Share Trading? Do you have to Pay Tax
Incomes such as salary, rent and business income are regular and recurring. However, these do not cover all sources of income.
Income can arise out of the sale of capital assets such as shares and mutual funds. You will have to pay a capital gains tax on the profits made on the sale of shares/ mutual funds.
What is short term capital gain and long term capital gain?
If you sell a share or a mutual fund within one year of buying it, the profit is called short term capital gain. If you sell it after one year, it is long term capital gain. This distinction is necessary because the tax treatment is different for each of these.
Tax laws are usually stricter for short term capital gains because the government wants to encourage you to stay invested in equities and mutual funds for the long term.
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