Stock Market · Markets & Taxation

Intraday = speculative income, taxed at slab

Intraday equity trading, buying and selling shares on the same day, is classified as speculative business income under the Income Tax Act. This is completely separate from capital gains.

Why 'speculative'?

The Income Tax Act defines speculative transactions as those that are settled without actual delivery of goods. Intraday trades settle by netting profit/loss, no actual shares change hands overnight. Hence: speculative.

Tax treatment

Speculative income is added to your total income and taxed at your income tax slab rate.

• If your total income (including intraday profits) is below ₹7 lakh: taxed at lower slabs.
• If total income exceeds ₹10 lakh: taxed at 30%.

> There's no flat-rate benefit like capital gains. Earn ₹5 lakh in intraday profits at 30% tax = ₹1.5 lakh tax. The same gain via long-term equity = ₹46,875 tax.

Losses from speculative income

• Speculative losses can ONLY be set off against other speculative income.
• You CANNOT set off speculative losses against salary, business income, or non-speculative income.
• Carry forward: speculative losses can be carried forward for 4 years.

Practical implication

Many traders who do intraday thinking they'll avoid taxes get a rude shock at year-end. Track every intraday trade in a P&L statement. File ITR-3 (not ITR-1 or 2).

Takeaway. Intraday equity trading is speculative business income, taxed at your slab rate, not the concessional capital gains rates. Speculative losses can only offset other speculative gains, not salary or other income.