101 Q&A on Taxation on Sale of Shares

Description -
If you are investing or trading in Stocks/Shares, then you should know the taxation on that asset very well. This ebook covers all aspects of Sale of share taxation - Share trading as business income, Short Term & Long Term Capital Gain tax, Dividend taxation, ESOP taxation, STT etc. All details are as per FY2020-21.

 Total Pages – 48

 Content Index -

A. INTRODUCTION TO TAXATION OF INCOME FROM SALE OF SHARES

B. BASIC CONCEPTS RELATING TO SHARE TRADING

1.                  What is meant by the term ‘Shares’?

2.                  What are the different types of Shares?

3.                  What are the features of Equity Shares?

4.                  What are the features of Preference Shares?

5.                  Which Equity Shares are traded in the Share Market?

6.                  What are the different types of share trading in the share market?

7.                  What is meant by ‘Delivery Trading?’

8.                  What is meant by Intra-Day Trading?

9.                  What is meant by Short Sell?

10.              What is the meaning of ‘Buy Today Sell Tomorrow (BTST)?’

11.              What is the meaning of ‘Sell Today Buy Tomorrow (STBT)?’

12.              What is Margin Trading?

13.              What is Arbitrage?

14.              What is ‘Derivatives’?

15.              What are the underlying assets under Derivatives?

16.              What are the types of Derivatives?

17.              What is Futures?

18.              What is Options?

19.              What are the types of Options?

C. TAXATION OF TRADING OF STOCK IN THE MARKET

20.              How the Equity shares are treated under the Income Tax Act?

21.              How the profit / loss from sale of shares is treated under Income Tax Act, 1961?

22.              What factors should I consider while deciding the treatment of Equity Shares?

23.              What is meant by Purpose of Investment?

24.              When the shares can be called as an ‘Investment?’

25.              When the shares can be called as ‘held for trading?’

26.              How is the frequency of the transaction important?

27.              What clarifications have been laid under the CBDT Circular No. 6/2016?

28.              When the activity of sale of shares is a treated as a ‘Business Activity’?

29.              Explain the provisions as described in the circular with the help of examples.

30.              How the income under the head ‘Income from Business’ is categorized?

31.              How the Capital Gain from the sale of shares is categorized under Income Tax Act, 1961?

D. PROFIT ON SALE OF SHARES TREATED AS INCOME FROM BUSINESS

32.              What is meant by Speculative Transaction?

33.              What is meant by Non-Speculative Transactions?

34.              How to compute the profit/loss from sale of shares under the head ‘Income from Business’?

35.              Which expenses can be deducted while calculating the profit/loss from sale of shares?

36.              What is Security Transaction Tax?

37.              On which transactions the STT is charged? What is the % Rate of STT?

38.              What is meant by Brokerage?     

39.              What is the Stamp Duty?

40.              Why GST is charged on the transaction of purchase / sale of shares?

41.              What are the Transaction Charges?

42.              What is meant by Depository Participant Charges?

43.              What other charges can be claimed as expenses?

44.              Example

45.              Can I disclose my profit from sale of shares under Presumptive Taxation (section 44AD)?

46.              What are the provisions of Section 44AA of Income Tax Act, 1961?

47.              How to calculate the Turnover in the case of Speculative Transactions, for deciding the Tax Audit Applicability?

48.              How to calculate the Turnover in the case of Non-Speculative Transactions, for deciding the Tax Audit Applicability?

49.              How to calculate the Turnover in the case of Non-Speculative Transactions (Delivery Based Trading), for deciding the Tax Audit Applicability?

50.              What are the provisions relating to Carry Forward and Set off of Losses?

E. PROFIT ON SALE OF SHARES TREATED AS CAPITAL GAIN

51.              What is Short Term Capital Gain?

52.              What are the provisions under Short Term Capital Gain?

53.              What is Long Term Capital Gain?

54.              What are the provisions under Long Term Capital Gain?

55.              What are the tax rates applicable for Capital Gain from sale of shares?

56.              How to Calculate LTCG on sale of shares?

57.              How to calculate the Cost of Acquisition for Long Term Equity Shares?

58.              How to calculate the cost of acquisition in case of Short Term Capital Gain?

59.              How to calculate Long Term Capital Gain on sale of share after 1st April 2018?

F. EQUITY SHARES CAPITAL GAIN TAXATION – For Tax-Exempt Individuals

60.              What is the Basic Exemption Limit for Indian Resident Individuals?

61.              Can I take the benefit of Basic Exemption Limit while calculating the Taxable Capital Gain?

62.              How to take benefit of Basic Exemption Limit when both LTCG and STCG are earned during the year?

63.              How to calculate Tax on Capital Gain, when Basic exemption Limit is partially consumed by the Capital Gains?

64.              Can I claim deduction under section 80C to Section 80U against LTCG and STCG?

65.              What is the concept of rebate under section 87A of Income Tax Act, 1961?

66.              If I have earned only STCG and LTCG during the year, can I claim rebate under section 87A of Income Tax Act, 1961?

67.              Explain the provision of Section 87A with the help of an example.

68.              From when the LTCG on the sale of Equity shares is taxed?

69.              I have purchased equity shares in November 2015 and sold the same in February 2018. Will the long-term capital gain be taxable?

70.              Example

71.              Example

72.              Example

73.              Example

G. EMPLOYEE STOCK OPTION PLANS (ESOP)

74.              What is ESOP?      

75.              Why ESOPs are given?

76.              What is vesting period?

77.              What is meant by ‘Options’?

78.              What is Exercise Period?

79.              What is Exercise Price or Grant Price?

80.              What is the Issue Date?

81.              What is Vesting Date & Exercise date?

82.              What is the Expiration date?

83.              How the ESOP is taxed when the employee exercises an option?

84.              How the ESOP shares are taxed when those shares are sold? (Listed Companies)

85.              How the ESOP shares of Unlisted Companies (Private Companies) is taxed when those shares are sold?

86.              How the Foreign ESOPs are taxed?

87.              Should I opt ESOP in lieu of cash as a part of salary?

H. FAQS ON THE OTHER MISCELLENEOUS TOPICS

88.              What is Dividend?

89.              How the Dividends are taxed under Income Tax Act, 1961?

90.              What is a stock split?

91.              Why Companies decide to split their shares?

92.              Example

93.              What is reverse stock split?

94.              What is issue of bonus shares?

95.              Why the companies issue Bonus Shares?

96.              Is the issue of bonus shares beneficial?

97.              Example

98.              What is meant by the issue of the Right Shares?

99.              Why does company go for right issue?

100.          How to calculate Capital Gain on Sale of Right Shares?

101.          Example

Disclaimer - This book is not meant as Tax Advise or Financial Advice. It only gives the information about the stock or the company as per publicly available information and Yadnya's analysis of that information.