Your new cost price is Rs 11 lakh, and your net profit is Rs 2 lakh in the span of 2 years. Let’s assume you fulfilled your target of Rs 13 lakh after one year from this time frame. The tax harvesting rule will be implemented in this case you will receive the same total number of shares in your demat account, but your new cost price will be Rs 11 lakh. But let’s assume that your target to achieve is Rs 13 lakh in 2 years, now to achieve this target what you will have to do is sell your entire shares and buy immediately. Here the gain made is Rs 1 lakh, but after the exemption of Rs 1 lakh on LTCG, so the tax you will pay will be zero. Let’s assume that in 1 year your total cost of shares have gone up to Rs 11 lakh and the cost at which you had bought the shares was Rs 10 lakh. ![]() You will now pay Rs 20,000 in tax on your long-term capital gain at a 10% tax rate.īut it’s not over yet, here we will take advantage of tax harvesting to lower the taxable amount. Your total LTCG after exemption is now Rs 2 lakh. ![]() Long-term capital gains (LTCG) of up to Rs 1 lakh are exempted from income tax in a fiscal year if equity shares and equity mutual funds (MFs) are sold after being held for one year or more. If you invested Rs 10 lakh in a stock today and made an LTCG of Rs 3 lakh in two years, resulting in a net gain of Rs 13 lakh after two years. Here, we will take an example on how salaried individuals can calculate income tax on Short-Term Capital Gains (STCG), Long-Term Capital Gains (LTCG). How to calculate STCG and LTCG along with your salary? STT can be claimed under income tax if the STT amount paid is recognised as business expense and if share income has been classified under the heading “Profits/Gains from Business and Profession” as per Section 36 of the Income Tax Act of 1961. Securities Transaction Tax (STT) is a taxable amount that is levied in India on the acquisition or sale of securities listed on Indian stock exchanges. As a result, income tax will be levied on speculative and non-speculative business income in accordance with the individual’s income tax slab rates. If you made a profit through intraday trading, your income is classified as business income rather than a capital gain earnings are added to your net income and taxed at the slab rate. 1 lakh on the sale of equity shares or equity-oriented mutual fund units, the gain would be taxed at 10% plus any relevant cess but without the benefit of indexation. If a seller earns a long-term capital gain of more than Rs. If listed stock shares are sold after 12 months of acquisition, the seller is said to have either made a long term capital gain (LTCG) or incurred a long term capital loss (LTCL). Short-term capital gains are taxed at 15% under Section 111A, regardless of your tax bracket, plus any applicable surcharges and cess. If listed equity shares are sold within 12 months after buying, the buyer is reported to have either short term capital gains (STCG) or short term capital losses (STCL). Based on the period of holding of shares, your capital assets are classified either as short term or long term. Gains from intraday trading are taxed under the head of “Business Income” whereas gains made from long or short term investing are taxed under the head of “Capital Gain”. ![]() ![]() Income made from the purchase or sale of shares falls under the category of Capital Gains or business head. A stock market investor should be aware that equity share gains are taxed in different manners such as Short-Term Capital Gains (STCG), Long-Term Capital Gains (LTCG), taxation on dividend, Securities Transaction Tax (STT), intraday in cash segment and futures and options (F&O). Taxpayers, particularly traders and stock market participants, should calculate tax liabilities and submit returns as soon as possible to prevent a last-minute rush. The deadline to file an Income Tax Return (ITR) for income earned in the fiscal year 2022-23 is July 31.
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