Taxation of shares transactions for Individuals

Taxation of shares transactions for Individuals

Kind of share Trading transaction: When it comes to the taxation of shares transactions for individuals treating it as a business, Three Categories and taxation varies based on category, Intraday- Buying and selling shares on the same day, Delivery based- Buying shares & holding them for a certain time period & Doing Futures and Options Trading. the categorization and taxation vary based on the type of transaction. Here is a detailed breakdown for each category:

1. Intraday Trading

·       Buying and selling shares on the same day. Intraday Trading income is Considered as speculative business income. Taxed at the normal slab rates applicable to the taxpayer. Speculative losses can only be set off against speculative gains. Speculative losses can be carried forward for up to 4 years and set off only against speculative gains in subsequent years. High-frequency intraday trading. Day Trader Is treated as Business Income. Only few Expenses Deductible i.e. Brokerage, internet charges, and other related expenses. Added to total income and taxed at slab rates.

2. Delivery Based Trading:

Buying shares and holding them for a certain period before selling. Treated as business income (not speculative). Income is to Tax at the normal slab rates applicable to the taxpayer. Non-speculative business losses can be set off against any other income except salary income. Non-speculative business losses can be carried forward for up to 8 years and set off against any business income in subsequent years.

3. Futures and Options (F&O) Trading:

Trading in derivative instruments like futures and options. Considered as non-speculative business income. Income is to Tax at the normal slab rates applicable to the taxpayer. Non-speculative business losses from F&O trading can be set off against any other income except salary income. Non-speculative business losses can be carried forward for up to 8 years and set off against any business income in subsequent years.

Summary Explain about taxation of shares transactions for individuals

Category	Nature of Income	Taxation	Set-off and Carry Forward
Intraday Trading	Speculative Business	Normal slab rates	Speculative losses: Set off against speculative gains, carry forward 4 years
Delivery Based Trading	Non-speculative Business	Normal slab rates	Non-speculative losses: Set off against any income except salary, carry forward 8 years
F&O Trading	Non-speculative Business	Normal slab rates	Non-speculative losses: Set off against any income except salary, carry forward 8 years

Income Tax Saving guidance for the AY 2025-26

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