Stocks that you hold for more than 1 year can be considered as investments as you would have most likely received some dividends and also held for longish time. Shorter term equity delivery buy/sells can be considered as investments as long as frequency of such buy/sells is low.

If you wish, you can also show your equity delivery trades as a business income, but whatever stance you take, you should continue with it in the future years as well.

For calculating the Long term capital gain (LTCG) you firstly need to know that, when you buy & sell (long trades) or sell & buy (short trades) stocks within a single trading day then such transactions are called intraday equity/stock trades. Alternatively if you are buying stocks/equity and wait till it gets delivered to your DEMAT account before selling it, then it is called ‘equity delivery based’ transactions.

Any gain or profit earned through equity delivery based trades or mutual funds can be categorized under capital gains, which can be subdivided into:

Long term capital gain (LTCG): equity delivery based investments where the holding period is more than 1 year

Short term capital gain (STCG): equity delivery based investments where the holding period is lesser than 1 year

Taxes on long term capital gains for equity and mutual funds are discussed below –

For stocks/equity – 0% for first Rs 1lk and @10% exceeding Rs 1lk

The above taxation rate is only if the transactions (buy/sells) are executed on recognized stock exchanges where STT (Security transaction tax) is paid. As discussed above, LTCG is for holding period more than 1 year.

If the transactions (buy/sells) are executed through off-market transfer where shares are transferred from one person to another via delivery instruction booklet and not via a recognized exchange then LTCG is 20% in case of non-listed stocks, and 10% on listed stocks. (Listed are those which trade on recognized exchanges). Do note that when you carry an off-market transaction Security Transaction Tax (STT) is not paid, but you end up paying higher capital gains tax.

Note that a gift from a relative through DIS slip is not considered as a transaction and hence not capital gain. It is important that gift not be treated as transfer, and relative could be (i) spouse of the individual (ii) brother or sister of the individual (iii) brother or sister of the spouse of the individual(iv) brother or sister of either of the parents of the individual (v) any lineal ascendant or descendant of the individual(vi) any lineal ascendant or descendant of the spouse of the individual (vii) spouse of the person referred to in clauses (ii) to (vi)