If you have a lot of share trading activity (e.g. if you are a day trader with lots of activity or if you trade regularly in Futures and Options), the Income Tax Department classifies this as a Business Activity. In that case, you need to file an ITR-4 and show the Profit / Loss from the share trading under the head "Income from Business and Profession".
If you have share trading activity and you want to declare that under the head "Income from Capital Gain", you can specify just the aggregate Capital Gain / Loss value of the whole financial year. We have described the steps below.
Share trading falls into 4 separate categories:
- Long Term STT Paid
- Short Term STT Paid
- Long Term STT not paid
- Short Term STT not paid
STT paid and Not-STT paid have different taxation rate, so you have to handle each case separately.
For example, Let's say you have Short Term STT paid share sale, then you need to create one entry in Short Term STT Paid Shares:
- If you have Net Capital Gain in the financial year in Short Term STT Paid, then just specify the profit in the Sale Price and Zero in the purchase price.
- If you have Net Capital Loss, then just specify Zero in Sale Price and the amount of Loss as the purchase price. We will automatically make this a loss, as the sale price is lower than the purchase price.
In total, you may have to make 4 such entries to cover all the cases listed above. Please click on contact us if you have any questions.