Tax on Stock Market Capital Gains
This is an article discussing the taxes you have to pay against your short term and long term capital gains.
Most Stock Market investors and traders ignore this important aspect which will impact the final net profit out of the investments and trades that they make in stock markets.
So it will help to understand how much tax you have to pay for your short term and long term investments.
Stock Market Taxes
(i) The tax rates differ based on the duration you hold the stocks for, i.e did you sell the stock before or after 1 year from the date of purchase of the stocks.
(ii) The capital gains on stocks that are held for more than 1 year will be exempted from capital gains taxes.
You don’t need to pay any tax on these gains.
But however, you need to pay the brokerage and service charges, of course.
(iii) The capital gains on short terms trade that are sold before 1 year from the date of purchase are taxed at 15 % capital gains income tax on the profit you make plus the surcharges and education cess.
But however, you have to remember that you will have better control of accounting the profits on these short term gains against the losses (if any) you make during this period.
Bonus Shares
You don’t need to pay any additional taxes for the bonus shares that are alloted to you at the time of allocation.
BUT, when you sell these stocks you have to pay capital gains tax on the profits you make irrespective of how much duration you hold them.
This means, even of you held them for more than one year, you still have to pay taxes on these bonus shares.
This is because of the fact that the shares are given to you at no cost.
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