How Much Income Tax Should I Pay If My Income Is 2 Lakhs from Short-Term Capital Gain and Intraday Trading?

When it comes to paying income tax, understanding the tax exemptions and rules is crucial. In this article, we will explore whether you need to pay income tax on an income of 2 lakhs from short-term capital gain and intraday trading. We will cover the exemption limits, tax rates, and any additional deductions.

If your income is below the exemption limit, there will be no income tax levied. For an income of 2 lakhs, this means you do not need to pay income tax.

Income Below the Exemption Limit

If your income from short-term capital gain and intraday trading, totaling 2 lakhs, is below the exemption limit, you are exempt from paying income tax. The basic exemption limit is Rs. 2.5 lakhs, and since your income is below this threshold, no tax is required.

Exceeding the Exemption Limit

If your total income from short-term capital gain and intraday trading exceeds Rs. 2.5 lakhs, you will need to pay income tax. The tax structure for long-term and short-term capital gains, as well as income from intraday trading, follows a specific rate.

Short-Term Capital Gain (STCG) and Intraday Trading

For short-term capital gain and intraday trading, the tax rate is 15%. However, since your income is Rs. 2 lakhs, which is below the exemption limit, no additional tax is required.

Overcoming the Exemption Limit

If your income from short-term capital gain and intraday trading exceeds Rs. 2.5 lakhs, the tax calculation becomes more complex. Here's a detailed breakdown:

During an intraday trading, your income is taxed as business income, following the standard business tax rules. Your total income is Rs. 1.5 lakhs (Rs. 2 lakhs - Rs. 2.5 lakhs Rs. 0.5 lakhs), making it subject to 15% tax. You can claim a deduction of Rs. 12,500 under section 87A, which reduces your taxable income to Rs. 87,500.

With the taxable income reduced to Rs. 87,500, the tax liability is calculated as follows:

Tax on Rs. 87,500 at 15%: Rs. 13,125 Tax Cess on Rs. 13,125: 4% Rs. 525 Total tax liability: Rs. 13,125 Rs. 525 Rs. 13,650

However, due to the 87A deduction, the net tax liability is reduced to Rs. 10,400.

Conclusion

For an income of 2 lakhs from short-term capital gain and intraday trading, if your total income remains below the exemption limit (Rs. 2.5 lakhs), you do not need to pay any income tax.

To clarify any doubts or to consult with an expert, you can connect with us for any assistance or consultancy needs. Our team is happy to help you with your tax-related queries.

Note: The above analysis is based on the information provided. For detailed and personalized assistance, consult with a tax professional who can review your documents and verify the facts.

Find Help for Income Tax Return Filing

For more information on how to file your income tax returns, feel free to whatsapp 8 9 4 0 0 0 0 8 2 4.