Posted by: nikhilblog | May 24, 2008

Use of the opportunities in stock exchange

Make Sure: Best thing would be to catch a Chartered Accountant(C A) and get the whole provision in detail so it could be wisely used by every one of us.
Provision: Settingoff short term capital loss against Short Term Capital Gains.
Explaination:For Example, if you have Rs.50000 of notional loss and made profit of Rs. 5000 on sale of stock purchased between April07- March09 ( Short Term Capital Gains). Then you can sell your entire portfolio of stock purchased between April08 -March09 on 29th or 31st of March 09 and purchase it back on 1st or 2nd April09 this would not change your position on Loss and you will still have about Rs.50000 Loss + some brokerage charge and some movement in stock exchange.
But the amount taxable this year under short term capital gains tax would be (Loss of Rs.50000 – Profit Rs.5000) ie loss of Rs.45000( Not Taxable), So in actual if you were to pay short term capital gains tax this year (for April 08- March2009) of Rs.500 (ie.10% of 5000) your taxable income from short term would actually be( – Rs.45000) ie loss of Rs.45000 which can be carried forward till eight years.
Their by your benefit will be that you can trade next year. ie (April08-March09) and make a profit of 45000 and still you would not fall under the bracket of short term capital gains Tax.

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