Losses from speculative trading can be set off against speculative gains made during a year.
You can carry forward these losses for 4 years.
These losses can’t be set off against non-speculative trading income.
THREAD: SAVE YOUR TAX ON TRADING INCOME
Investors and traders want to make big money in the stock market. But what about paying taxes. All of them would like to save some chips.
In this thread, you will learn a few smart ways to save on your taxes
Losses from speculative trading can be set off against speculative gains made during a year.
You can carry forward these losses for 4 years.
These losses can’t be set off against non-speculative trading income.
However, losses from Long Term trading can be set off against LTCG only.
An investor can carry forward such losses for a period of 8 years.
Exemption on LTCG of up to 1 lac. So, you can plough back these gains to increase your capital.
Example ~
Investment = 5 lacs
Time period = 1 year
Profit = 1 lac
No tax liability for this 1 lac but this time your new capital invested will be 6 lacs.
This way, your Tax liability = 2 lacs (LTCG) – 1 lac (exemption) = 1 lac (taxable)
Now we know that STCG losses can be set off against STCG as well as LTCG losses for the same year.
Company A and B shares were bought in May 2021.
Profit of 5 lacs in A and loss of 2 lacs in B.
Book loss of 2 lacs in B before 31st March 2022 and set off your loss in B against profit in A.
Net Taxable Gain = 5 lakhs (Gain in A) – 2 lakhs (Loss in B) = 3 lakhs.
It should be noted that you will be able to take advantage of the above provisions only if you file your income tax return on time as late submissions will make you ineligible to fetch these advantages.
If you want to reduce your taxes, then there is nothing wrong with opening multiple Demat accounts.
You can open one or two Demat accounts on the names of your family members. This would reduce your tax burden to a great extent.
This also becomes beneficial when you come under a higher tax slab but your spouse or another family member comes under a lower tax slab.
Whatever expenses have been incurred to carry out a business activity can be deducted from the speculative income before calculating tax.
This provision is not there for LTCG or STCG as they are not considered as business income but capital gains.
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More from Finkarma
10 threads that will teach you more than any Course on Trading🧵
1/ Lies that you've been told about trading.
From:
2/ Pitfalls that every discretionary trader faces, and how to overcome them.
From: @KillerTrader_
3/ The only trading psychology post you need to read.
From: @indian_quant
4/ A thread on Trading mistakes.
It's inevitable that you will make a lot of mistakes in your trading career, what's truly important is if you learn from those mistakes or keep repeating them.
From:
1/ Lies that you've been told about trading.
From:
Which are the biggest lies told by well meaning people in trading?
— Anandable Conservative Trader (@AnandableAnand) December 29, 2021
I will list the ones I heard and believed initially, which was detrimental to my progress
Lets do this and you add one LIE u heard many times
First
1. Its impossible to make money in intra-day trading
+
2/ Pitfalls that every discretionary trader faces, and how to overcome them.
From: @KillerTrader_
What are the pitfalls I faced as a discretionary trader and how I overcame them:
— Killer Trader \U0001f4c9\U0001f4c8 (@KillerTrader_) October 10, 2021
A thread \U0001f9f5#StockMarketindia
3/ The only trading psychology post you need to read.
From: @indian_quant
The only trading psychology post you need to read:
— Indian Quant \U0001f1ee\U0001f1f3 (@indian_quant) October 28, 2021
===========
This guy gets appreciation and possibly makes money only after he reaches from one point to another.
But if his entire focus is on :
1. Not falling down the rope.
2. Keeps on thinking to reach the other end
..contd pic.twitter.com/YQCEnnU7iR
4/ A thread on Trading mistakes.
It's inevitable that you will make a lot of mistakes in your trading career, what's truly important is if you learn from those mistakes or keep repeating them.
From:
Trading Mistakes & Lessons Learnt \U0001f9f5
— Sourabh Sisodiya, CFA (@sourabhsiso19) September 30, 2021
1) I always keep my mistakes & lessons learnt in front of my screen while trading.
Bcz we as traders tend to commit the same mistakes everytime.
So seeing your learnt lessons everyday ensures that you avoid them.
#trading #mistakes pic.twitter.com/4MYFlCS9Hi
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