How much tax is applicable on selling shares? Tax on Share Market Income ?

How much tax is applicable on selling shares? Tax on Share Market Income?

You will learn in this article how much tax is charged when selling shares, how much tax you pay when trading shares, if share market income is tax-free, and what fees are charged when buying and selling shares.

So make sure to read this post all the way through if you’d like to learn more about (Tax on Share Market Income) in depth with examples.

Let’s get to the point now.

How much tax is charged when shares are sold?

How much tax is applicable on selling shares? Tax on Share Market Income?

You must pay two different forms of taxes on the money generated from shares when you sell them. The first is the short-term capital gains tax, which must be paid on shares sold before the first year and is 15.6%; the second is the long-term capital gains tax, which is levied at a rate of 10.4% on income sold after the first year.

Below, we have provided an example to help you better understand how much tax must be paid on share market earnings in order to demonstrate how much tax is applicable on share market income.

Example:

If you purchase shares today for Rs. 2 lakh and make a 10% profit on them after a year, the share’s value will rise to Rs. 2,20,000, earning you Rs. 20,000 in profit.

Therefore, if you sell the shares in this scenario after a year, you must pay long-term capital gain tax (10.4%) on this profit.

This means that you must now pay 10.4% of Rs. 20,000, i.e  Rs. 2080, as long-term capital gain tax (LTCG).

In this manner, after selling the shares after a year, you will receive (2 lakh + 20000 – 2080) = Rs 217920.

However, if you sell this share before a year has passed, you will be required to pay 15.6% STCG, also long-term capital gain tax, which equates to Rs 3120 in profit.

As a result, if you sell the shares before a year has passed, you will receive Rs. 216880 (2 lakh + 20,000 – 3120).

I assume you are aware of the fees associated with selling shares at specific times.

What fees applicable to buying and selling of shares?

You must pay brokerage fees when you purchase shares, which also contain many taxes as GST, Stamp duty, STT, Sebi charge, etc. When you sell shares, you must pay a long-term capital gains tax of 10.4% and a short-term capital gains tax of 15.6%.

Here, short term and long term are defined as time periods of less than or equal to one year.

What fees applicable when selling shares?

A brokerage fee of Rs 20 is applied to both purchasing and selling shares, so if you do both, you will be charged a fee of Rs 40. In addition, there are other little taxes and fees that must be paid, such as SEBI fees, GST, and stamp duty.

What percentage of your share of market profits is taxed?

On share market income, you are taxed at a rate of 10.4% LTCG and 15.6% STCG. Meaning that if you make money from the stock market, you must pay both long-term capital gain tax and short-term capital gain tax.

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How much of my share market income is tax-free?

Income from the stock market up to one lakh is tax-free. That is to say, if you earn less than Rs. 1 lakh from the stock market each year, you are exempt from paying long-term capital gain tax on this income, whereas earnings above Rs. 1 lakh are subject to tax.

You now know how much tax or charge is charged on selling shares, how much tax is applied on share market income, whether it is exempt from taxation or not, and how much charge is applied on selling a share as a result of reading this article.

The knowledge provided in this post should be helpful to you, I hope. You can ask any questions you may have about this subject in the comment section below.

Frequently Asked Questions:

How much tax is applicable on selling shares? Tax on Share Market Income ?

In India, how are share sales profits taxed?

Depending on the holding duration, gains from selling shares in India are classified as either short-term capital gains (STCG) or long-term capital gains (LTCG). Generally speaking, STCG is taxed at a greater rate than LTCG. we provided above with example.

What significance does the holding period perform in the taxation of shares?

Because it decides whether your gains are categorised as short-term or long-term, the holding time is important. Long-term gains can be eligible for exemptions or lower tax rates while short-term gains are often taxed at a higher rate.

How can I calculate out my tax liability on share market income?

You must decide whether your gains are short-term or long-term based on the holding time in order to establish the tax you must pay. The tax amount is then determined by using the applicable tax rate. For accuracy, it is advised to use online tax calculators or to consult a tax expert.

How much tax is applicable on selling shares? Tax on Share Market Income?: Conclusion:

Investors have to understand the taxation of income from selling stock market shares. In conclusion, a number of factors, including the holding duration, the type of shares, and the individual’s income, affect the tax obligation when selling shares. While exemptions may be available in certain situations, short-term capital gains are normally taxed at a higher rate than long-term gains. Investors should seek the advice of a tax expert or use trusted tax calculators to precisely calculate their tax liabilities and arrange their investments accordingly.

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