What are the STT and LTCG taxes levied on market earnings?

What are the STT and LTCG taxes levied on Stock market earnings?

What are the STT and LTCG taxes levied on market earnings? we are provided trading Tips readers to consult with their investment advisers before making any financial decision. What is the tax on earnings from stock market?  This question often haunts new investors.  There are three taxes on earnings from the stock market.  This tax bothers investors.  Investors are hoping for a reduction in taxes this time around.  Let us tell you in simple words how much and how much tax you have to pay.

What are the STT and LTCG taxes levied on market earnings?


 Suppose you have earned Rs 5 lakh from the stock market in one year. But only Rs.  4.50 lakh will come into your account.  In fact, the transaction is subject to Security Transaction Tax i.e. STT and Long Term Capital Gains Tax i.e. LTCG.  At the same time income tax has to be paid on the total earnings.  That means you have to pay three taxes.  Investors expect from the budget that STT will end and another - LTCG will fall.

 Two taxes are levied

 In the year 2004, the then Finance Minister P.  Chidambaram replaced STT with Long Term Capital Gain i.e. LTCG but did not remove LTCG.  Now the investor has to pay both taxes on the earnings.  Income tax is also levied on the remaining earnings after this.  Therefore, investors want STT to be abolished or LTCG tax to be reduced.  At the same time, there is a demand for continued economic reforms.  This will continue to accelerate growth.

Understand the calculation of tax levied on market earnings

 Rs 125 STT will be deducted while selling your shares earning Rs 4 lakh.  One week after the completion of one year, Rs.  If 5 lakh shares are sold, LTCG tax of 10% i.e. Rs.  Suppose you have now earned Rs 3 lakh through any other means.  Thus his total income is 3 lakh + 5 lakh = 8 lakh.  50 thousand rupees were deducted from it earlier.  8 lakh -50,000 = Rs.  7.50 lakhs.  Now you also have to pay income tax on this 7.50 lakh.

 What is Long Term Capital Gains Tax?

 If the stock market makes a profit after 12 months of sale by buying listed shares, it is called long term capital gains tax.  The seller of the shares will have to pay tax on these earnings.  The Long Term Capital Gains Tax was reintroduced in the 2018 budget.  Previously, profits from the sale of equity shares or units of equity mutual funds were not taxed.  It was exempted from tax under Section 10 (38) of the Income Tax Rules but the provision included in the 2018 budget states that if the sale of shares and units of an equity mutual fund sold after one year yields a capital gain of more than Rs.  Will be taxed.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. www.Tradtips.com suggests its readers to consult with their investment advisers before making any financial decision.)

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