How income tax is levied on your stock market transactions


While filing one's Income Tax Return (ITR) one needs to mention all its sources of income including stock market investments. According to tax and investment experts, there are two set of income tax forms for stock market investors. If a taxpayer has investments in cash segment, then he or she will have to file ITR-2 Form while for a derivative segment investor or aggressive intraday traders, ITR-3 Form will be the ideal one. Experts went on to add that like two ITR forms, there are two types of taxes levied on the stock market investor, which depends upon the period of shareholding of the taxpayer.

Speaking on the reason for two types of ITR Forms for stock market investors Pankaj Mathpal, MD at Optima Money Managers said, "If an investor has investments in cash segment then the taxpayer will have to file ITR-2 Form. But, in case, the taxpayer is an intraday trader, then he or she will have to file ITR-3 Form. In fact, if the taxpayer has stock investments in the derivative market, in that case too, ITR-3 Form will be applicable."


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