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Capital Gain Tax – Short Term Capital Gain

Capital Gain tax
Capital Gain tax

Capital Gain Tax is least understood but most discussed topic. Capital Gain Tax is a vast topic. If i will cover both Short Term Capital Gain Tax and Long Term Capital Gain Tax in a single post then it will be injustice. Indian Tax system is very complex & it is equally difficult to explain it in a simplified manner. In this post, we will cover Short Term Capital Gain Tax and next post will be dedicated to Long Term Capital Gain Tax. To start with basics, lets understand what is Capital Gain. Capital Gain means the profit earned from the sale of Capital Assets like Property, Shares etc. Though it is referred as Capital Gain but not necessary that you always book Capital Gain from sale of Capital Assets. If you incur loss from sale of Capital Assets then it is referred as Capital Loss. For taxation purpose, Capital Gain / Capital Loss can be further classified as Short Term Capital Gain Tax / Loss or Long Term Capital Gain Tax / Loss depending on the Holding Period of a Capital Asset as specified in the Income Tax Act or amendments to Income tax Act. For example, in this years budget the definition of Minimum Holding period for Long Term was increased from 1 year to 3 years for Debt Mutual Funds. In short, if Debt Mutual Fund is held for less than 3 years then any gain will be treated as Short Term Capital Gain. In case, holding period is more than 3 years then any gain arising out of sale of Debt Mutual fund will be treated as Long Term Capital Gain.

What are Capital Assets ?

Following 6 assets are classified as Capital Assets which come under the ambit of Capital Gain Tax

(a) Stocks and Equity Oriented Funds: Any direct investment in stock or Equity oriented Fund. Imp point to note is definition of Equity Fund for taxation purpose.  Though we have multiple categories of mutual funds like Large Cap, Small Cap, Balanced Funds, Monthly Income Plan, Debt Mutual Funds etc but from tax perspective there are only 2 type of funds i.e. Equity Mutual Funds and Debt Mutual Funds. Any fund which invest min 65% of its AUM (Assets under Management) in equity market is classified as Equity fund.

Balanced Funds: The confusion is related to status of Balance funds. Depending on market fluctuations, the investment of Balanced funds in equity segment vary from 55% to 70% therefore if equity exposure of Balance fund is less than 65% then it will be treated as Debt Fund from tax perspective else it is Equity Fund. Why it is imp, the min holding period for long term is 1 year for equity fund. Whereas for debt funds, min holding period is of 3 years for long term therefore capital gain tax treatment will depend on Min Holding period.

(b) Bonds and NCD’s (Non Convertible Debentures) 

(c) Debt Oriented Funds: Any fund with less than 65% exposure in equity segment will be treated as Debt oriented fund from capital gain tax perspective.

(d) Gold ETF’s and Gold Funds

(e) Bullion and Jewellery

(f) Real Estate

Minimum Holding Period for Long Term / Short Term Classification

Holding period is the time period between Date of Purchase and Date of Sale of a capital asset i.e. period for which the capital asset is held by the individual. If the asset is held for more than Min Holding Period for long term as specified in Income tax act then Gain / Loss from capital asset is Long Term Capital Gain and tax will be Long Term Capital Gain Tax. If the capital asset is held for less than Min Holding period then it will be Short Term Capital Gain Tax.

The minimum Holding Period for Long term for each of the capital asset is as follows

(a) Stocks and Equity Oriented Funds: 1 Year

(b) Bonds and NCD’s (Non Convertible Debentures): 1 Year

(c) Debt Oriented Funds: 3 Years

(d) Gold ETF’s and Gold Funds: 3 Years . The reason for change in Min Holding period of Gold ETF and Gold Fund from 1 year to 3 years from current FY is because of treatment of Gold ETF and Gold Funds at par with Debt oriented funds. In short, equity exposure of Gold ETF’s and Gold Funds is less than 65% therefore these funds are now treated at par with Debt oriented funds for capital gain tax purpose.

(e) Bullion and Jewellery: 3 Years

(f) Real Estate: 3 Years

How Short Term Capital Gain is Calculated?

It is very simple, you just need to find out simple gain by subtracting purchase price from sale price. Example, if you bought property worth 50 lakhs in April, 2013 and sold it for 60 lakhs in Oct, 2014. Since holding period is less than 3 years therefore Short Term Capital Gain will be 60 lakhs – 50 lakhs = 10 lakh. In case of property, cost of improvement and cost of transfer can also be included in the cost of acquisition for capital gain tax calculation.

Few important points related to Short term capital gain.

(a) Any losses from business or profession can be set of against short term or long term capital gain only during the Financial year in which the business losses are booked. Any carry forwarded business losses cannot be set off against capital gains.

(b) Short term capital gain tax cannot be saved u/s 54 i.e. by re-investment in property or buying capital gains bond issued by REC or NHAI. Section 54 is available only to set off Long Term Capital Gain and save Long Term Capital Gain Tax.

Short Term Capital Gain Tax Rate

Except for Stocks and Equity oriented Funds, any short term capital gain tax from rest all capital assets class is taxed at marginal tax rate i.e. as per Income Tax slab of the taxpayer. Short term capital gain tax on Stocks and Equity oriented funds is flat 15% irrespective of income slab of the tax payer. Continuing with same example of short term capital gain calculation, if the tax payer is in 30% income tax slab then Short Term Capital Gain Tax will be 30% of 10 lakh i.e. 3 lakh.

Imp Note: Above calculation is only indicative because if you add Short Term Capital Gain (STCG) to income then there is a possibility that income tax slab of the user will change because of increase in taxable income. In this case, STCG will be calculated in 2 parts. For example, if my taxable salary is 9 Lakh and short term capital gain is of 3 Lakh my taxable income will increase from 9 lakhs to 12 lakhs accordingly my income tax slab will increase from 20% to 30%. In this scenario out of 3 lakh short term capital gain, 1 lakh will be taxed at 20% and balance 2 lakh will be taxed at 30%.

Short Term Capital Loss

Not may tax payers are aware that Short term capital loss can be booked and carry forward for upto 8 financial years. Any short or long term capital gain booked during 8 subsequent years can be offset against Short term capital loss booked by the tax payer. Short term capital loss can be set off against both short term or long term capital gain. One of the biggest misconception is that capital loss can be adjusted against head of “Income”. It is not true, you cannot adjust capital loss against Income from salary or any other source of income.

Another smart strategy to save tax is that if you are in 20% or 30% tax bracket then you should offset short term capital loss from stocks and equity oriented funds against short term / long term capital gain from capital assets other then capital gain from stocks and equity oriented funds. Reason being short term capital gain tax on Stocks and equity is 15% whereas short term gain from other capital assets is taxed at marginal rate i.e. income tax slab (20% or 30%). You can pay short capital gain tax at 15% on stocks and equity & set off short term losses against gains where you need to pay short term capital gain tax at 20% or 30% i.e. as per income tax slab. In highest tax bracket, you will save approx 15% tax by adopting this strategy.

To summarize, Short term capital gain is clubbed with the income and taxed at Marginal Rate i.e. income tax slab of the tax payer. Short term capital loss can only be offset against short term / long term capital gain.

I have tried to cover all important aspects of Short Term Capital gain tax in this post. In next post on capital gain tax we will discuss Long Term Capital Gain Tax. Hope you liked the post. You can share your comments, feedback and queries through following comments section.

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Rishi
Rishi
9 years ago

If my only income is from equity mutual funds STCG which would be below 2 lakh per annum, then will I have to pay the 15% STCG tax. Provided I have no other income from any other source.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Rishi

If your income + STCG is less than basic exemption limit of 2.5 lakh i.e. income tax slab of less than 2.5 lakh then you are exempted from paying 15% Short Term Capital Gain Tax on Equity Mutual Funds.

Rishi
Rishi
9 years ago
Reply to  Nitin Bhatia

Thank u very much Nitin.

vish
vish
9 years ago
Reply to  Nitin Bhatia

If my only income is from stocks then am i exempt from paying TAX till 6 lakhs profit which will be STCG in a year

2.5 basic exemption
1.5 under 80 c
2.0 lakhs in home loan interest
===
6.00 lakhs
so effectively there is no tax liability till 6 lakhs. or with profit of 6 lakhs or above due to heavy activities it might be treated as a business income and taxed at 30 % ?

vish
vish
9 years ago
Reply to  vish

Found out 1st part . seems its part of section 111 A and only basic exemptions are allowed. and not the 80c to 80 u.

please help answer 2nd question , STCG above exemption limit will be continue to be charged at 15 % or could become 30 %.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  vish

STCG above exemption limit will be charged at 15%.

Rishi
Rishi
9 years ago
Reply to  Nitin Bhatia

Hi Nithin, I have another doubt. I have some investments in bond funds which is 2 years old in regular non direct plans. If I switch it to Direct plan of the same scheme now, wud it incur STCG .

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Rishi

Yes

Rishi
Rishi
9 years ago
Reply to  Nitin Bhatia

Thank u very much

Nintz
Nintz
9 years ago

hi
i have rental income after standard decduction of rs.40,000 and STCG on shares of Rs.3,20,000. Total 3,60,000 after deducting basic exemption it comes to Rs.1,10,000. so i have to pay rs.16,500 as TAX right ? And also how much advance tax should i pay before 15 march ? please clarify sir.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Nintz

Your basic exemption limit is 2.5 lakh and income of Rs 40,000 therefore there is a shortfall of 2.1 lakh in basic exemption. Now this shortfall can be adjusted against STCG on shares. After adjusting shortfall, your STCG is 1.1 lakh which will be taxed at 15% therefore your STCG tax is Rs 16500 and is correct as per your calculation. You have not added applicable cess of 3%. Kindly include applicable cess.

For advance tax, i need dates on which STCG is booked.

Nintz
Nintz
9 years ago
Reply to  Nitin Bhatia

STCG was booked at various dates during the f.y .. but major amount rs.2,50,000 was booked this month i.e february 2015. please advise advance tax i need to pay… thank you again.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Nintz

100% Advance tax should be paid before 15th Mar

Nintz
Nintz
9 years ago
Reply to  Nitin Bhatia

can i claim expenses such as internet,telephone bills and electricity charges which were incurred for trading.. ? Thank you.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Nintz

It depends on source of income and type of trading

Piyush
Piyush
9 years ago

Hi Nitin,
I have invested Rs. 20lacs in FPMs in Feb’2014. They are maturing in April’2015. I invested with the purpose to get double indexation benefit. But after the announcement in Budget last year, I am not sure how to show it while filing returns? Please guide.
Thanking you in anticipation.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Piyush

You may rollover your FMPs for 3 years else you need to pay STCG tax. You have to file ITR-2 as per last years ITR format but for current FY wait for income tax department to release ITR forms.

Piyush
Piyush
9 years ago
Reply to  Nitin Bhatia

Thanks Nitin.. Could you please let me know more on this rollover option? Is it available in all FMPs? How do I choose this option? Please guide.
Thanks,

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Piyush

After the changes incorporated in last years budget regarding taxability of debt funds, now the indexation benefit is available only if holding period is 36 months. Therefore all FMP’s with holding period of less than 36 months gave option to roll over FMP’s for 3 years so that clients can take advantage of indexation benefit. I suggest you to check with your fund house, they must have send you communication to roll over FMP to 36 months. I suggest you to opt for this option if you don’t need funds in near future.

Piyush
Piyush
9 years ago

@ I meant FMPs.

Neeraj
Neeraj
9 years ago

Hi Nitin,
Pl refer the below data. I have
1. STCL on debt fund : Rs 1000
2. STCG on equity fund: Rs 1000

Can we set off the loss using 2 different kind of asset class?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Neeraj

You can offset Short Term Capital Loss against Short Term Capital Gain.

John
John
9 years ago

HI Nitin,

I have only income from Share for the financial year 2014-2015. In my portfolio there are a few shares which are in loss.

If I sell these shares and book loss by Mar31st, wont I save tax? This question is considering the statement in your post that ” 15% flat” will be deducted on short term capital gains from shares irrespective of the income slab.

regards,
JPR

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  John

You can offset capital gain against capital loss depending on nature of gain / loss i.e. long term or short term.

omprakash sonar
omprakash sonar
9 years ago

Hi Mr.Nitin,
I have made STCG on sale of debt fund of INR 20000/- and STCL on sale of equity fund for INR 20000/- can I offset the same. also due to my staus as NRI fund house has already deducted my tax @30% .
Please Advice.

Nitin Bhatia
Nitin Bhatia
9 years ago

You can offset short term capital loss against short term capital gain. You can seek refund of TDS while filing ITR.

Minal Roy
Minal Roy
9 years ago

If my only income is from Debt mutual funds STCG which would be below 2.5 lakh per annum, then will I have to pay any STCG tax. I have no other income from any other source.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Minal Roy

STCG Tax is not applicable in your case.

Prateek
Prateek
9 years ago

Hi Nitin. NOt sure if you have dealt with such a situation before. I bought a flat in Jan 2012 i.e. I gave the booking amount cheque in Jan 2012 (it got encashed in Jan 2012). However the BBA was signed in Oct 2012. If I want to sell my property today i.e. May 2015, will STCG tax be applicable for me? Please confirm.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Prateek

Builder Buyer Agreement is one part but you have not mentioned what is the date of allotment letter.

amit
amit
9 years ago

Hi Nitin. My father purchased an under construction flat in 2008, he made the payments according to the payment plans of the builder and by 2011 he had made about 90% of the payment. The remaining 10% was payed by him in April 2014, when he got the possession of the flat. He sold the said flat last month and will invest the money in another under construction flat. What are the tax implications and how to save tax?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  amit

In this case, Long Term Capital Gain Tax is applicable. You calculate LTCG and based on that your father can decide how to save the same. Your father can invest in other property or he can buy Capital Gain Tax Exemption Bonds.

Hasmukh Shah
Hasmukh Shah
9 years ago

Dear Nitin Bhatia,

We are NRI (Australian residents) and have sold our Bombay property in December 2014.

The Buyer has deducted Rs 15,60,000 as TDS from the proceeds.

This matter and the amount is recorded in our SAKE DEED that we had all signed and registered. To date they (mother and son) have not paid the TDS to the ATO India.

What is our recourse?
What can we do to make them pay the ATO or return it to me?
ELSE we (my wife and I) will lose that amount.

This may dilemma must be happening to many NRIs I

What would you suggest?

Regards

Hasmukh

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Hasmukh Shah

You may complaint to Income Tax Department.

Hasmukh Shah
Hasmukh Shah
9 years ago
Reply to  Nitin Bhatia

Dear Nitin Bhatia,

Thank you for your response.

There are many ITO departments in various locations.
Where do I lodge my complaint?
I must write to the right department/Office.

What will be effective? e-mail or a letter?

Regards.

Hasmukh Shah

shashank karia
shashank karia
9 years ago
Reply to  Hasmukh Shah

kindly go to income tax efiling site over there you will get an option of know your jurisdiction and then enter your PAN no. you will get your ward no. (ITO office )

shashank karia
shashank karia
9 years ago

Another smart strategy to save tax is that if you are in 20% or 30% tax
bracket then you should offset short term capital loss from stocks and
equity oriented funds against short term / long term capital gain from
capital assets other then capital gain from stocks and equity oriented
funds. Reason being short term capital gain tax on Stocks and equity is
15% whereas short term gain from other capital assets is taxed at
marginal rate i.e. income tax slab (20% or 30%). You can pay short
capital gain tax at 15% on stocks and equity & set off short term
losses against gains where you need to pay short term capital gain tax
at 20% or 30% i.e. as per income tax slab. In highest tax bracket, you
will save approx 15% tax by adopting this strategy.

Sir how can i show the set-off in income tax return and what values will i put in sale and purchase column under gains where STT is paid and gains from Debt sector

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  shashank karia

I will check the new ITR and share with you.

Sachin Vishwas Gawade
Sachin Vishwas Gawade
9 years ago

Dear Sir,

Please study the following case study and give me what should be the amount of tax on the same:
1. I have purchase flat on 1st april 2014 for Rs. 21,11,000 and spend Rs. 1,05,000 for stamp duty and registration and 20000 as brokerage.
2. I have sold the same flat on 16th march 2015 for Rs.40,00,000 and spend Rs. 44000 as brokerage on the same and purchased another flat in span of one month for Rs. 20,00,000 where i have spent Rs.100000 as stamp duty, registration and Rs.20000 for brokerage.

What will be amount of capital gain?
What are the formalities to redude the tax burden?

Nitin Bhatia
Nitin Bhatia
9 years ago

Personalized consultation is available on paid basis. This forum is only for general queries.

Kumar
Kumar
9 years ago

My income falls lower to the taxable limit and I am in a compelling situation
to sell of the property i got from my father as gift recently.
The term “STCG tax as per the Tax Slab” is rather confusing.

Whether
1. The STCG will be treated as my income and taxed as per the income slab slab
or
2. The Tax Rate differs with the personal income slab
(ie) as i fall well under the 10% slab, will the tax rate for the STCG will also be 10% ?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Kumar

STCG will be taxed as per your income tax slab. You can add it in your income and then calculate tax.

Kumar
Kumar
9 years ago
Reply to  Nitin Bhatia

Thank you.
In my case will the STCG Tax be 10 % ?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Kumar

It depends. You have to add it in your income and then calculate.

sreejith
sreejith
8 years ago
Reply to  Nitin Bhatia

If I get 10 Lakhs as profit and my slab is 10%(total income 3 Lakhs). Will I have to consider whole 13 Lakhs and calculate my tax?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  sreejith

Yes

Om Prakash
Om Prakash
8 years ago

Can the profit on debt mutual fund held for 15 months and sold in February 15 be set off against the carry forward LT and ST losses

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Om Prakash

As i mentioned in my post that short term capital gain can be offset only against short term capital loss.

Amit
Amit
8 years ago

Only capital gain/loss in this session for me is STCG in debt/liquid funds. Can I include it in “other incomes” in ITR-1 and avoid filing ITR-2? ITR-2 is very lengthy and I have never filed using it before.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Amit

I will not suggest. Last year there was no clarity but this year it is very clear that in case of any capital gain or loss you need to file ITR 2

Amit
Amit
8 years ago
Reply to  Nitin Bhatia

Ok. Thanks.

Roy
Roy
8 years ago

How to report short term capital loss occurred between 16-Mar and 31-Mar in ITR2 ?

I have short term capital gains from sale of equity shares for India financial year 2014-15 as below (Figures are hypothetical, but the concept is exactly how I am facing it)

Gain of Rs.30000 in August 2013

Gain of Rs.25000 in November 2013

Loss of Rs.10000 in March 2014 after 16th of March.

There are no carried forward losses or other losses which I can set off against this.

I am using ITR 2. As I have a total gain of Rs.45000 for the financial year, have filled Schedule CG to reflect this.

Corresponding details are auto populated in Schedule BFLA as Rs.45000 short term capital gain taxable @ 15%.

While filling Section F1 of Schedule CG with information about accrual/receipt of capital gain, I need to split the gain into four different time duration as

Upto 15/9 (i)

16/9 to 15/12 (ii)

16/12 to 15/3 (iii)

16/3 to 31/3 (iv)

I have provided Rs.30000 gain against Upto 15/9 (i), Rs.25000 gain against 16/9 to 15/12 (ii) and Rs.0 against 16/12 to 15/3 (iii).

However, I can not provide -10000 against 16/3 to 31/3 (iv) as the field does not accept negative values. I couldn’t see any other place where I can provide this detail either.

Now Section F1 of Schedule CG has a total of Rs.55000 and Schedule BFLA has a total of Rs.45000 which does not tally and the form can not be submitted.

Can anyone please help how I can represent this short term capital loss of Rs.10000 occurred after 16th of March in ITR 2 correctly?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Roy

This query can be answered only after going through complete details.

Puneet
Puneet
8 years ago
Reply to  Roy

Roy, did you get an answer to this ?

Roy
Roy
8 years ago
Reply to  Puneet

I didn’t. I adjusted the STCL amount in breakup against STCG.

Puneet
Puneet
8 years ago
Reply to  Roy

Thanks ! I did the same as I was also not able to figure out what to do.

Kashyap
Kashyap
8 years ago

I have received a credit of Rs. 1 lakh in my savings account due to sale of shares which I held for 4 years. Even though it is exempt from tax, how do I declare the entire transaction proceeds (Rs. 1 lakh) in my ITR-2 in order to avoid receiving query later on. My purchase cost 4 years ago was 1.2 lakhs (meaning that I lost money). My tax slab is 10%.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Kashyap

I will write a post on this shortly.

Alex Geevarghese
Alex Geevarghese
8 years ago

If we hold debt funds for 2 years and have sold in May 2014. Should we consider indexed acquisition price or actual price while calculating STCG ? ICICI Direct uses index proce, however for STCG, the column specificaly asks for non-indexed cost of purchase..Please help clarify

Nitin Bhatia
Nitin Bhatia
8 years ago

Actual Price

Aasheesh Watts
Aasheesh Watts
8 years ago

Hi Nitin, Should leap years be considered in calculating the long term holding period?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Aasheesh Watts

Yes

sunil
sunil
8 years ago

Residential Land Allotted on instalment by Govt Authority FY2002-03
Instalments paid to Authority from FY2002-03 to FY2015-16
Possession FY2006-07
Registry / Conveyance Deed into my name FY2015-16
Sold by me FY2015-16
Is it LTCG or STCG?
Will Payments/Instalments made till before 3 years of sale be considered eligible for LTCG ?
Balance for STCG ?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  sunil

Personalized consultation is available on paid basis. This forum is for general discussion.

Nalin
Nalin
8 years ago

Hi Nitin,

I have bought some shares for 1 lakh rupess and sold them for 1.20 lakh rupees in the same year 2014-2015. I have reinvested 1.2 lakhs in equity in January, 2015 and sold them in June, 2015 for 1.3 lakh rupees.

My total buy value for year 2014-2015 is 2.2 lakhs and sell value is 1.2 lakhs. Should I file losses for year 2014-2015?

If yes, then I reinvest my money so then it means always I will have losses because I am doing the transaction in two different fiscal years? Please help

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Nalin

You are incurring a short term capital gain of 30k. You need to pay short term capital gain tax on same.

Pankaj
Pankaj
8 years ago

Hello,

When I left service last year, I got a payment of approx Rs 6 lakhs from LIC against my Superannuation for which LIC deducted a 10% tax. In my from 26AS this shows up as payment against Sec 192 (Salaries) paid by P&GS(Pension group), LIC.
Should this be reflected in my tax return as salary from LIC or salary from my last employer ?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Pankaj

I cannot comment without going through complete details.

AS
AS
8 years ago

Hello, I am a resident Indian and have STCG for unlisted shares bought and sold off within a year. As per my current tax rate, I have paid advance tax @ 30%. However, when I try to fill form ITR 2 the tax calculated automatically is at 15%. How do I fill the form and include this?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  AS

As i mentioned in my post that STCG is 15% therefore you paid extra tax and can claim refund.

AS
AS
8 years ago
Reply to  Nitin Bhatia

These are unlisted shares for which no STT is paid and as per IT notification, the STCG should come into the current tax rate of the individual and cannot be charged at 15%

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  AS

If STT is not paid then taxation will be at marginal rate.

Sameer
Sameer
8 years ago

Hi

If a bought shares on NSE on 23 July 2013 and sold on 23 July 2014, will it be considered long term capital gain or short term capital gain.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Sameer

Long term capital gain

Sameer
Sameer
8 years ago
Reply to  Nitin Bhatia

My holding in this case is exactly 1 year. However many sites are ambiguous on this. Some sites (like an article on rediff) say that for long term, holding needs to be more than one year and anything that is 1 year or less qualifies as short term. Are those sites giving wrong advice? What is the language used in the income tax code for this situation. Please reply soon.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Sameer

Income tax department mention in months therefore 1 year means 12 months. In your case date of purchase is 23 july 2013 therefore 12 months completed on 22 july 2014. If you sell on 23 july 2014 then capital gain is Long term capital gain as 12 months is over.

Vyas
Vyas
8 years ago

1. Do we need to pay advance tax on short term capital gain due to selling of the shares. Since this gain is very unpredictable (whether we get gain or loss), do we still need to pay advance tax and if not paid, do we need to pay interest, penalty on the overall gain due to selling of the shares. etc.

2. How is the speculation gain (intraday and futures/options that have no delivery) is taxed, as per tax slab or at 15%.

Thanks in advance.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Vyas

1. It depends whether it is for investment or trading. You may pay advance tax in Mar’16
2. As per tax slab as it will be considered as business income.

Vyas
Vyas
8 years ago
Reply to  Nitin Bhatia

Thank you sir. My tax consultant has computed the interest and penalty on the profit earned in shares sale as advance tax has not been paid for the last financial year. As I did not know that I was going to get profit or loss on shares sale, I have not paid the advance tax. Do I still need to pay interest and penalty (234B and 234C) on the profit earned by selling shares. I am referring to the shares that I bought and taken delivery and sold before completion of one year of holding.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Vyas

It seems your CA has considered as business income if taxed as per IT slab. Interest and penalty will be applicable for delay in advance tax payment. In my opinion, delivery based buying if not traded frequently should be considered as an investment.

Mayur Wadkar
Mayur Wadkar
8 years ago

Sir , if i am getting Short term gain on Stock (Shares) then is it my income ? If Yes, then can i claim loss on it ?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Mayur Wadkar

It is income from capital gain. You have to pay tax on same.

anuj
anuj
8 years ago

Is capital gain tax deducted from source?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  anuj

No

kishan
kishan
8 years ago

Sir, I have stcg approx 15000 @15% and my taxable income is below 150,000. Am I supposed to pay Income tax ? (I don’t have any investments.)

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  kishan

If your income + STCG is less than basic exemption limit of 2.5 lakh then you are exempted from paying 15% Short Term Capital Gain Tax.

Tari
Tari
8 years ago

Hello Sir, very good article. I am looking at my residential site sale generating about 30 lakhs of short term capital gain. I have a home loan for 20 lakhs which i would like to pay off from the gain. In such a case, would the tax be calculated on 30 lakhs or the residual difference of 10 lakhs ? Very much appreciate your help.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Tari

On 30 lacs

Rajan
Rajan
8 years ago

Dear Nitinji,
I have not mentioned loss in short term capital gain in previous return. Still can I allow to carry forward loss for current year?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Rajan

Now it is not possible if not mentioned in the ITR.

karthi
karthi
8 years ago

Dear Nitinji,

Thanks for the detailed explanation. when i buy a share on first day the cost of acqusition includes share buy rate + brokerage +STT +stamp duty+SEBI fee. and when i sell on the next day the cost of selling would be share sellrate – brokerage – STT – stamp duty -SEBI fee .

In this my short term capital accounted for tax will be
a) (share sellrate – brokerage – STT – stamp duty -SEBI fee) – (share buy rate + brokerage +STT +stamp duty+SEBI fee)

or
b) simply share sell rate – share buy rate ?

Thanks in advance for answering my question

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  karthi

Except STT, other charges like Brokerage, Stamp Duty, Service Tax etc can be claimed as expense.

kaaljai
kaaljai
8 years ago

Sir i want to know if you get STCG from equity then you are liable to pay at 15% but,what if this amount exceeds than the taxable income level.e.g if i earn more than 3 lakhs-4 lakhs in a year fully by STCG (from sale of shares ) and there is no other income at all then what tax rate is applicable to this particular situation?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  kaaljai

It is subjective but will be treated as business income. Business income is taxed at 33%.

varunmehndiratta
varunmehndiratta
8 years ago

Sir, I have a long term capital gain from debt funds of apporx 47KINR (after indexation) and 55000 (before indexation). This amount (i.e 55000 + my annual salary is below the 250,000/- ). Will I be charged Long term capital gain tax?

Nitin Bhatia
Nitin Bhatia
8 years ago

Only short term capital gain is added to income and taxed as per income tax slab. Long term capital gain tax is taxed at 20% after indexation.

gurusamy
gurusamy
8 years ago
Reply to  Nitin Bhatia

Nitin Sir, does capital gain amount affect the Tax slab. I gained 10 Lakhs in capital gain and my annual income is 10 Lakhs. what tax bracket i would pay my tax for annual income ?

Pratap Rai Tejwani
Pratap Rai Tejwani
8 years ago

Can Short Term Capital Loss (Equity or Debt Funds) be adjusted against Short Term or long Term Gains of Debt Funds

Nitin Bhatia
Nitin Bhatia
8 years ago

Yes, it can be adjusted.

Pratap Rai Tejwani
Pratap Rai Tejwani
8 years ago

Can Short Term Capital Loss be adjusted against ULIP Pension Plan Policies (Like ICICI Pru Life Stage Pension Plan).

Neeta
Neeta
8 years ago

Can Short Term Capital Loss be adjusted against ULIP Pension Policy (Like ICICI Pru Life Stage Pension Plan).

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Neeta

No, it cannot be adjusted.

rajeshjain155
rajeshjain155
8 years ago

If someone has invested in Liquid fund of a mutual fund and he is getting short term gain, can it be adjusted with short term loss from share trading. (Both in the same financial year)

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  rajeshjain155

You can adjust Short term capital loss against short term capital gain.

Nisha
Nisha
8 years ago

If a NRI seller is selling a flat which is a Short term asset at a loss. Does the buyer still have to deduct TDS @ 30 % U/s 195 on total sale consideration value and then have the NRI seller claim a refund ?

What is the best way to avoid this cycle ?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Nisha

TDS is applicable even if there is Short term capital loss. Only solution is to obtain NIL tax deduction certificate from income tax department.

Nisha
Nisha
8 years ago
Reply to  Nitin Bhatia

Thank you , Sir.

Sandhu
Sandhu
8 years ago

I have sold a property and made profit Of 30lakhs as short term capital gain. How can i get exemption from tax…

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Sandhu

There is no provision to save short term capital gain tax.

V.K.GARG
V.K.GARG
8 years ago

Sir myself and my wife were gifted 50 % shares each of an ” AG “company in switzerland by our uncle in july ’14 after 13 months the company was liquidated owing to his death the share capital was sent to our accounts in India ,what tax would be applicable , will it be capital gain , if yes short term or long term i am unable to decide having different opinions from every one.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  V.K.GARG

Though i have not seen the documents but in my opinion, Short term capital gain is applicable.

Varada
Varada
8 years ago

If I have short term gain of 10000 and long term gain 0f 10000 and short term loss of 10000, all these from stocks, can my loss be set off against short term gain only? Or is there any priority order per law that it has to be adjusted first against long term profit?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Varada

You have not mentioned whether these losses & gains are in same FY or carried forward.

Varada
Varada
8 years ago
Reply to  Nitin Bhatia

Yes, these are in same FY.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Varada

Long term capital gain can be offset against short term capital gain. You can carry forward short term capital loss to next FY. It can be carry forward for up to 8 years.

Anshuman Chakravarty
Anshuman Chakravarty
8 years ago

Hi Nitin, if an NRI buys a property in 2009 but registers it in Jun 2013 only. Now in 2016 he wants to sell it. On this sale, short term capital gain will apply or long term capital gain?
Thanks!

Nitin Bhatia
Nitin Bhatia
8 years ago

There are two school of thoughts on same. It can be either LTCG or STCG depending on date of vesting the title of the property.

ankit modi
ankit modi
8 years ago

Hi Nitin, I have booked short term capital loss on equity mutual fund in FY15-16. In this same fiscal, i sold some other equity MF in which i had long term capital gain. Since LTCG from equity MF is tax free, i was wondering if i can carry forward the STCG from equity MF that i have booked. Someone was telling me that i wont be able to carry forward the STCG because it will offset against the LTCG even though LTCG is tax free.

I would really appreciate your help.
Thanks!

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  ankit modi

Your understanding is correct. You can carry forward net capital loss.

Kunal Shivalkar
Kunal Shivalkar
8 years ago

Dear Nitinji,
I bought shares in previous month (February) and looking forward to sell them after 17th of current month (March) to book 20-30K profit. Do I need to pay 15% tax before 31st of this month or in next financial year 2016-17?
Thanks in advance !

Kushal
Kushal
8 years ago

Before filing you can the tax @15% as its a STCG. And the same could be file in the AY 2016-2017

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Kushal

I concur. Pay the tax on or before 31st Mar, 2016 to avoid penalty.

Ashish singh Rathod
Ashish singh Rathod
8 years ago

Good Morning Sir, my salary is 3,40,000…i have investment about 1,48,000….if i have a short term capital gain in Mutual funds about 5000-8000 then it will taxable @15% or it can manage in the investment in current FY.

Kushal
Kushal
8 years ago

it should be 15% of (5000-8000)

Ashish singh Rathod
Ashish singh Rathod
8 years ago
Reply to  Kushal

thank you..for ur reply……if short turn capital gain is 1000-2000 then ?

it will be deducted @ 15% short term capital gain tax?

Nitin Bhatia
Nitin Bhatia
8 years ago

It will be 15% on short term capital gain.

Kushal
Kushal
8 years ago

Hi Nitin,
I have made some profits for FY 2013-2014, STCG : 4500/-
But I have not showed while filing income tax?
Could you please tell me how would I pay the amount and file it now? And if any penalty that I have to bear?
Thank you.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Kushal

You can file revised return if it is not assessed yet else you may approach your AO to get it corrected.

prasad
prasad
8 years ago

Dear sir,
I’ve got profit of 37,708.00 in short term capital gain during the month oct’15 and till now i’ve not paid advance tan for that plz tell how much advance tax amount i need pay and which challan and code i will have to opt while paying tax for yeay 2015-16….kindly reply

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  prasad

STCG tax is 15% and you may file challan 280.

gurusamy
gurusamy
8 years ago

does capital gain amount affect the Tax slab. I gained 10 Lakhs in capital gain and my annual income is 10 Lakhs. what tax bracket i would pay my tax for annual income ?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  gurusamy

It depends whether the capital gain is long term or short term. Also the asset class.

gurusamy
gurusamy
8 years ago
Reply to  Nitin Bhatia

it is a long term capital gain, sale of Residential Land.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  gurusamy

Long term capital gain from property will not affect your income tax slab.

Sahil
Sahil
8 years ago

Hello Nitin,

Suppose i have a STCG of 1 lac in an year but for some stocks i am at a loss of 50K . Is is fine to sell those stocks to book a loss of 50K and reduce my STCG from 1 lac to 50k. IF i do this just to save tax, can i rebuy my stocks next day as i really want to hold them but only selling to save on taxes.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Sahil

You can do that.

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