How income tax is calculated on the earnings from the stock market (You can save so much if you understand)
It’s crucial to be aware of the income tax charged on stock market earnings in addition to the earnings themselves. Earnings of various categories are taxed at varying rates (Taxation on Share Market Earning).
If you are unable to conduct the Income Tax Calculation on Share Market Earning on your stock market earnings, you may incur a loss. Please tell us how and how much tax is charged on stock market earnings.
Earnings from the stock market are subject to income tax. There is a lot of boom in the stock market since the effect of the coronavirus is lessening. This surge is bringing in a lot of money for a lot of people. As a result, a large number of new people have begun to try their luck in the stock market.
However, not only should stock market earnings be borne in mind, but also the tax on such gains should be considered. This will assist you in determining how much you have profited. Please tell us how and how much tax is charged on stock market earnings (Taxation on Share Market Earning).
1) Income Tax on Short Term Capital Gain
Short term capital gains are earned when you purchase stock in the stock market for less than a year and more than one day.
Short-term capital gains are taxed at a fixed rate of 15%. If your total income is less than Rs 2.5 lakh, you would not be required to pay any tax. It makes no difference which tax bracket you are in.
2) Income Taxes on Long Term Capital Gain
Long term capital gain occurs when you buy shares in the stock market for a period of more than one year and then sell them after that time.
Long-term capital gains earnings up to Rs 1 lakh are tax-free, while income over that is subject to a flat 10% tax. It makes no difference which tax bracket you are in. If your total income is less than Rs 2.5 lakh, you would not be required to pay any tax.
Also Read: How to Open Demat & Trading Account in Fyers
3) Income Taxes on Intraday and Futures & Options Trading
Intra-day trading is when you buy and sell stocks on the same day by the evening of the same day in the stock market. This type of income is known as speculative business income.
Non-speculative business income refers to earnings from futures and options trading. Intraday and futures-option trading profits are taxed according to the tax slab. That is, all income up to Rs 2.5 lakh would not be taxed; instead, it will be taxed according to the tax slab.