Income Tax on sale of listed shares in short term : Capital gain
Short term capital gain is applicable on capital gain on sale of shares within the range from 1 day to 12 months. Income Tax Rate for sale of listed stocks/ equity under short term is 15% of the profit if the transactions (buy/ sells) are executed on recognized stock exchanges where STT (Security transaction tax) is paid.
For example, If your income from salary is Rs 5,00,000 and income from share is Rs 2,00,000. Then Rs 5,00,000 will be taxable as per slab rate but Rs 2,00,000 will be taxable at flat rate of 15%.
15% is applicable irrespective of your tax slab. However, if your total taxable income excluding short term gains is below taxable income i.e Rs 2.5 lakh (Rs 3 lakh for senior citizens or Rs 5 lakh for super senior citizen), you can adjust this shortfall against your short term gains. Remaining short term capital gain on sale of shares will be then taxed at 15% + 4% cess on it.
For example, your salary income is Rs 150000 in a year and short term gain from selling of shares is Rs 100000, since your basic exemption limit is Rs 2,50,000 and your total income is also Rs 2,50000, therefore no income tax liability
Another example, your salary income is Rs 200000 in a year and short term capital gain on sale of shares is Rs 100000, since your basic exemption limit is Rs 2,50,000 and your total income is also Rs 3,00000, Income tax liability will arise @15% on Rs 50000 (Total income Rs 300000- Basic exemption limit Rs 250000) i.e. Rs 7500 + 4% cess , total Rs 7800.
Purchase Cost of Shares
While calculating income tax on shares, STT can not be added to the cost of acquisition or sale of shares. However, brokerage and all other charges (which include exchange charges, SEBI charges, stamp duty, service tax) that you pay at the time of buying or selling shares on the exchange can be added to the cost of share, hence you can reduce tax payable by indirectly taking benefit of these expenses that you incur.
Old Income Tax Regime
Income tax old slabs for Individual and HUF
|Income Tax Slab||Individuals Below 60 Years||Individual aged 60-80 years||Individual aged more than 80 years|
|Up to Rs 2.5 lakhs||NIL||–||–|
|Up to Rs 3 lakhs||–||NIL||–|
|Up to Rs 5 lakhs||–||–||NIL|
|Rs. 2.5 lakh -Rs. 5 Lakhs||5%||–||–|
|Rs. 3 lakh -Rs. 5 Lakhs||–||5%||–|
|Rs 5 lakh – Rs 10 lakhs||20%||20%||20%|
|More than Rs 10 lakh||30%||30%||30%|
NOTE: Income tax exemption limit is up to Rs.2,50,000 for Individuals, HUF and Non- Resident Individuals for FY 2020-21. An additional 4% Health & education cess will be applicable on the tax amount calculated as above.
New Income tax slab rate from FY 2020-21
Income tax rates in the New tax regime is the same for all categories of Individuals, i.e. Individuals up to 60 years of age, Senior citizens above 60 years up to 80 years and Super senior citizens above 80 years and for Hindu undivided Family (HUF). Additional Health and Education cess at the rate of 4 % will be added to the income tax liability in all cases.
|Income Tax Slab||New Regime Income Tax Slab Rates|
|Rs 0.0 – Rs 2.5 Lakhs||NIL|
|Rs 2.5 lakhs- Rs 5.00 Lakhs||5% (tax rebate u/s 87a is available)|
|Rs. 5.00 lakhs- Rs 7.5 Lakhs||10%|
|Rs 7.5 lakhs – Rs 10.00 Lakhs||15%|
|Rs 10.00 lakhs – Rs. 12.50 Lakhs||20%|
|Rs. 12.5 lakhs- Rs. 15.00 Lakhs||25%|
|more than Rs. 15 Lakhs||30%|
The author of the above article is Riya Thawani.
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