Income tax on selling shares

Ananjan Mukherjee (Querist) 29 September 2008 This query is : Resolved
If I sell off some shares that I own, how is that income going to be treated? How will I be taxed?

Thank you,
Ananjan Mukherjee

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SHEKHAR MISHRA (Expert) 30 September 2008
you will be liable to pay Securities Transaction Tax and short term capital gain tax depending on duration of your holding.

ARVIND JAIN (Expert) 30 September 2008
WITHOUT FACTS TAX CAN NOT BE CALCULATED.

Ananjan Mukherjee (Querist) 30 September 2008
Thank you for your responses.

I do not have any specific facts at the moment. I am planning to start investing the stock market, and before I start I am trying to understand the relevant tax implications.

From what I can think of at the moment, the specific questions could be:
1. Will I have to pay tax at the end of every financial year even if I don't sell any of my shares in that year?
2. How will I be taxed on my income if I sell a share within one year of purchasing it, within 3 years of purchasing it and after it has been with me for more than 3 years?
3. Do I have to pay any tax when I buy a share?
4. Are dividends or bonus taxed?
5. How are my investments in mutual funds taxed? Do the funds deduct TDS?

I basically want to understand the tax policies relevant to share trading before I get into it. If you can guide me to a link or an article which explains the policies in simple english, it will be very helpful to me.

Guest (Expert) 30 September 2008
Dividends are exempt.
Gains i.e Selling price - cost of shares is taxed at short term rates if sold within one year of acquisition and more than that as long term capital gains.
Gains arising from mutual funds are taxed at 10% under section 111A.

Rates differe each year and are as per
Finance ACt for that year.

TDS will be deducted in most cases.

rajesh garg (Expert) 01 October 2008
FIRSTLY WHEN U HV PURCHASE IT IS SHORT TERM OR LONG TERM PLS SEND DETAILS.

Guest (Expert) 03 October 2008
Yes more details are required.

Ananjan Mukherjee (Querist) 07 October 2008
I don't have any concrete plans now. Your responses have given me sufficient information to plan at the moment.

Thank you all for your responses. I'll come up with more specific queries if and when I need advice.

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