Taxation of Capital Market Transactions in Bangalore

Taxation of Capital Market Transactions in Bangalore

Taxation of Capital Market Transactions in Bangalore

Taxation of capital market transactions in Bangalore, or anywhere in India, is subject to the regulations set forth by the Income Tax Act, 1961. The taxation rules apply to various transactions such as buying and selling of stocks, bonds, mutual funds, and other securities. Below are some key points related to the taxation of capital market transactions in Bangalore:

1.     Securities Transaction Tax (STT): STT is applicable on the purchase and sale of securities listed on recognized stock exchanges in India. The rates for STT are predetermined and vary for equity delivery, equity intraday, and derivatives transactions.

2.     Capital Gains Tax:

·         Short-Term Capital Gains (STCG): If securities are held for a period of less than 12 months, any gains arising from their sale are considered short-term capital gains. STCG is taxed at the applicable slab rates for individuals.

·         Long-Term Capital Gains (LTCG): If securities are held for more than 12 months, any gains arising from their sale are considered long-term capital gains. LTCG on listed equity shares and equity-oriented mutual funds were exempt from tax till a certain limit. However, Budget 2018 introduced LTCG tax at 10% for gains exceeding Rs 1 lakh in a financial year. Indexation benefits are not available.

3.     Dividend Distribution Tax (DDT): Previously, companies were required to pay DDT on the dividends distributed to shareholders. However, in the Union Budget 2020, the government abolished DDT, and the shareholders are now liable to pay tax on dividends as per their applicable tax slab.

4.     Tax Deducted at Source (TDS): If the total income from securities transactions exceeds a certain threshold, TDS may be applicable on the gains. Investors need to ensure that they comply with TDS provisions.

5.     Tax Planning and Compliance: Investors should keep track of their capital market transactions and maintain proper records for tax purposes. Seeking advice from tax professionals or financial advisors can help in efficient tax planning.

It's crucial to note that tax laws are subject to change, and it's advisable to consult with a tax professional or refer to the latest amendments in the Income Tax Act for the most accurate and updated information on capital market taxation in Bangalore or any other location in India.

What Is a Primary vs. Secondary Market?

New capital is raised via stocks and bonds that are issued and sold to investors in the primary capital market, while traders and investors subsequently buy and sell those securities among one another on the secondary capital market but where no new capital is received by the firm.

Which Markets Do Firms Use to Raise Capital?

Companies that raise equity capital can seek private placements via angel or venture capital investors but are able to raise the largest amount through an initial public offering when shares list publicly on the stock market for the first time. Debt capital can be raised through bank loans or via securities issued in the bond market.

The Bottom Line

Capital markets are a very important part of the financial industry. They bring together suppliers of capital and those who seek it for their own purposes. This may include governments that want to fund infrastructure projects, businesses that want to expand, and even individuals who want to buy a home. They are divided into two different categories: the primary market where companies list new issues for the first time and the secondary market, which allows investors to purchase already-issued securities. The key benefit to these markets is that they allow money to move from those who have it to those who need it for their own purposes.


Created & Posted by Navneet Kumar
CA  Article at TAXAJ

TAXAJ is a consortium of CA, CS, Advocates & Professionals from specific fields to provide you a One Stop Solution for all your Business, Financial, Taxation & Legal Matters under One Roof. Some of them are: Launch Your Start-Up Company/Business, Trademark & Brand Registration, Digital Marketing, E-Stamp Paper Online, Closure of Business, Legal Services, Payroll Services, etc. For any further queries related to this or anything else visit TAXAJ



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