Income Tax Return: Making Money From Stock Market? Here’s How to Declare it in ITR Filing

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© Debjit Sinha | India.com Business Desk The taxpayer must know how stock market gains are taxed and how to declare them in ITR filing.

Income Tax Return Latest News Today: The stock market in 2021 was at all-time high and various investors must have made big gains by investing in share market. People into trade and investment must be knowing that the gains from their businesses are part of the taxable income. However, very few investors pay attention to the gains made from trading in the stock market which comes under the taxation part. These gains are generally covered under income tax return which the taxpayers need to file every year.

Speaking to Zee Business, Amit Gupta, MD, SAG Infotech, talked about how stock market gains are taxed and how to declare them in ITR filing.

Giving details, he said that under the income tax act 1961, the taxability of gains primarily depended on factors like holding period and volume of transactions. “If the shares purchased by the assessee are for the purpose of investment, then the same would be treated as a capital asset and taxed as capital gains. But if the shares are bought and sold in a short duration repeatedly, then the same would be taxed as the business income,” he said.

He also stated that the gains on which the tax is levied are called capital gains and they are subsequently divided into short-term or long-term capital gains (STCG and LTCG) depending on the duration of holding.

“If any shares are held by the taxpayer for more than one year (two years for unlisted shares), then those shares would be classified as long-term, and if not then it comes under short-term,” he added.

Giving more details, Amit Gupta said that under section 112 of the income tax act, Long term capital gain (LTCG) from the unlisted shares is taxed at 20% while on the other side STCG is taxed on the prescribed slab rate of the investors. “But if the shares are listed then it is levied with tax at a concessional rate of 15 per cent/10 per cent beneath Sections 111A/112A, correspondingly (for LTCG and STCG). The business income is taxable under the slab rate subjected for the individual,” he added.

He said that the taxpayers need to know that the STCG is to be taxed at a 15% rate whatever be the tax slab.

He further stated that under Capital Gain Schedule in the ITR form, the obtained capital gains on share transfer needed to be stated, and also to maintain the difference between short term and long term gains. “Beneath ITR-1/ITR-4 the information of the capital gains does not need to be reported. An assessee would require to utilize ITR-3 or ITR-4 towards declaring the business income,” he concluded.