Accidentally made Intra-day trades? πŸ“‰

This can happen. Here's how to deal with it from a tax perspective.

A Thread 🧡 Image
1/ First up, why does this happen?

- You might think your stock broking app will just sell your old shares. This happens most times.

But if you purchase and sell the same scrip on the same day, it will be treated as an intra day transaction.
2/ What's the tax treatment?

Intra day transactions are treated as speculative business for tax purposes.

Tax treatment is NOT the same as capital gains.
3/ How is a speculative business taxed? βœ‚οΈ

- Loss from speculative business can be set off only against gains from speculative business.

- Speculative gains are taxed at slab rates.
4/ The 44AD problem

This is where it gets interesting. If your profits from intra-day trades are less than 6% of turnover, you will need a tax audit.

Note that less than 6% also includes a loss.
Turnover is the absolute (positive) values of gains/ losses of all intra day transactions.
5/ I made one intra-day transaction. Tax audit seems like an overkill. πŸ€¦πŸ»β€β™‚οΈ

That's true.

There's 2 potential ways of dealing with this πŸ‘‡
6/ Potential solutions πŸ’‘

a. Show 6% of your turnover as profit and call it a day.
No need for a tax audit in this case.

This is the easiest solution. And you would be on the correct side of the law if you do this.
b. This is a slightly more controversial solution. ⚠️

You could also show the 1-2 transactions as Short term capital gains.

Note: This is not 100% correct. Check with your professional advisor before you do this.
Liked/related with this thread?

Go ahead and share/ RT!

Follow @manansmehta5 for more such threads on finance and tax!

β€’ β€’ β€’

Missing some Tweet in this thread? You can try to force a refresh
γ€€

Keep Current with Manan Mehta

Manan Mehta Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @manansmehta5

1 Oct
National Pension Scheme (NPS) is the new hot deduction everyone is talking about.

We've spent a lot of time dissecting #NPS. Here's everything you need to know.

A Thread 🧡

Like and RT πŸš€

#NationalPensionScheme #Investing #PersonalFinance Image
1/ First up, here's a detailed article on NPS and why it might be good idea to start investing in an NPS:

thegalacticadvisors.com/post/national-…
2/ Let’s focus on the deduction aspect here βœ‚οΈ

Deduction under 80CCD is available upto:

β€’ Employed person:

Can contribute upto 10% of salary to NPS. This 10% is in addition to the INR 1,50,000 limit under Section 80C.
Read 6 tweets
29 Sep
Is Universal Basic Income the future?

I've been doing some research on this for a while.

Here's a findings thread 🧡

Make sure you like and retweet πŸš€ Image
1. What is Universal Basic Income? πŸ’°

Imagine a state where the Government covered your cost of living. What would you do? Would you would you still go to work? Go back to school? Not work at all?

This concept is called a universal basic income.
Universal basic income is gaining momentum around the world and a growing number of countries are considering UBI as an alternative to welfare schemes.

A lot of countries have already started providing a fixed amount of money to its citizens to examine the effect.
Read 26 tweets
24 Sep
Excellent session from @SahilBloom today at @BuildBySTL.

Here's a thread on a few tips from Sahil.
1/ Keep asking why.

We're born as very curious individuals. Over time, we lose this curiosity because we're told 'that's how things are always done'

Keep asking why. The greatest builders keep asking why.

@elonmusk asked why is going to space so expensive - hence, @SpaceX
2/ Be curious. @SahilBloom learnt about Pufferfish - completely random but fun to know.

It's like Steve Jobs learning calligraphy. You never know how something works out. Dots connect only in hindsight.
Read 9 tweets
22 Aug
Here's a master thread of threads on all things tax and finance!

Everything you need to know in one place 🧡

Please retweet and share πŸš€
1/ What is income tax? Why do you have to pay tax at all?

Income tax 101 for beginners

2/ Tax filing websites are excellent.. if you know what you are doing.

Here's 9 times you might want to avoid a tax filing website.

Read 25 tweets
5 Aug
Planning to move outside India?

Here's 4 things we tell all our clients who plan to move outside India

A thread 🧡
1. Can Recent Immigrant continue to hold Indian Assets?

All kind of assets in India such as properties, bank deposits, stocks and securities, life insurance policies, loans, company deposits, debentures, bonds etc. acquired, held or owned by an individual...
while he/she was in India can be continued to be so held and dealt in any manner even after the individual leaves India for permanent settlement.
Read 9 tweets
16 Jul
Let's continue:

THE LEGENDARY SECTION 44ADA - A MASTER THREAD.

Presumptive scheme of tax

Under the presumptive scheme of taxation, profits are presumed at 50% of the gross receipts.

#remotework #44ADA #presumptivetaxation

1/n
Eligible Assessees

Individual, HUF and Partnership resident in India.

2/n
Turnover Limit & Eligible professions

Professionals mentioned below, whose total gross receipts are less than INR 50 lakh in a year can avail benefit of the presumptive taxation scheme.

3/n
Read 17 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!

:(