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HOW TO SAVE TAX ON SHARE MARKET INCOME

Understand Income Tax saving on stock market income for the current year. This video will help to plan your taxes and save the maximum amount. For doing the tax planning it is essential to know about the basic taxation of the share market. We shall briefly discuss short-term and long-term capital gains on shares along with the intra-day being treated as speculative business income. We shall discuss the different tax rates applicable to them and dividend income.

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HOW TO SAVE TAX ON SHARE MARKET INCOME

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  1. How to save tax on share market income? How tax is calculated on share market income? Tax planning Tax on Stock Market Income for AY 2021-22 Details about Capital gains required to show in ITR?

  2. How tax is calculated on share market income? Tax planning Tax on Stock Market Income for AY 2021-22 Details about Capital gains required to show in ITR?

  3. TYPES OF GAINS • Short term: Sale – Purchase = < 12 months • Long term: Sale – Purchase > 12 months • Intra-day: Buy and Sale same day

  4. TAXABLE INCOME TAX HEADS • Short term = Capital Gain head of income • Long term = Capital Gain head of income • Intra-day = Speculative business income (PGBP) • Dividend income = Other sources

  5. TAX RATES ON GAINS • Tax is on Profit. Profit = Sale price – Purchase price • Short term Capital Gain – 15% • Long term Capital gain upto 1 lakh in a year – 0% • Long term Capital gain more than 1 lakh – 10% on the excess of 1 lakh • Intra-day – Slab rate • Dividend – Slab rate • Health and Education cess @ 4% additional on all cases

  6. Benefit of Loss • ST / LT can be carried forward for 8 years • Intra-day for 4 years • Filing of IT return on time to c/f losses • ST loss can be set-off against ST OR LT • LT loss can be set-off only against LT • Intra-day loss can be set-off only against intra-day gain.

  7. How to show in ITR? • ITR 1 cannot be used. • Section 111A – Short term Capital Gain • Total of Sale figure of all shares as Full Value of Consideration in ITR • Total of Purchase figure of all share as Cost of acquisition • Schedule 112A – Long term Capital Gain • If share bought after 31.01.2018 then consolidated figures • If share bought before 31.01.2018 then each shares details along with ISIN code of that share

  8. How to save tax???

  9. Trick 1 • Regular trading by your Family member who don’t have any other income – Spouse or parents. • Benefit - Basic exemption uptoRs 2,50,000 can be claimed. • NO TAX on profit made uptoRs 2.50 lakhs every year.

  10. TAX SAVING OF Rs. 31,200 (85800-54600)

  11. How to save tax on big LTCG? • Individual or HUF • Currently own no house or just one house • Invest the total Sale amount in • Buying one new residential property within 2 year or construct within 3 years. • This new residential property shouldn’t be sold for next three years.

  12. HOPE IT HELPS VINOD K AGRAWAL & ASSOCIATES, CA

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