Dear Sreekanth ,
Hope you are good
You have been doing great service by making people financially equipped.
I would like to know few things :
How one files Income Tax Returns of Open Holdings and Closed Holdings.
I have a trading account with Reliance Securities. I payin Funds from my bank account and purchase stocks. I do not have plans for selling short term but if any good opportunity gets visible , i trade intraday and gain speculation. otherwise I pay in funds from my bank account on regular basis and increase my holdings.
Sometimes i get gains from speculation and i reinvest it in any other stock the same day. So in that way my money gets rotated in the Reliance Securities account only. It hardly get credited in my bank account.
My question is how will i have to file income tax returns. How will i show the short terms/Speculation gains when nothing gets credited in my bank account. Rather it is in my trading account and i reinvest it in other stocks. Please guide. Also how will the debit in my bank account will be shown in ITR (Which i paying in my trading account from bank).
Please guide about filing ITRs
4 Answers
Hi,
I am doing fine, thank you!
Intra-day trading has been defined as ‘Speculative business’ whereas F&O trading is not. Income from trading in F&O (both intraday and overnight) on all the Stock Exchanges can be considered as non-speculative business income.
You need file relevant ITR and have to report the gains incurred through Intra-day trading.
Whereas, if you buy, get the stocks delivered to your demat account and then hold them, they are not considered for intra-day trading or speculative.
In this case, if you hold on to the shares for 12 months or more, any gains (long term capital gains) are tax-free.
Suggest you to avoid doing intra-day trading / short term trading.
Suggested readings :
https://www.relakhs.com/set-off-carry-forward-capital-losses/
https://www.relakhs.com/asset-classes-returns-tax-implications/
https://www.relakhs.com/10-reasons-avoid-short-term-trading-stock-markets/
https://www.relakhs.com/new-itr-forms-ay-2017-18-fy-2016-17/
You didnt get my query..
Actually suppose i have debited 1,00,000 from my bank account and i have purchased shares worth Rs 1,00,000 in my trading account. Meanwhile i have also done some intra day trade and gets Short term gain of 5000. So now i have extra 5000 in my trading account which is nnot transferred in my bank account. So my question is how will i show the entry of 1lac that is debited from my bank account and also how wto show the short term gain of 5000 which is in my trading account (and not in Bank Account)
Hi,
Kindly note that there is no need to show the inflow and out-flow of capital flows in your income tax return.
One needs to account for Gains/Losses only.
So, if you make say Rs 5,000 as short term capital gain, then that needs to reported under CG section of your ITR and taxes have to be paid accordingly.
You can request for a CAPITAL GAIN statement from your broker/agent to get a clarity on your capital gain and loses of a particular financial year.
If i switched some Long Term Mutual Fund Investment in other fund and the money did not enter my bank account , Do i have to file that In Returns.
I request you to make some Posts on Income Tax Returns
Hi,
Yes, if an investor switches manually from one fund to another, these switches are treated as normal redemption only.
So, taxes (if any) are applicable on capital gains (if any).
Kindly read :
https://www.relakhs.com/mutual-funds-taxation-rules-capital-gains-tax-rates-on-mfs-fy-201516/
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