The stock market has given tremendous profits in the last one year. You will be surprised to know that both the benchmarks Sensex and Nifty have climbed around 17 percent. In such a situation, if you have also made a profit, then before filing ITR, understand how much tax will be levied.
Tax on Stock Profit: The Indian stock market has been making a splash for the last one year. The Sensex has given a return of more than 16 percent in a year, while the Nifty has given a return of 17 percent. Obviously, you too must have made a lot of money in this flowing Ganga of the capital market. But, now the time has come to pay tax on this income from the stock market. Now that the last date for filing returns is approaching, you have to keep in mind that tax has to be paid on the income from the stock market as well. How is tax levied on it and in what ways can you save tax.
First of all, let’s talk about the performance of the stock market, so on July 31, 2023, the Sensex closed at 66,528 points. Today i.e. on July 8, 2024, the Sensex was around 80 thousand. In this way, a jump of 13,472 points has come in it, which is a strong jump of about 16.84 percent. Similarly, Nifty also closed at 19,754 on July 31, 2023, which stopped at 24,321 today. This benchmark has also given a return of more than 17 percent. Obviously, you too must have made huge profits by investing money in the stock market.
How is tax levied on stocks?
The earnings from the stock market are called capital gains and the tax levied on it is called capital gains tax. This tax is levied in two ways. This tax levied on stocks depends on how long you have kept these shares with you after buying them. Short term and long term capital gains tax is levied according to this period.
How much tax will be levied in the short term?
If you keep a stock with you for less than 12 months after buying it and then make a profit by selling it, then you will have to pay short term capital gains tax on it. This tax is levied at the rate of 15 percent. However, the brokerage fee levied on buying and selling the stock is deducted from the profit and whatever your net profit is, you will have to pay 15 percent tax on that. Suppose you make a net profit of Rs 1 lakh from the market, then you will have to pay tax of Rs 15,000.
If sold after 1 year
If you sell your shares after keeping them for 12 months, then you will have to pay long term capital gain tax on the profit earned from it. However, the biggest advantage in this is that if you have earned a profit of 1 lakh or less on long term investment, then it will be completely out of the scope of tax. At the same time, any amount more than 1 lakh will be taxed at the rate of 10 percent. Along with this, 4 percent cess will have to be paid on this tax. Suppose you have a profit of 3 lakhs in the long term, then excluding 1 lakh, 10 percent tax will be levied on the remaining 2 lakhs, which will be 20 thousand rupees. Now if 4 percent cess i.e. 800 rupees is added to this 20 thousand, then the total tax will be Rs 20,800.
