Financial Daily from THE HINDU group of publications
Tuesday, May 30, 2006
Financial Daily from THE HINDU group of publications Tuesday, May 30, 2006 |
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Opinion
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Letters Listing criteria
The CBDT proposes to issue supplementary instructions listing the criteria to be considered by assessing officers in determining whether a person is a trader in stocks or an investor therein. The instructions do not specify that they are for FIIs. Assessing officers could examine, in the case of all persons including individuals who have income from stocks, as to whether the person classifies as an `investor' or a `trader.' If the individual qualifies as an `investor,' he/she will be liable to pay tax at the lower tax rates on income by way of capital gains on sale of listed shares (10.22 per cent for short-term gains, nil for long term). If the individual qualifies as a trader, his/her income will be treated as business income and would be taxable at regular slab rates applicable to individual assessees (maximum rate of 33.66 per cent). The individual would be required, among others (a) to maintain proper books of accounts, where the income exceeds Rs 1.25 lakh or the turnover exceeds Rs 10 lakh; and (b) Obtain and furnish a Tax Audit report, if the turnover exceeds Rs 40 lakh. The due date for filing the tax return in such cases would be October 31 of each assessment year. One possible benefit could be that `trading' loss incurred, if any, could be set off against any income (other than salary/capital gains) in the same year, as against the position for an `investor' of short-term capital loss being available for set off only against short-term capital gains.
Executive Director
PricewaterhouseCoopers
Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in
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