Capital Gain Tax on shares purchase and sold

How are Capital Gains treated on gain of shares purchased in India from Stock Market. Below are FAQ, on treatment of profit and loss of shares sold and purchased 1. What is a Capital asset ? A Capital asset is defined under section 2(14) of the I.T. Act, 1961 as property of any kind held by an assessee such as real estate, equity shares, bonds, jewellery, paintings, art etc. but does not include some items like any stock-in-trade for businesses and personal effects. 2. What is Transfer? Transfer has been defined under section 2(47) to include sale, exchange, relinquishment of asset, extinguishment of rights in an asset, etc. Certain transactions are not regarded as 'Transfer' under section 47 3. What is Capital Gain? Gain on sale of following investment/assets is known as Capital Gain:

  • Shares
  • Units of a mutual fund
  • Bonds/debentures
  • Immovable property
  • Jewellery, paintings etc
4. What is Long term and Short Term Capital Gain? When investments are held for more than 36 months, such gains are termed as Long Term Capital Gain. However, for shares, mutual funds, listed bonds & debentures, zero coupon bonds, the period is 12 months. When investments held for less than 36 months, such gains are termed as Short Term Capital Gain. However, for shares, mutual funds, listed bonds & debentures, zero coupon bonds, the period is 12 months.

Capital gain on sale of Shares

4. Do I have to pay tax on sale of shares that I have purchased one year back? No, since you have hold the shares for more than one year, no Income tax is payable. Also please ensure that Income tax exemption would be available only if:: 1. Such shares are sold through a recognized stock exchange. 2. Securities Transaction Tax (STT) has been paid on the sale of such shares. 5. What is STT? STT stands for Securities Transaction Tax. It is a tax paid for transactions made on a recognized stock exchange. 6. Is STT borne by the buyer or seller? Securities Transaction Tax (STT) is levied on both buy as well as sell transactions. Hence it has to be borne both by the buyer and the seller. 7. Do I have to declare sale of assets even if it is at no profit no loss? It is relevant for transactions where STT is not paid and for claiming indexation benefit.


5 responses to “Capital Gain Tax on shares purchase and sold”

  1. A M J REGO Avatar
    A M J REGO

    How is short term capital gain on sale of listed equity shares calculated. What are the admissible charges? For instance Brokerage, STT, Transaction charges etc. levied by the share broker, are they deductible.
    Since I do heavy trades on the exchange will I be taxed as a trader or an investor?

  2. hemant Avatar

    No.its not deductible.. If it is taxed under the head CG.
    Whereas if u r trading in shares is taxed under PGBP its deductible.

  3. S.P. VIJJI Avatar
    S.P. VIJJI

    IF DAILY TRADING OF SHARES (SPECULATION) is heavy and there happens to short trading capital gains what is the tax rate.Some body commented it is to be shown as business and pay 33 +%. PAYMENT OF TAX AT 33+% is ridiculous when the gain is only 2 or 3 lakhs. Pl. say if any body is interested.THANKS/REGARDS

  4. Ashok kumar Avatar
    Ashok kumar

    If we purchage share in the month of October 2014 and sell it in the month of May 2015. Can we paid tax on profit in financial year of 2015-16.

    what the taxable limit of Short term and Long term capital gain under incometax

    1. Tax Dost Avatar
      Tax Dost

      It will be Short term capital gain.

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