Latest news on trading tax
There have been many important updates regarding trading tax recently. Investors and traders need to know about the changes in the rules and policies related to it. In this article, we will discuss the new changes in trading tax and their effects.
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What is trading tax?
A trading tax is a tax that is levied on the income from trading methods. It applies to many types of investments and business transactions such as stock market, mutual funds, derivatives, etc.
Recent changes in trading tax
Long-term capital gains tax (LTCG):
There has been no major change in long-term capital gains tax, but the government has announced some new exemptions under it. These exemptions are for those investors who invest for a long time and have proof of income.
Earlier there was a tax on long-term investments.
Earlier: Earlier there was a 10% tax on long-term investments.
Example: Suppose you bought shares of a company today and held those shares for a year and if you made a profit of more than ₹ 1 lakh on that share, then you will have to pay tax. Suppose you made a profit of ₹ 3 lakh, then excluding ₹ 1 lakh, you will have to pay tax of ₹ 2 lakh. But if you made a profit of less than ₹ 1 lakh in 1 year, then you will not have to pay any tax. And if you sold your shares 1 year, a few months or a few days ago, then your shares will not come in the long term, then your shares will come in the short term, and then the short-term condition will apply on those shares.
Long-term investment tax now: Currently, a 12.50% tax is levied on long-term investment.
Change: Earlier, tax had to be paid on a profit of more than one lakh, now tax will have to be paid on a profit of more than one and a quarter lakh.
Increase in Security Transaction Tax (STT):
Recently the government has announced an increase in the Security Transaction Tax. This applies to traders who trade in shares and derivatives. Under this, a certain percentage of tax is levied on the purchase and sale of shares. The purpose of this increase is to increase government revenue.
Earlier Short-Term Investment Tax
Earlier: Earlier the short-form investment tax was 15%.
Example: Suppose you bought shares worth ₹ 1 lakh today and after 10 days you made a profit of ₹ 10 thousand on it, then you had to pay 15% tax on that ₹ 10 thousand. In this you do not get any exemption like a long-term investment, you have to pay tax on whatever you earn, more or less.
Now: From now on you will have to pay 20% tax on short-term investments, the condition is the same as before. No change has been made in the condition.
Impact of GST:
GST applies to many services related to trading. The government has recently changed the GST rates on some trading services, due to which traders may have to face additional GST.
Impact on traders
Increase in cost:
Due to the increase in security transaction tax and other taxes, traders will have to face additional costs. This may have a greater impact on small traders who work on low margins.
Change in investors' strategies:
According to the new tax rules, investors may have to change their strategies. For example, long-term investments may be given priority to get an exemption in long-term capital gain tax.
Impact on liquidity:
An increase in trading tax may affect the liquidity in the market. Higher tax rates may slow down trading speeds and methods, which may reduce liquidity in the market.
Conclusion
The recent changes in trading tax have made it necessary for traders and investors to reconsider their strategies. With the increase in costs and new tax rules, everyone should strategize carefully. The main purpose of these policies of the government is to increase revenue, but only time will tell what impact it will have on the trading community. Therefore, investors and traders need to understand these latest changes related to trade tax and revise their strategies accordingly.