Fire your tax related queries and i would get it solved!!!

[diosys]

Diosys,

A strange question. I'm required to hold a derivative position (Futures, for example Nifty Fut) for 13 months by rolling over each month to next months contract. Will this attract short term capital gain tax? any way to make it as Long Term?

Thank you,
TFL,

Income from F&O is always....always... BUSINESS INCOME !!!

so no point in discussing STCG or LTCG

 

[lazytrader]

That for the corrections diosys. It would be good if you link the post to your signature so that it is easily accessible to everyone reading this thread. (the same silly question are showing up again)

So here's my question:
-In 2008 after making a profit initially I lost a lot of money in the crash and since I didn't know about the tax stuff I traded everything short term, long term equities, Futures, options etc and started making a profit and just about managed to breakeven by year Tend. The long term equities that I purchased in 2008 I am still holding and are more than a yr old. Year ended in a slight net loss

So I assume I dont have to pay tax for my trading activites in 2008. Is that right?

-Last yr I was a salried employee so my income tax - TDS has been payed by my employer. I quit my job last yr and right now not employed. I have my Form 16 for my previous yr 2007-08 but not for 2008-09. Do I need to ask my employer for it?

-Since I was not aware about the tax stuff I have not declared anything related by my trading since long term capital gains are not taxed and short term was a net loss. Now after reading your thread I have realized that declaring things like these and filing returns is better even if no tax payable, but dont know what to do about it. Please advise.

 

[diosys]

That for the corrections diosys. It would be good if you link the post to your signature so that it is easily accessible to everyone reading this thread. (the same silly question are showing up again)

So here's my question:
-In 2008 after making a profit initially I lost a lot of money in the crash and since I didn't know about the tax stuff I traded everything short term, long term equities, Futures, options etc and started making a profit and just about managed to breakeven by year Tend. The long term equities that I purchased in 2008 I am still holding and are more than a yr old. Year ended in a slight net loss

So I assume I dont have to pay tax for my trading activites in 2008. Is that right?

-Last yr I was a salried employee so my income tax - TDS has been payed by my employer. I quit my job last yr and right now not employed. I have my Form 16 for my previous yr 2007-08 but not for 2008-09. Do I need to ask my employer for it?

-Since I was not aware about the tax stuff I have not declared anything related by my trading since long term capital gains are not taxed and short term was a net loss. Now after reading your thread I have realized that declaring things like these and filing returns is better even if no tax payable, but dont know what to do about it. Please advise.

I cannot comment whether you need to pay tax or not until each and every unit is seperately taxable....U might be having loss in capital gain but profit in business income...or vice versa...so it might be possible that tax is payable depending upon exact facts of the case....

You should ask for form 16 in case TDS has been deducted from your salary for the year irrespective of the fact whether you were employed for the year or part of it.

I would strongly suggest to revise your return if it relates to FY 2008-09...you have a lot of time in order to revise it....Please do so.

 

[lazytrader]

Long term equities I have been holding for more than a yr now. The capital is from my salary and haven't sold them yet. Last yr there was no profit was realized from long term equity holdings. I only purchased shares and still holding.

All the trading which I had done was very short term intraday and max held shares for a week or so. So all would be classified as business income right? In this short term trading there was no profit almost breakeven.
To clarify, all long term holding are still being held and didn't sell anything in 2008-09 and all short term profit=short term loss.

Will do as advised on other matters.

I remember you mentioning about having seperate accounts for longterm and short term holdings. I don't understand why 2 accounts are needed. If lets say you buy some stocks and hold them for more than a yr then if you do short term trading with the same account will these be taxed at 30%?

 

[TFL]

Dear Diosys,

I know Its illegal to use PIS account for any other purpose other than trading(delivery).
My question is , Then a fund transfer from PIS account to other persons bank account through NEFT is legal or not?

TFL.

 

[diosys]

Long term equities I have been holding for more than a yr now. The capital is from my salary and haven't sold them yet. Last yr there was no profit was realized from long term equity holdings. I only purchased shares and still holding.

All the trading which I had done was very short term intraday and max held shares for a week or so. So all would be classified as business income right? In this short term trading there was no profit almost breakeven.
To clarify, all long term holding are still being held and didn't sell anything in 2008-09 and all short term profit=short term loss.

Will do as advised on other matters.

I remember you mentioning about having seperate accounts for longterm and short term holdings. I don't understand why 2 accounts are needed. If lets say you buy some stocks and hold them for more than a yr then if you do short term trading with the same account will these be taxed at 30%?

First i would answer your second question as to why i have said to maintain two demat accounts....

According to income tax rules when a share is sold out of Demat account then the principal of FIFO needs to be followed....FIFO means first in first out method. Under this method whatever came first in Demat goes out first....

Now....IF suppose you hold 100 L&T purchased on 01-01-08 in your Demat. Now on 01-12-08 you bought 50 more L&T with an intention of short term trading and subequently sold them on 10-12-2008 then what would be your tax liability ???

If the method of FIFO is applied to this transaction then it is short term capital gain since those which first came in (on 01-01-2008) went out first....Hence how would you prove to the Income tax authoraties that these are for Long term...

So technically in the above transaction as on date of 04-08-2009 you have the following

L&T - 50 Qty - Purchased 01-01-2008
L&T - 50 Qty - Purchased 01-12-2008

Get my point !!!

That is why it is advisable to have two seperate Demats and keep your long term holdings in it and seperate from your short term trading activities....


Now judging from my above reply take a call where does your trading lye for FY 2008-09.... As for short term trading it should be classified as business income.

 

[diosys]

Dear Diosys,

I know Its illegal to use PIS account for any other purpose other than trading(delivery).
My question is , Then a fund transfer from PIS account to other persons bank account through NEFT is legal or not?

TFL.

I am only aware of tax laws hence answering from that angle....as per Income Tax all income whether Illegal, Black or white is taxable....It does not prohibit any transfers between people through banking channels...

 

[lazytrader]

First i would answer your second question as to why i have said to maintain two demat accounts....

According to income tax rules when a share is sold out of Demat account then the principal of FIFO needs to be followed....FIFO means first in first out method. Under this method whatever came first in Demat goes out first....

Now....IF suppose you hold 100 L&T purchased on 01-01-08 in your Demat. Now on 01-12-08 you bought 50 more L&T with an intention of short term trading and subequently sold them on 10-12-2008 then what would be your tax liability ???

If the method of FIFO is applied to this transaction then it is short term capital gain since those which first came in (on 01-01-2008) went out first....Hence how would you prove to the Income tax authoraties that these are for Long term...

So technically in the above transaction as on date of 04-08-2009 you have the following

L&T - 50 Qty - Purchased 01-01-2008
L&T - 50 Qty - Purchased 01-12-2008

Get my point !!!

That is why it is advisable to have two seperate Demats and keep your long term holdings in it and seperate from your short term trading activities....


Now judging from my above reply take a call where does your trading lye for FY 2008-09.... As for short term trading it should be classified as business income.

Thanks for you detailed reply. I now finally know whatvFIFO and LIFO you guys were discussing all along.

After I purchasing my long term equities I haven't traded in the cash segment. Last thing I did was purchased stocks of 10 different comapines and there are no sell transactions after that in cash segment for over a yr. I've done FnO only after that. So it would mean that the Last In are still being held, now more than a yr so no tax.

Coming to hold separate accounts for short term and long term trading - we will need 2 different demat account for this right? So that the transactions would show holding duration for a yr.

Now what if no short term trasactions are done in cash segment. All short term is done in FnO and all equities are held for a yr aleast, in such a case 2 different accounts wouldn't be needed, is that right?

Thanks for your guidance.

 

[mahesh2007]

dear diosys,
Now when STT is an expense, is there any need to preserve STT statements ?
As all credits are STT adjusted?

regards

 

[diosys]

Thanks for you detailed reply. I now finally know whatvFIFO and LIFO you guys were discussing all along.

After I purchasing my long term equities I haven't traded in the cash segment. Last thing I did was purchased stocks of 10 different comapines and there are no sell transactions after that in cash segment for over a yr. I've done FnO only after that. So it would mean that the Last In are still being held, now more than a yr so no tax.

Coming to hold separate accounts for short term and long term trading - we will need 2 different demat account for this right? So that the transactions would show holding duration for a yr.

Now what if no short term trasactions are done in cash segment. All short term is done in FnO and all equities are held for a yr aleast, in such a case 2 different accounts wouldn't be needed, is that right?

Thanks for your guidance.

Yes then no different accounts are needed.