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Tax Update: My salary is Rs 12 lakh but if I earn from the share market or anywhere else, will I be charged tax?

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Finance Minister Nirmala Sitharaman made the middle class happy with the budget. Giving a big gift to the middle class, Finance Minister Nirmala Sitharaman has made income up to 12 lakhs tax-free. But if you have also earned from the stock market or you have earned 12 lakhs from the stock market full time, will there be tax? Let's know

Before knowing whether there will be a tax on the earnings from the stock market or not, you have to understand the income tax rules. In terms of income tax, the income of any person is divided into 5 categories.

Income from salary

Income from house property

Income from business or profession

Income from capital gain

Income from other sources

In which category does the earnings from the stock market fall?

If you invest money in the stock market, then your earnings will be taxed either under capital gain or under other sources. If you earn money by buying and selling shares, then they will be considered capital gains, while the income from dividends comes under other sources.

Which income has been made tax-free by the government?

The government has given a big relief to the salaried class. The biggest announcement of the budget was making income up to Rs 12 lakh tax free under the new tax regime, apart from this, with a standard deduction of Rs 75,000, the effective income tax on income of Rs 12.75 lakh became zero. This is such an announcement that has made everyone happy in the salary class, from the employee to the boss.

Will there be a tax on earnings from the stock market?

Now in such a situation, the question arises whether there will be tax on earnings from the stock market. So the answer is yes, of course, it will be. Tax on earnings from the stock market is levied under capital gains. Capital gains are of two types. First long-term capital gain and second short-term. Long-term capital gain occurs when you sell a share after at least 1 year. On this, you used to get tax exemption on a gain of Rs 1.25 lakh. On the other hand, a 12.5 percent tax is levied on earning more than this. The second is short-term capital gain, when you sell a share before 1 year, then you have to pay 20 percent tax.

Understand it like this.

Suppose Monica sold the shares worth 60 thousand which she had bought a year ago at the value of 2 lakhs after a year, then Monica earned a profit of 1.40 lakhs in a year. Now the profit of up to 1.25 lakhs is tax-free. Your taxable income will be 15 thousand in such a case. On which you will have to pay LTCG i.e. Long Term Capital Gain Tax of 12.5 percent. On the other hand, if you sell the shares before a year, then you will not get any exemption and you will have to pay 20 percent tax on capital gain.

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