Tax implications on investing

Long term capital gains

If you hold any stock for more than 365 days, the stock is eligible for long term capital gains tax. Long term capital gains are tax free in the hands of the investor.

Short term capital gains

Any stock held for <= 365 days is eligible for short term capital gains tax. Short term capital gains are taxed at 15% in the hands of the investor.

Tax on dividend

If an investor receives less than Rs. 10 lac of dividends in any financial year, such dividend is free of tax in the hands of the investor. Dividend income above Rs. 10 lacs is taxed at 10% in the hands of the investor.

Tax treatment of Bonus Shares

For the purpose of calculating capital gains on bonus shares, the cost of such shares is assumed as Rs. 0. Hence, it is advisable to hold bonus shares for more than a year such that they become eligible for long term capital gain treatment.

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