Hello Sir, first of all thanks for sharing your valuable inputs in this column. I am a salaried person & my income tax on salary income gets deducted automatically. But i am planning to do share trading ( buying equity shares on dips & selling in 5-6 months with some profit & continue), so i guess i will be liable for 15% tax as it will be STCG, so where i need to pay this tax. If I declare it only in ITR, will that be sufficient or have to select some option in Demat Account as well? I am in old tax regime, my Salary income (in hand) is around 12 lacs, FD Interest around 2 lacs p/a & i take all tax exemptions like 80c, 80CCD (1B), 80 G etc. Also advise shall i avoid this profit booking in shares & hold for long term considering i am on threshold of higher tax slab. Thanks again for your valuable guidance.

Ans: Your understanding in relation to STCG is correct. You need to declare this at the time of filing ITR and no where else. Further, please ensure that you pay advance taxes on STCG booked.

If you can hold the shares for long term it would be good, you will further save taxes to the extent of 5% of your gains.

Ans: Here's a breakdown of your tax situation and some advice:

Tax on Share Trading Profits (STCG):

You're correct. Since you plan to sell the shares within 5-6 months (short-term), the profits will be considered Short-Term Capital Gains (STCG).
STCG on equity shares is taxed at a flat rate of 15% in the old tax regime.
Paying STCG Tax:

You don't need to pay STCG tax directly while filing your Demat account.
However, you are responsible for reporting the STCG income and paying the tax when you file your Income Tax Return (ITR) for the relevant financial year.
ITR Filing:

While filing your ITR, you'll need to declare the sale of shares, the profits earned (STCG), and the tax liability (15%).
The ITR itself doesn't involve direct tax payment. You might need to pay any tax due through challan or other methods specified by the Income Tax department.
Profit Booking vs. Long-Term Investment:

Here's a consideration for your strategy:

Tax Benefit of Long-Term Capital Gains (LTCG): If you hold the shares for more than 1 year, any profits become Long-Term Capital Gains (LTCG). LTCG exceeding Rs. 1 lakh attracts a 10% tax with indexation benefit (reducing impact of inflation). This can be a tax advantage compared to the flat 15% on STCG.
Market Volatility: Short-term trading involves higher risk due to market volatility. Consider your risk tolerance and investment goals.
Recommendation:

It might be beneficial to hold the shares for the long term to potentially benefit from LTCG tax advantages and potentially higher returns over time. However, the decision depends on your individual circumstances, risk tolerance, and investment goals.
Additional Tips:

Consult a qualified tax advisor for personalized advice on your specific tax situation, considering your income sources, deductions, and tax regime.
Research and understand the risks involved in share trading before investing.

I hope this clarifies your queries!

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in