Tax sops for stock investors : Sify India

There are tax sops for stock investors

Have you ever wondered how you get to retain only a part of your actual gains on the stock market despite trading regularly and taking sizeable shots? A major portion of the gain is eaten away by the transaction costs imposed on you in every single trade.

There are broadly two claimants to this money — your broker and the government. But, while your broker may or may not honour your everyday relationship with him by refunding all or any part of the brokerage paid by you, the government does, by having a provision to set off the securities transaction tax (STT) paid by you against the tax payable on your stock market gains.
Section 88E of the Income Tax Act provides for a rebate in income tax payable by the assesses who are active traders in the stock market, irrespective of whether they are individuals, Hindu undivided families, companies, firms, association of persons or body of individuals, local authorities or any artificial judicial person, subject to the following conditions:

First, your total taxable income should have income chargeable to tax under the head ‘Profit and Gains of Business or Profession’ (PGBP). Second, this income under must contain positive income arising from taxable securities transactions. Positive income means there should be some income from securities transactions, and if you are claiming any loss under this head, arising from taxable securities transactions, then the question of rebate under Section 88E doesn’t arise at all.
It is also to be understood clearly that this section applies only to those transactions, which have the nature of a business transaction. If any assessee is doing transactions from the investment point of view and accounting for his gains or losses under the head ‘Income from Capital Gains’, this section is again not applicable. When a transaction will be treated as a ‘business’ transaction and when as an ‘investment’, is a matter of facts and is to be dealt independently and individually in each and every case, and is thus beyond the scope of this discussion.

How to claim rebate u/s 88E

More details @ http://sify.com/finance/fullstory.php?id=14576559


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