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How to calculate capital gain on Intra day trading of shares?
When it comes to intra-day trading (buying and selling shares on the same day), the Income Tax Act does not treat the profits as capital gains. Instead, such trading is classified as speculative business income. This means the traditional capital gains computation method doesn’t apply. Key Points NoRead more
When it comes to intra-day trading (buying and selling shares on the same day), the Income Tax Act does not treat the profits as capital gains. Instead, such trading is classified as speculative business income. This means the traditional capital gains computation method doesn’t apply.
Key Points
Not Capital Gains:
Intra-day transactions are considered speculative because the shares are not actually delivered; they are bought and sold within the same day. Thus, the profits or losses from these transactions are treated as business income.
Calculation as Speculative Business Income:
To compute your net income from intra-day trading, follow these steps:
Calculate Turnover:
Sum up the sale consideration of all intra-day trades (i.e., the total amount received from selling shares).
Deduct Purchase Cost:
Subtract the total purchase cost of those trades (i.e., the total amount paid to buy the shares).
Deduct Direct Trading Expenses:
Also deduct any brokerage fees, transaction charges, and other direct expenses incurred while trading.
Net Speculative Business Income:
The resulting amount is your net profit (or loss) from intra-day trading, which will be taxed as business income according to your applicable slab rates.
Example Calculation
Additional Considerations
Set-Off & Carry Forward of Losses:
Losses from speculative transactions can only be set off against speculative income and can be carried forward for one year.
Record-Keeping:
It’s important to maintain detailed records (trade confirmations, brokerage statements, etc.) for each transaction to substantiate your calculations.
Read: How to calculate capital gain on future and options trading?
See lessHow to get deduction of medical insurance premium under income tax act?
Under Section 80D of the Income Tax Act, you can claim a deduction on the premiums paid for medical insurance. Here’s how it works: 1. Who Is Eligible? Self, Spouse, and Dependent Children: For individuals below 60 years, you can claim a deduction of up to ₹25,000 on the premium paid. If you or anyRead more
Under Section 80D of the Income Tax Act, you can claim a deduction on the premiums paid for medical insurance. Here’s how it works:
1. Who Is Eligible?
Self, Spouse, and Dependent Children:
Parents:
Preventive Health Check-Up:
2. Steps to Claim the Deduction
Keep All Premium Receipts:
Report in Your Income Tax Return (ITR):
Verify Your Documentation:
3. Example Scenario
Let’s say you are below 60 years old and have paid the following in a financial year:
Total Deduction Claimed:
This amount is fully deductible from your taxable income, thereby reducing your tax liability.
Final Thoughts
Claiming a deduction on your medical insurance premium is a straightforward way to reduce your tax liability. Ensure you have the proper documentation and correctly report these amounts when filing your ITR.
Read: Can we get deduction of medical expenditure incurred on the health of senior citizens under the income tax act?
See lessCan we get deduction of medical expenditure incurred on the health of senior citizen under income tax act?
In general, the Income Tax Act does not allow a blanket deduction for all medical expenses incurred on the health of a senior citizen. However, there are specific provisions that provide relief in certain cases: 1. Health Insurance Premium (Section 80D) What It Covers: You can claim a deduction forRead more
In general, the Income Tax Act does not allow a blanket deduction for all medical expenses incurred on the health of a senior citizen. However, there are specific provisions that provide relief in certain cases:
1. Health Insurance Premium (Section 80D)
2. Medical Treatment for Specified Diseases (Section 80DDB)
Key Takeaways
- General medical expenses (like hospital bills or doctor’s fees) incurred by a senior citizen are not deductible unless they are related to the treatment of specified diseases under Section 80DDB.
- Health insurance premiums paid for a senior citizen are deductible under Section 80D, with a limit of up to ₹50,000.
- Always ensure you have the required receipts and documents to support any deduction claims
See lessHow much deduction is allowed on purchase of electrical vehicle under income tax act?
The Income Tax Act offers benefits for electric vehicle (EV) purchases—but the benefits vary depending on whether you’re an individual or a business. For Individuals Under Section 80EEB, if you take a loan to purchase an electric vehicle, you can claim a deduction on the interest paid on that loan.Read more
The Income Tax Act offers benefits for electric vehicle (EV) purchases—but the benefits vary depending on whether you’re an individual or a business.
For Individuals
Under Section 80EEB, if you take a loan to purchase an electric vehicle, you can claim a deduction on the interest paid on that loan. The maximum deduction allowed is ₹1,50,000. This benefit helps lower the effective cost of borrowing and encourages the use of environmentally friendly vehicles.
For Businesses
If a business purchases an electric vehicle for commercial use, the EV is treated as a fixed asset and is eligible for depreciation under Section 32. In addition, the government may offer accelerated or additional depreciation benefits (for example, an extra 15% of the purchase cost) to promote green investments. This means you can reduce your taxable income by writing off a larger portion of the asset’s cost in the early years.
Quick Comparison
Key Points to Remember
- Section 80EEB: Only available for interest on loans taken for purchasing an EV—direct purchase cost isn’t deductible.
- Depreciation: For business use, claim depreciation as per normal provisions plus any additional rates offered for green investments.
- Always keep proper documentation (loan agreements, interest receipts, purchase invoices) to support your claims.
- These benefits are subject to updates with each budget, so it’s wise to check the latest notifications or consult a tax professional.
See lessHow much deduction is allowed for donations made to charitable trust under income tax act?
Under Section 80G of the Income Tax Act, the deduction you can claim for donations to charitable trusts depends on two main factors: 1. Type of Trust or Institution 100% Deduction:Some charitable trusts are eligible for a 100% deduction. This means you can claim the entire amount donated as a deductRead more
Under Section 80G of the Income Tax Act, the deduction you can claim for donations to charitable trusts depends on two main factors:
1. Type of Trust or Institution
100% Deduction:
Some charitable trusts are eligible for a 100% deduction. This means you can claim the entire amount donated as a deduction.
50% Deduction:
Other institutions may be eligible for only a 50% deduction, so you can claim half the donated amount.
2. Mode of Donation
Non-Cash Donations (e.g., cheque, digital transfer):
Cash Donations:
Example Scenarios
Scenario 1:
You donate ₹10,000 via bank transfer to a trust eligible for 100% deduction.
Deduction Allowed: ₹10,000
Scenario 2:
You donate ₹10,000 via bank transfer to a trust eligible for 50% deduction.
Deduction Allowed: ₹5,000
Scenario 3:
You make a cash donation of ₹10,000 to any eligible trust.
Deduction Allowed: Limited to 10% of your Adjusted Gross Total Income (even if the trust qualifies for 100% or 50% deduction).
Key Points to Remember
Approval is Essential:
The trust must be approved under Section 80G for you to claim the deduction.
Documentation:
Always obtain a valid receipt or certificate from the trust as proof of donation.
Choose Non-Cash Methods:
To maximize your deduction, it’s preferable to donate via non-cash modes (like cheque or online transfer) since these are not subject to the 10% limit on cash donations.
Read More:I have made donation to the PM care fund but don’t have any receipt, whether deduction under section 80 G is allowed under income tax act?
See lessI have made donation to the PM care fund but don’t have any receipt, whether deduction under section 80 G is allowed under income tax act?
While donations made to the PM CARE Fund qualify for a 100% deduction under Section 80G of the Income Tax Act, you must have proper documentation to claim the benefit. Key Points: Eligibility for Deduction:Donations to the PM CARE Fund are eligible for deduction under Section 80G if they are made thRead more
While donations made to the PM CARE Fund qualify for a 100% deduction under Section 80G of the Income Tax Act, you must have proper documentation to claim the benefit.
Key Points:
Eligibility for Deduction:
Donations to the PM CARE Fund are eligible for deduction under Section 80G if they are made through eligible modes (like cheque, online transfer, etc.) and the fund is registered for this benefit.
Importance of Receipts:
To claim the deduction, the Income Tax Department requires you to provide proof of donation, typically in the form of an official receipt or certificate issued by the PM CARE Fund.
No Receipt, No Deduction:
If you do not have a receipt, you may not be able to claim the deduction on your tax return. The receipt serves as the evidence that the donation was made and is crucial for the tax audit process.
What You Can Do:
Try to obtain a duplicate receipt or certificate from the PM CARE Fund if possible.
If you made the donation online or via cheque, keep your bank statements or cheque details as supporting evidence. However, note that these may not always be accepted in place of an official receipt.
Final Thought:
See lessWhile the donation itself is eligible for a deduction under Section 80G, lacking the official receipt may result in disallowance of the deduction. It’s always best to secure and retain proper documentation when making such donations.
Can I get deduction of rent paid even if I am not getting any HRA as I am self employed?
Yes, you may be able to get a deduction on rent paid even if you're self-employed and don't receive House Rent Allowance (HRA). However, the way you claim this deduction depends on how the rent is used: 1. For Your Residential Rent (Personal Use) – Section 80GG Who Can Claim: Individuals (salaried oRead more
Yes, you may be able to get a deduction on rent paid even if you’re self-employed and don’t receive House Rent Allowance (HRA). However, the way you claim this deduction depends on how the rent is used:
1. For Your Residential Rent (Personal Use) – Section 80GG
Who Can Claim:
What It Offers:
How the Deduction Works:
Important Conditions:
2. For Business-Related Rent (Office/Workplace)
Final Thoughts
By understanding these options, you can ensure that you make the most of the tax benefits available, even if you’re self-employed and not receiving HRA.
Read: Can I claim a deduction of rent paid in both section 80GG and 10(13a) HRA?
See less