Newcomers to the trading world don’t always know how to include gains and losses in their income tax calculations. It is even more difficult to report gains from intraday trading as they are not considered as capital gains. As a result, many taxpayers are fined for submitting the wrong income tax returns (ITR) form. Some are also fined for reporting under a wrong head. Let’s look at how exactly you should report your gains or losses from intraday trading in the ITR.
All about intraday trading
A trading transaction completed within the period of a single business day is known as intraday trading. Here, the trader holds no positions at the close of the day. Instead, they try to profit from the price variations of a stock during one business day. To become a day trader, you will need to open a trading account with a reliable broker like Kotak Securities.
Income head for incorporating intraday trading gains
Gains from intraday trading do not meet the minimum holding period of one day to qualify as capital gains. These gains are listed under business income and taxed as per the investor’s tax slab.
Such gains may also be classified as speculative income because there is no delivery of shares. The shares purchased in the morning are sold off by the evening.
Advantages and disadvantages of speculative income
Speculative income is filed under income from business. Any profit is added to the total tax payable by the individual in keeping with the … Read More