I have bought Stocks in MTF can I get tax benefit on the interest amount?

23 July 2024

I have bought stocks in MTF Margin Trading Facility (paying 1/3 or 1/4 amount, rest as a loan from the broker on which they charge interest + gst).

So Can I get tax benefit on the interest amount? If yes then will I have to show it as a business income or ITR 2 will do ?

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Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (3437 Points)
Replied 23 July 2024

Margin Trading Facility (MTF) margin is considered a loan for tax purposes Interest paid on MTF margin is eligible for tax benefits under:

Section 36(1)(iii):Deduction for interest expenses: You can claim a deduction for interest paid on MTF margin as a business expenses, if the investment is for business purposes.
Section 80C: Deduction for interest on loan for shares: You can claim a deduction upto Rs. 1,50,000 for interest paid on loan (including MTF margin) for purchasing shares or debentures.
However, to avail of these benefits:
Business Purpose: The investment should be for business purposes, not personal or investment purposes.
Docummentation: Maintain records of interest paid, loan statements, and investment details:
ITR filing: claim the deduction in your income tax return.