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CA Mayur J Sondagar | Jul 3, 2021 | Views 1964487

Summary Chart showing Taxation of Shares and Mutual Funds

Summary Chart showing Taxation of Shares and Mutual Funds

Situation I: When Taxpayer is a Trader

Particulars Equity Future & Options
Delivery Type Delivery Based Intraday Non-Delivery Based
Nature of Income Non-Speculative Speculative Non-Speculative
Nature of Business Normal Speculative Normal
Tax Rate Slab Rate Slab Rate Slab Rate
Loss c/f 8 Years 4 Years 8 Years
Turnover Limit for Audit Subject to 44AD $ 10 Crore 10 Crore 10 Crore
Turnover Calculation No of Shares Sold * Sale price per Share Aggregate sum of absolute differences of positive and negative amounts Aggregate sum of absolute differences of positive and negative amounts + Premium received on Sale
Expenses allowed If You are Traders then Related Business Expenses are allowed as cost (STT, Brokerage, other taxes, Salary, Rents, Depreciation, Utility Bills etc)
As per Section 73 Speculation Loss can be set off against Speculation Profit only

Situation II: When Taxpayer is an Investor

Particulars Equity Mutual Funds
Equity Mutual Funds # Non Equity Mutual Funds (Debt)
Holding STCG if Period of Holding not more than 12 Months LTCG if Period of Holding more than 12 Months STCG if Period of Holding not more than 12 Months LTCG if Period of Holding more than 12 Months STCG if Period of Holding not more than 36 Months LTCG if Period of Holding more than 36 Months
Tax Rate 15% 0 % upto 1 lakh after that @ 10 % without indexation 15% 0 % upto 1 lakh after that @ 10 % without indexation Slab Rate 20 % with Indexation
Loss c/f 8 Years 8 Years 8 Years 8 Years 8 Years 8 Years
Turnover Limit for Audit Subject to 44AD If you are investor then audit is not applicable irrespective of the Amount of Sale Value during the Financial Year
Turnover Calculation All Long Term Capital Gain upto 31/01/2018 was grandfathered by Finance Act 2018 and for such transaction cost will be Higher of 1.Cost of Acquisition and 2.Lower of i.FMV and ii.Sale Price (This Long Term Capital Gain to be Reported Scrip-wise in ITR)

For STCG & LTCG If Shares are Acquird after 31/01/2018 then Scrip-wise reporting is Not Required

As per Section 73 Speculation Loss can be set off against Speculation Profit only As per Section 74 Long Term Capital Loss can be set off against Long Term Capital Gain only

# A mutual fund is considered as equity-oriented if at least 65% of the investible funds are deployed into equity or shares of domestic companies.

Who you are?

Trader or Investor – As per Circular No.06/2016 It is to be decided at the Intention of Assessee irrespective of the period of holding & Stance once taken shall not be allowed to change in subsequent years

Note:

  • Section 44AB says Turnover Limit for Audit is 10 Crore for Digital Transactions (Share Market Transactions are 100% Digital so Turnover Limit for Audit is 10 Crore
  • Section 44AD says If Turnover is upto 2 Crore and Profit is below 6 % and Total Income is above maximum amount which is not chargeable to income-tax, then audit is Required as per S. 44AB (For Individual, HUF & Partnership Firm but Not LLP)

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