Profits On Intra-Day Transactions On Stock Market Taxable Under Different Income Heads

The profits made by you on all the transactions on the stock exchange are taxable under different heads of income. The profits made by you on intra-day trading are taxable under the head “Profits and Gains of Business or Profession”. The profits made on short-time delivery transactions is also taxable in your hand. The question as to whether this short-time delivery based transactions are under the head “Profit and gains of Business or Profession” or “Capital Gains” shall depend on various factors like volume, frequency of transactions, source of money for investments made, average holding period, the accounting treatment given in the books of accounts of the taxpayer etc.

The ITR form to be filed depends on composition and quantum of taxable income. If your taxable income does not exceed Rs 50 lakh and since your only source of income is salary and interest from a savings bank account, you can use ITR 1 even if you are claiming interest on a home loan provided you do not own more than one house and you are not a non-resident for tax purposes. In that case, you can file ITR-1 popularly known as SAHAJ. In case you have more than one house or your income exceeds Rs 50 lakh, you can file ITR-2.

The tax deducted on your income is correctly deducted and the person paying such income is not allowed to take into account deduction available under Section 80C. The right course of action available to you in such a case is to file your ITR under the old tax regime and claim deduction under Section 80C. Answer to your question whether you are eligible for refund or not will depend on the quantum of tax payable on your income so calculated and the quantum of total TDS made from your income.

However if you opt for the new tax regime, you are eligible to claim rebate under section 87A against your tax liability on normal income taxable at slab rate. In case you do not have any income taxed at flat rate and since your taxable income does not exceed 12 lakhs, you can claim refund for full tax deducted. Please note that if you opt for the new tax regime, no deduction is available under Section 80C.