21 August 2010
Hi, last year I had Short Term Capital loss . If I switch to Business Profits method 1. Can I offset that STCG loss against current year business gain accruing through share trading ? All share trading is delivery based.
2. Can this STCG loss be carried forward for possible next year gains?
22 August 2010
1. Short term capital loss can be set off against capital gains only in the same year and against future STCG only and not against business profit. So no.
23 August 2010
Till last year I was using the STCG method for filing tax returns whereby I had a STC Loss. This year I am changing to Business Income method . Income from share trading being the only source of income .
As business income from share trading--- can the following costs be reduced in arriving at the gain: Service tax on brokerage; education cess on the above service tax; STT paid on purchase/sale; stamp duty paid on daily turnover; DP charges on purchase/sale; annual DP maintenance charges; interest on borrowed capital; any other expenses such as travelling, consultancy fees etc
24 August 2010
Yes this can be claimed Service tax on brokerage; education cess on the above service tax; STT paid on purchase/sale; stamp duty paid on daily turnover; DP charges on purchase/sale; annual DP maintenance charges.
Any other expenses incurred in relation to share trading business can be allowable as an expenditure including interest on borrowed capital; any other expenses such as travelling, consultancy fees.
for the circular visit this link http://law.incometaxindia.gov.in/DIT/File_opener.aspx?page=CIR&schT=&csId=1265ffc5-f116-4812-94a9-4e854b3ca5bb&crn=4&yr=2007&sch=&title=Taxmann - Direct Tax Laws
The highly informative link sent by you seems to suggest that a person can have both capital gains and business income. This implies that I can have STCG , LTCG and Business income all while trading in shares .
If this is true then I should be able to offset STCG Loss earned in previous year against shares sold this year where I have earned dividends but sold them before One year.
31 August 2010
U are now drifiting from your original query.
Referring to your query now you can have all LTCG and Business income all while trading in shares as per the circular given and even set off your STCL.
31 August 2010
Thank you for being so patiently answering to my queries. Perhaps I did not state my issue properly. Kindly excuse me for that.However , I believe we are now on the right track.
Please guide: 1. How do we distinguish between share sale inviting STCG vs for business ? Does holding it for a few months or getting the divedend qualify? All buys are delivery based with STT paid.
2 Holding a share for One year thereby getting the benefit of LTCG exemption
Does this mean that I have to pay no business profits for it . or the profits will be deducted against income ?
01 September 2010
There is a recent case law where it has been held that if the assessee sells shares within 30 days it will be considered as business income and if he sells after 30 days it will be capital gains. Department has taken a criteria that, gains earned from shares which were held for more then 30 day is to be treated as Short Term and gain from shares held less then 30 days as adventure in nature of trade and the same has also been confirmed in one of the ITAT judgements and hence u could follow this rule also.
01 September 2010
http://shubhamblog.co.cc/legal-update-profit-on-account-of-frequent-pu and this http://www.forum4finance.com/2010/08/04/holding-period-for-purposes-of-computation-of-capital-gain/
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