Capital Gain Taxes On Shares In India(budget 2018-19)

Hi all in this post I am going to tell about the taxes on share market (investing, trading,) there are different taxes involved in investing for long term, short term and futures-options ok now lets move to the actual topic

What is income tax :

Income tax is annual tax levied by the government of India on every indivisual and business, in simple words income tax is a tax  portion of money (profits) that will pay to the government.

Why should we pay tax :

as per the indian government rule every one should pay the tax  according to the indian  income tax slab, because the government needs funds to discharge different number of responsibilities such as importmnet of government hospitals, eduaction, defence, and ifrastructure etc…

How much tax we need to pay for Government:

every person should pay the income tax according to the income tax slab,it is setted by the government

  • taxes have to pay based on how much profits will get every year
  • taxes will pay every financial year starts 1st-April to ends 31st march every year.

Income tax slab for taxpayer :

1. For tax payer less the 60 years 

                             Income Tax rate
Income upto 2,50,000                                       Nill
Income from 2,50,000 to 5,00,000      5%
Income from 5,00,000 to 10,00,000   20%
Income more than 10,00,000   30%

2. For tax payer more than 60 years :

                             IncomeTax rate
Income upto 3,00,000   Nill
Income from 3,00,000 to 5,00,000                  5%
Income from 5,00,000 to 10,00,000   20%
Income more than 10,00,000   30%

Note : the above taxes are applicable only for income from business and indivisuals not for shares

Capital gain taxes on shares in India:

before going to study about capital gain taxes in India you need to know few things about it are as follows 

Long-Term  Investments :

lets assume you boughts some shares and your hoilding period  more than 12 months then it called as long term investment, and when you sell the shares for profit after 12 months then it know as long term captial gains

long Term Capital Gain Taxes (LTCG Tax)

the government of India announced the new rules in budget 1-april-2018, long term capital gains are Taxed 10%, if the income is more than 1 lakh.

Essential things to know before :

  • the holiding period should be more than 12 months
  • if you sell the shares then you have to pay tax
  • if you do not sell th shares, you do not have to pay taxes
  • if you sell the shares after 12 months then you have to pay tax of 10% is under Long- term capital gains

Short-Term Investments :

when you hold your share less than 12 months then its called as short-term investments, and when you sell the shares for profit before long-term year is known as short-term capital gains

Speculative Business Income:

Trading is considered as speculative business, as per income tax act 1961 section 43(5) income earned by trading shares for intraday (or) day trading is categorized as speculative business income, they taxed according to tax slab

Non-Speculative Business Income

Trading in Futures and Options considered as Non-speculative business income, as per section 43(5) under income tax act 1961

Short Term Capital Gain Tax (STCG Tax) :

short term capital gain tax is appilcable both Investor/Trader, ther is no matter how much tax in income tax slab, you have to pay flat 15% tax for short term capital gains

for example you have got a short term income Rs 2 lakh you have to pay 15% for short term capital gain tax

Tax on Dividends :

the company already pay the tax to the govenment on dividends distribution tax, before distribution of dividends to shareholders, in generally  you already paid the tax on dividends

Note :  if you income from dividends is more than 10 lakhs you have to pay 10% tax

Note: All the cases mentioned above are for those whose primary source of income is salary, self-employment or business. In case you declare trading as your primary business income, i.e. in case of full-time traders, you have to pay the short-term capital gain according to your tax slab (not a flat 15% tax). Other cases will remain the same as they are charged according to your tax slab.

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