InvestorQ : Should profits from equity be treated as capital gains or business income?
Maniish Lofar made post

Should profits from equity be treated as capital gains or business income?

Answer
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Nisha Chandani answered.
1 year ago


One of the common areas of dispute between equity traders and the tax authorities has been regarding the treatment of profits and losses from shares. It is still not too clear whether the profits from trading in shares should be classified as capital gains or as business income. In fact, there have been umpteen cases where assessees have received a notice from the Assessing Officer (AO) asking them why the income from shares should not be treated as business income instead of capital gains. While there is not hard and fast rule to classify the only thing the Income Tax Act says is that one must maintain consistency of how these incomes are treated. Whatever you choose to show the income as, you must be consistent. However, there are cases where your turnover is very high or profits are a large chunk of your total income, in which you will be required to show the same as business income rather than as capital gains.