HOW TO SAVE TAX ON SHARE MARKET INCOME

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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?

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• 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?

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TYPES OF GAINS

• Short term Sale Purchase lt 12 months
• Long term Sale Purchase gt 12 months
• Intra-day Buy and Sale same day

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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

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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 _at_ 4 additional on all
  cases

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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.

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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

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How to save tax???
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Trick 1

• Regular trading by your Family member who dont
  have any other income Spouse or parents.
• Benefit - Basic exemption upto Rs 2,50,000 can be
  claimed.
• NO TAX on profit made upto Rs 2.50 lakhs every
  year.

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INCOME Mr X Mr Y Mrs Y
       
Salary 7,00,000 7,00,000 -
Short term Capital Gain 2,00,000 - 2,00,000
       
Total Tax 85,800  54,600 0
TAX SAVING OF Rs. 31,200 (85800-54600)
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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 shouldnt be sold
  for next three years.

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HOPE IT HELPS
VINOD K AGRAWAL ASSOCIATES, CA