I am 30 years, single and reside in Bengaluru. I invested INR 1 Lakh in different stocks to make a quick profit. I made a profit of INR 45,000 through intraday trading. My friend has told me that I have to pay tax on this profit. Is this true? Can I escape paying this tax?
Any person, engaged in intraday trading is automatically treated as someone who is engaged in a business and his income shall be assessed as Income earned from Business and tax rate shall be same as any other business activity. Intra-day trading transactions are treated as speculative transactions and the net income earned, after deducting eligible expenses incurred to earn the profit, is taxed as business income. Any profit or gain earned from day trading is called Speculative Income. You have to display appropriate documentation and maintain books of accounts to support the income and expense claims. 1. You would need to pay taxes on such income at the rates applicable to your total income, for the financial year (FY) in which you earned this income. 2. These taxes will need to be paid in advance during the year in four specified installments on specified dates. If you incurred any loss from speculative transactions in any of the four FYs preceding the FY in which you have earned this profit, and you had reported such a loss in your tax return, the profit can be offset against such loss.