If i purchase and sale shares by forming a Private ltd. co. or a firm, whether my gain from it will be taxable under business income or capital gains?
3 Replies
Santosh Pandey
(26 Points)
Replied 12 June 2018
where any co.,or firm engaged in the trading of shares then income arising from such trading activities is treated as business income and taxable u/h PGBP
saurabh verma
(accounts)
(73 Points)
Replied 16 June 2018
Thanks Sir. One more thing i want to ask, that if shares are sold after one year will it not arise capital gain on it?
Santosh Pandey
(26 Points)
Replied 19 June 2018
Normally, trading of shares is to earn the profits by purchase and sale of shares and hence the trading company doesn't hold the shares for longer period.If you have such two portfolio i.e one for frequently purchase and sales of shares ,and second is to hold the shares for more than 12 months ,then you may bifurcate the income arising out of trading and out of investment.
Accordingly, if you hold the share for more than 12 months then that would attract the income tax under head Capital gain.
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