Friends as we all are aware of financial world, we also know that some people make it a business , a business of trading and investing, but still many are not aware about the transaction of securities and taxation over it.
Its a big big concern ??is it?? don’t worry you will get brief understanding about the taxation in world of financial markets just within few minutes.
Friends, two types of taxes are applicable over the securities and the parameter over which it is mounted is the period for which one is willing to hold on to the securities .
The very first is the LTCG (LONG TERM CAPITAL GAIN). Long term capital gain is applicable to securities which are held for more than a one year. For example I buy Tata motors at 250 on 1 DEC 2002 and sell at 300 on 30 march 2004 ,the period if holding here exceeds one year hence the transaction will be charged under the head CAPITAL GAINS and that too long term capital gain(LTCG).As per the income tax act norms (LTCG) will be taxed at 10%.Apart from it u will have to pay GST(goods and service tax),STT (securities transaction tax),brokerage and much more as per the case may be.
On the other side on the table we have STCG(short term capital gain tax),lets understand when its levied. Friends STCG as its name suggest give a slight hint that its is levied on short term transaction period. Any period less than one year will attract short term capital gain tax including speculative activities .
Speculative activity includes intraday trading, scalping, also swing trading for a change. STCG are levied at the rate of 15% ,apart from that u will have to pay STT,GST & of course brokerage.let consider some examples . example 1- I buy PVR at 550 on 1 Aug. 2002 and sell PVR at 570 ,getting a profit of 20 rs per share ,this transaction will incur STCG(short term capital gain .Example 2-i buy PVR at 550 on 1 Aug. 2002 and sell at 7 Aug 2002 ,thus transaction will also incur short term capital gain tax.