Stock Market And Stock Trading in Telugu > Legal Framework

Income Tax Act for Stock Market

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Long-term capital gain (LTCG) from unlisted shares is taxed at 20% under section 112 of the income tax act, whilst short-term capital gain (STCG) is taxed at the investor's required slab rate.

Security traders can declare 6% of their turnover), after which you must file ITR 4. If you classify your F&O income as presumptive business with capital gains, you will need to submit an ITR-3.

Short-term capital gains are subject to a 15% tax under Section 111A of the Internal Revenue Code. This comprises equity shares, equity-oriented mutual funds, and business trust units sold on a recognised stock exchange on or after October 1, 2004 and subject to the securities transaction tax (STT).

Short-term capital gains are earned when you sell an equity share listed on a recognised stock exchange within one year of the date of purchase. These will be subject to a 15% tax rate. Long-term capital gains are earned if you sell a listed equity share after one year from the date of acquisition (LTCG).

As a result, there is no tax responsibility as long as the investment is not sold and the profits are not realised. Furthermore, the requirement to file an ITR normally arises only when taxable income from all sources, including earnings on investments, exceeds the basic exemption threshold before other deductions and exemptions.

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