In the end of FY, my traded value in F&O option trading is Rs 80 lakh whereas my profit stands Rs 12 lakh. How will the income tax be calculated on this? If I have to pay any other tax on my traded value other than my income tax that is calculated on my profit? Request is to answer.

Ans: Income from derivatives for the transaction done through recognised stock exchange is non speculative business income and taxable at slab rate. Thus, in your case 12 lakhs will be taxable.

Ans: When you sell shares and make a profit, the tax implications depend on the holding period and the type of capital gain—long-term or short-term. Here's how the tax will be calculated based on your Rs 40,000 profit:

1. Determine the Holding Period:
Short-Term Capital Gains (STCG): If the shares were held for less than 12 months before selling, the profit is considered short-term.
Long-Term Capital Gains (LTCG): If the shares were held for more than 12 months, the profit is considered long-term.
2. Tax on Short-Term Capital Gains (STCG):
Tax Rate: STCG on the sale of shares is taxed at 20% plus applicable surcharge and cess.

Your Situation: If your Rs 40,000 profit is short-term, it will be taxed at 20%.

Example Calculation:

Tax on STCG = 20% of Rs 40,000 = Rs 8,000
Add surcharge and cess as applicable to arrive at the final tax payable.
3. Tax on Long-Term Capital Gains (LTCG):
Exemption Limit: The first Rs 1.25 lakh of LTCG in a financial year is tax-free.

New Rule (12.5% on gains above Rs 1.25 lakh): If your total LTCG exceeds Rs 1.25 lakh, the amount above Rs 1.25 lakh will be taxed at 12.5%.

Your Situation:

If your Rs 40,000 profit is long-term and your total LTCG for the year is within Rs 1.25 lakh, no tax will be due on this profit.
If your total LTCG exceeds Rs 1.25 lakh, then the amount above Rs 1.25 lakh will be taxed at 12.5%.
4. Filing Tax Returns:
Include the Gains: You need to declare these capital gains when filing your income tax return.
Pay the Tax: Ensure that you pay any applicable tax before filing your return to avoid penalties.
Final Insights:
Whether your Rs 40,000 profit is short-term or long-term, understanding the holding period and applying the correct tax rate is essential. If your gains fall under LTCG and your total gains for the year exceed Rs 1.25 lakh, be prepared to pay the 12.5% tax on the excess amount.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: as you have made overall loss no need to pay any Capital Gain Tax, but you need to declare this while filling your income tax returns.

Ans: There are 5 heads of income under Income Tax Act and your trading income is appears to be taxable as Income from Capital Gain. It is taxable at different rate depending on holding period of shares on which STT is paid at the time of acquisition and sale as well as on date of sale. In FY 2024-25, if shares are sold before 23rd July, Short term capital gain is taxable at 15% and Long term capital gain is taxable at 12.5% (above gain of 1 lac). If shares are sold After 22nd July, Short term capital gain is taxable at 20% and Long term capital gain is taxable at 12.5% (above gain of 1.25 lac).