By Chirag Nangia
I trade in securities and also maintain books of accounts. Will the profit be a business income or capital gain?
—R L Saroj
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Under the Income Tax Act, 1961, the classification of income from trading in securities depends on the nature of the transactions and the intention behind them.
If you frequently trade in securities, maintain books of accounts, and your primary intention is to earn profits through active buying and selling, your income will typically be classified as business income.
If the intention is to hold securities as investments for the purpose of long-term appreciation or earning dividends, the income will be treated as capital gains. This can be further classified as:
Short-term capital gains (if securities are held for up to 12 months for listed equities); or
Long-term capital gains (if held for more than 12 months for listed equities). Since you maintain books of accounts, it indicates a systematic approach to trading, which aligns more with business income. However, the final classification also depends on how the transactions are represented in the accounts.
l If I repay the remaining part of my home loan now, will I get any tax rebate? Or should I prepay some before March and the remaining in April to claim benefits for two years?
—Avdesh Jain
Under Section 24(b) of the Income Tax Act, you can claim a deduction on the interest paid on your home loan for a self-occupied or rented property. The maximum deduction allowed for home loan interest is `2 lakh per financial year for a self-occupied property. Under Section 80C, you can claim a deduction for the principal repayment of your home loan. The maximum deduction available under Section 80C is `1.5 lakh per financial year.
However, it is important to note that these deductions are not available under the new tax regime. If you are opting for the new tax regime and it is more beneficial for you,
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