of capital gains tax. Once you meet these requirements you simply pay tax on your income after any expenses, which includes any losses at your personal tax rate.
The only rule to be aware of is that any gain from short-term trades are regarded as normal taxable income, whilst losses can be claimed as tax deductions. Paying taxes may seem like a nightmare at the time, but failing to do so accurately can land you in very expensive hot water.
The tax consequences for less forthcoming day traders can range from significant fines to even jail time. Over time this can reach So, think twice before contemplating giving taxes a miss this year. It is not worth the ramifications. The good news is, there are a number of ways to make paying taxes for day trading a walk in the park.
Below several top tax tips have been collated:. To do this head over to your tax systems online guidelines. Follow the on-screen instructions and answer the questions carefully. Then email or write to them, asking for confirmation of your status.
Once you have that confirmation, half the battle is already won. Some tax systems demand every detail about each trade. So, keep a detailed record throughout the year.
Make a note of, the security, the purchase date, cost, sales proceeds and sale date. Nobody likes paying for them, but they are a necessary evil. You need to stay aware of any developments or changes that could impact your obligations. You never know, it could save you some serious cash. The end of the tax year is fast approaching. All of a sudden you have hundreds of trades that the tax man wants to see individual accounts of. That amount of paperwork is a serious headache.