Do traders need to pay advance tax?

As per the Income Tax Act, an assessee whose total tax liability exceeds Rs. 10,000 should pay Advance Tax. Thus, if a trader’s total income tax liability exceeds Rs. 10,000, he/she should pay advance tax in 4 installments of the financial year.

How is speculative income taxed?

Q- How is speculative income taxed? Ans: As per Section 43(5) of the Income Tax Act, 1961, intra-day trading shall be considered as speculation business transactions and the income therefrom would be either speculation gains or speculation losses. Income from speculation gains is taxed at the normal rates.

What is the tax rate for speculative income?

Any profits made within a period of 1 year will be treated as short term capital gains and will be taxed at the rate of 15\% of the profit. However, if the stock is held for a period beyond 1 year then it is classified as long term capital gains. In that case the profits are entirely tax-free.

Is intra-day trading speculative?

Intraday transactions are speculative in nature and hence, the income from these trades is called speculative business income. Income tax on intraday trading profit in india comes under this category. There is no separate speculative income tax rate in India as it is taxed according to your income tax slab.

How do I pay taxes on trading income?

How do I keep track of day trading taxes?

Record Trades In A Spreadsheet Or Software Every time you buy or sell, you need to record the ticker, that date, your cost basis (when you buy), and your selling price (when you sell). Record reinvested dividends or taxes paid too. You should also include fees associated with buying and selling.

What is speculative income?

Income from intra-day trading is considered as speculative income and taxed as per standard slab. It states that a transaction of purchase or sale of a commodity including stocks and shares settled otherwise than by actual delivery or transfer of the commodity or scrip is a speculative transaction.

How is income from intra-day trading taxed?

Income from intra-day trading is considered as speculative income and taxed as per standard slab. Section 43 (5) of the Income Tax Act, 1961, deals with speculative transaction.

Is intraday trading in shares for salaried employees a speculative business?

In this case not only he incurs tax as perquisite by exercising the options, but also gets into speculative income for which he will have to pay tax as per his tax slab. Hence, intraday trading in shares for a salaried employee will also be treated as speculative business.

What are the tax implications of a speculative business?

Also, Section 73 mentions that loss from speculative business can only be set off against profit from such kind of business. As per Section 43 of the Income Tax Act, it is a speculative business. The income will be computed normally & taxed as per standard rate slab.

How to reduce tax liability on intraday trading?

Many traders reduce their tax liability by booking the unrealized loss and immediately taking the same position in the stock. While this is not possible in an intraday trade, if you place delivery orders too, then this can be a great way to increase the non-speculative loss component and reduce your tax liability.