Up until 12.15 pm on July 23, the Indian benchmark index BSE Sensex was trading flat, as investors soaked in the the Union Budget 2024 announcements and altered positions on various sectors carefully. However, things changed fast post-noon, and within 15 minutes, the index nosedived sharply by almost 1000 points. So, what spooked investors and how will these proposed changes impact your portfolio returns? Read on!<br /><br /><h2>Increased <keyword id="173153" type="General" weightage="20" keywordseo="capital-gains-tax" source="Orion">capital gains tax</keyword></h2>The major reason behind the sharp fall was the finance minister <keyword id="19916618" type="General" weightage="20" keywordseo="nirmala-sitharaman" source="keywords">Nirmala Sitharaman</keyword>'s proposed several changes in the <keyword id="20619608" type="General" weightage="100" keywordseo="capital-gains" source="keywords">capital gains</keyword> taxation regime. The FM announced an increase in short-term capital gains (STCG) rates on certain assets to 20% from 15%. Additionally, long-term capital gains (LTCG) on certain specified assets will now be taxed at 12.5% from 10%.<br /><br />To soften the blow, she announced a hike in the LTCG exemption limit to Rs 1.25 lakh per year. Unlisted bonds and debt mutual funds will continue to be taxed at the applicable rate.<br /><br />“While the increase in capital gains exemption from ₹1 lakhs to ₹1.25 lakhs will encourage the middle class to invest more in equities, mutual funds, and other linked products, an increase in long-term capital gains tax to 12.5% will have a significant impact on HNIs' decision process of investing in alternative asset classes where money is typically tied in for 4-5 years,” says Ms Pearl Agarwal, Founder and Managing Partner, Eximius Ventures.<br /><br />For the unversed, stocks held for less than a year are classified as short-term, and shares held for more than 12 months are termed long-term. Similarly, different asset classes carried different holding periods to be classified as either.<br /><br />Now, according to the Memorandum of the Finance Bill 2024, the finance minister intends to rationalise and simplify the capital gains taxation with a three-pronged approach. The Memorandum proposed that there will only be two holding periods for differentiating between long- and short-term: For all listed securities, the holding period is proposed to be 12 months, and for all other assets, it shall be 24 months.<br /><br />Thus units of listed business trust will now be at par with listed equity shares at 12 months instead of earlier 36 months. The holding period for bonds, debentures, gold, unlisted shares and immovable property will reduce from 36 months to 24 months. This reclassification is also expected to benefit investors as more and more assets with much shorter holding periods will be classified as long-term.<br /><br /><h2>Increased tax on <keyword id="47029" type="General" weightage="20" keywordseo="futures" source="Orion">Futures</keyword> and Options (<keyword id="44618" type="General" weightage="20" keywordseo="FO" source="Orion">F&amp;O</keyword>) transactions</h2>The government came down hard on the equity derivatives segment or the Futures and Options (F&amp;O) as it increased the Securities Transaction Tax (STT).<br /><br />According to the FM speech, "It is proposed to increase the rates of STT on sale of an option in securities from 0.0625 per cent to 0.1 per cent of the option premium, and on sale of a futures in securities from 0.0125 per cent to 0.02 per cent of the price at which such futures are traded."<br /><br />The move was largely in the expected lines, amid the unprecedented spike in futures and options (F&amp;O) trading across India. The government has often tried to curtail speculative trading with higher taxes to discourage retail investors from losing money similar to previous instances of higher taxes on income from lottery or cryptocurrencies. India's monthly F&amp;O turnover has risen dramatically to a record Rs 8,740 lakh crore (or $1.1 trillion) in March 2024 compared to a mere Rs 217 lakh crore (approximately $ 27 billion) in March 2019, accounting for over 80% of such trades in the world. <br /><br />However, market experts do not expect a major change in the net impact due to the recent drop in exchange turnover charges. "While STT has been increased on both Futures and Options from 1st October 2024, this is the same date when exchange turnover charges will be reduced. In my view the net impact of this will be largely net neutral for the customer. Example, STT on Options will increase by ₹3.75 per ₹10,000 round trip premium turnover while exchange turnover charges should reduce by approx ₹3.50 to ₹4," says Ashish Nanda, President and Head - Digital Business, Kotak Securities.<br /><br />To summarize, the proposed changes aim to streamline and simplify the capital gains taxation system by reducing the holding periods and adjusting the tax rates. The amendments will affect various financial instruments differently, with long-term capital gains on listed equity shares, equity-oriented funds, and business trusts seeing new exemption limits, while unlisted bonds and debt instruments will be subject to the regular applicable tax rates without indexation benefits.<br /><br />(With inputs from agencies)<br />

Budget 2024: Tax alterations affecting stock markets — capital gains tax, STT on F&O, and more

Stock <keyword id="20345915" type="General" weightage="20" keywordseo="exchanges" source="keywords">exchanges</keyword> and <keyword id="20710434" type="General" weightage="20" keywordseo="brokers" source="keywords">brokers</keyword>, catering to retail traders, could be hit hard by the regulator <keyword id="19901201" type="General" weightage="100" keywordseo="Sebi" source="keywords">SEBI</keyword>'s proposed measures for Futures &amp; Options (F&amp;O) <keyword id="22748189" type="General" weightage="20" keywordseo="trading-regulations" source="keywords">trading regulations</keyword>, with market volumes slumping 30-40 %, according to reports. If these measures are implemented, the number of investors could decrease, it added. <br /><br />Moreover, discount brokers, who depend heavily on retail investors, are expected to be more affected than traditional full-service brokers. <br /><br />SEBI, in its consultation paper in July, proposed seven measures, including increasing minimum contract size and upfront collection of option premiums, intra-day monitoring of position limits, rationalisation of strike prices, removal of calendar spread benefit on expiry day and increase in near contract expiry margin. <br /><br /> SEBI stated that these measures are aimed at enhancing <keyword id="20775670" type="General" weightage="20" keywordseo="investor-protection" source="keywords">investor protection</keyword> and promoting <keyword id="20813757" type="General" weightage="20" keywordseo="market-stability" source="keywords">market stability</keyword> in derivative markets. <br /><br /> According to a report by Jefferies, SEBI's proposed measures to reduce the number of weekly option contracts from 18 to 6 could impact around 35% of industry premiums. However, if trading shifts to the remaining contracts, the overall impact can be reduced to 20-25%. <br /><br /> Among its 7 proposed measures, IIFL Securities see the highest impact from the withdrawal of <keyword id="22353333" type="General" weightage="20" keywordseo="weekly-options" source="keywords">weekly options</keyword> (only 1 per exchange allowed) as index Options account for 98% of the volumes. <br /><br />IIFL Securities expects the National Stock Exchange (NSE) to be more affected than the BSE because 60 % of NSE's revenue comes from options trading, compared to 40% for BSE. It estimates that by the financial year 2026, NSE's earnings could be reduced by 25-30% while BSE's earnings could drop by 15-18%. <br /><br />Jefferies also believes that the removal of Bankex weekly contract can impact BSE's earnings per share (EPS) by 7-9% over FY25-27. <br /><br /> It further said that BSE might see a small decline in earnings, but if trading activity shifts from discontinued products, it could offset the impact or even lead to earnings growth. <br /><br /> "We don't see any impact on MCX from these regulations. Within the value chain, discount brokers are likely to be more impacted than traditional full-service brokers given the former's dependence on retail investors," IIFL Securities said. <br /><br /> Jefferies believes that clearing members like Nuvama, which caters to institutional players High-Frequency Traders (HFTs), and Foreign Portfolio Investors (FPIs) are less impacted. <br /><br /> Rationalizing weekly options to only one benchmark index per exchange will significantly affect the NSE because it currently has four weekly index expiries, with "Bank Nifty" being the most important, contributing to 50 % of its options volume. The change could reduce NSE's overall trading volumes by 30-35 %, IIFL Securities said. On the other hand, BSE is expected to be less affected since it only has two contracts, with Sensex making up 85 % of its volumes in FY24. <br /><br />Even if "Bankex" contributes 30% by FY26, the impact on BSE's volumes is expected to be smaller compared to NSE, it said. <br /><br />Additionally, with just two expiries, BSE might gain market share and experience higher trading volumes, resulting in an estimated 20 % reduction in its overall volumes, it added. <br /><br />Jefferies said that SEBI's proposed measure of increasing lot sizes by 3-4 times over six months could lead to higher costs for retail traders, potentially reducing their participation in the market. <br /><br />The proposed margin increase for options sellers close to expiry could reduce leverage and profitability, especially for retail traders with limited funds. "Finally other measures like increasing ELM (extreme loss margin) around expiry, and withdrawal of calendar spread margin on expiry will increase the margin requirements and thereby could impact the liquidity. Based on our initial estimates we expect a 30-40 % impact on market volume," IIFL Securities said. <br /><br />SEBI Chief Madhabi Puri Buch recently mentioned that households are losing up to Rs 60,000 crore a year in the problematic futures and options segment. <br /><br />Earlier, SEBI research showed retail traders lose money in nine out of 10 trades in the F&amp;O segment Last month, the government in the Union Budget raised the securities transaction tax (STT) on both futures and options trade from October 1 to allay concerns about hyperactive interest in the derivative segment. <br /><br />Before that, the Economic Survey flagged concerns over rising retail investors' interest in derivative trading. The survey stated that speculative trade has no place in a developing country. <br /><br />It also pointed out that the sharp increase in retail investor participation in F&amp;O trading is likely driven by humans' gambling instincts.

SEBI proposed F&O norms to hit exchanges, brokers, says reports

Stock market benchmarks <keyword id="19896382" type="General" weightage="20" keywordseo="Sensex" source="keywords">Sensex</keyword> and <keyword id="19896381" type="General" weightage="20" keywordseo="Nifty" source="keywords" meta.keywordsubtype="org" meta.entityname="Nifty" meta.hostid="261" meta.entityid="Nifty">Nifty</keyword> tanked after <keyword id="19956758" type="General" weightage="20" keywordseo="Finance-Minister" source="keywords">Finance Minister</keyword> Nirmala Sitharaman announced a hike in <keyword id="20204742" type="General" weightage="20" keywordseo="STT" source="keywords">STT</keyword> (<keyword id="20930760" type="General" weightage="20" keywordseo="Securities-Transaction-Tax" source="keywords">Securities Transaction Tax</keyword>) on F&amp;O (Futures and Options) securities. The 30-share BSE Sensex jumped as soon as Finance Minister Nirmala Sitharaman began presenting the Budget for 2024-25. But, within minutes it slipped in the red and later plummeted 1,266.17 points to 79,235.91 during the afternoon trade. <br /><br /> The NSE Nifty also ticked higher as the finance minister began the presentation of her 7th Union Budget in the Lok Sabha. However, volatile trends soon came in and the benchmark later tanked 435.05 points to 24,074.20. <br /><br /> The BSE benchmark had climbed 264.33 points to 80,766.41 in early trade. The Nifty went up 73.3 points to 24,582.55. <br /><br /> Finance Minister Nirmala Sitharaman on Tuesday said the government plans to raise the capital gains exemption limit on certain financial assets to Rs 1.25 lakh per year for the middle and upper middle class. <br /><br /> Presenting the Budget for 2024-25, she announced a hike in STT (Securities Transaction Tax) on F&amp;O (futures and options) securities by 0.02 per cent and 0.1 per cent. <br /><br /> This is the first Budget during Prime Minister Narendra Modi-led government's third term in office. <br /><br /> India's economic growth continues to shine while the global economy is still in the grip of policy uncertainty, Sitharaman said. <br /><br /> The country's inflation continues to be stable and is moving towards 4 per cent, and core inflation stands at 3.1 per cent. <br /><br /> Among the Sensex pack, Larsen &amp; Toubro, Bajaj Finance, Power Grid, Reliance Industries, State Bank of India and Bajaj Finserv were the major laggards. <br /><br /> Titan, ITC, Hindustan Unilever and Adani Ports were among the biggest gainers. <br /><br /> Foreign Institutional Investors (FIIs) bought equities worth Rs 3,444.06 crore on Monday, according to exchange data. <br /><br /> In Asian markets, Seoul and Tokyo traded higher while Shanghai and Hong Kong quoted lower. <br /><br /> The US markets ended in positive territory on Monday. <br /><br /> Global oil benchmark Brent crude climbed 1.12 per cent to USD 82.40 a barrel. <br /><br /> Falling for the second day in a row, the BSE benchmark fell 102.57 points or 0.13 per cent to settle at 80,502.08 on Monday. <br /><br /> The NSE Nifty dipped 21.65 points or 0.09 per cent to 24,509.25.<br /><br /><b>SEE ALSO:<a href="https://www.businessinsider.in/budget/news/budget-2024-25-changes-to-tax-slabs-increased-standard-deduction-and-other-changes-to-direct-taxation/articleshow/111951205.cms" target="_blank"></a></b><br /><br /> <b><a href="https://www.businessinsider.in/budget/news/budget-2024-25-changes-to-tax-slabs-increased-standard-deduction-and-other-changes-to-direct-taxation/articleshow/111951205.cms" target="_blank">Budget 2024-25 – Changes to tax slabs, increased standard deduction and other changes to direct taxation</a></b><br /><br /> <b><a href="https://www.businessinsider.in/budget/news/union-budget-2024-live-updates-finance-minister-nirmala-sitharaman-key-announcements-23-july/liveblog/111942008.cms" target="_blank">Budget 2024 Live Updates: FM Sitharaman announces comprehensive review of the Income Tax Act 1961</a><a href="https://www.businessinsider.in/business/news/expectations-from-union-budget-2024-25-how-will-this-budget-impact-you/articleshow/111946291.cms" target="_blank"></a></b><br /><br /> <b><a href="https://www.businessinsider.in/business/news/expectations-from-union-budget-2024-25-how-will-this-budget-impact-you/articleshow/111946291.cms" target="_blank">Union Budget 2024-25: How will this budget impact you?</a></b>

Sensex, Nifty tumble after FM hikes STT on F&O

The Finance Ministry on Friday evening clarified that the securities transaction tax (STT) on options trading has been hiked by 25 per cent from 0.05 per cent to 0.0625 per cent, and not from 0.017 per cent to 0.021 per cent, saying that it was a typographical error and the rectification will be done in accordance with the extent procedure of the government.<br /><br />The <keyword id="16937384" type="General" weightage="20" keywordseo="STT-for-futures-trading" source="Orion">STT for futures trading</keyword> remains the same, as was announced in the amendments to the <keyword id="16001498" type="General" weightage="20" keywordseo="finance-bill-2023" source="Orion">Finance Bill 2023</keyword>, i.e., it has been raised to 0.0125 per cent from 0.01 per cent. The hikes in STT for both futures and options trading would be effective from April 1, 2023.<br /><br />In short, the STT has been hiked by up to 25 per cent on futures and options (F&amp;O) trading as per the amendments to the <keyword id="123776" type="General" weightage="20" keywordseo="finance-bill" source="Orion">Finance Bill</keyword> 2023, which was passed in the Lok Sabha earlier in the day through voice vote, without any discussion.<br /><br />By effecting a <keyword id="16937385" type="General" weightage="20" keywordseo="hike-in-STT-on-FO-trading" source="Orion">hike in STT on F&amp;O trading</keyword>, the government aims to tax such transactions more as turnover is higher in them.<br /><br />As per the amendments, option traders will have to pay Rs 6,250 for every Rs 1 crore worth of turnover as against Rs 5,000 that is being paid currently, which translates into a hike of around 25 per cent. Also, traders will now have to pay STT of Rs 1,250 on Rs 1 crore of turnover while selling futures.<br /><br /><strong>SEE ALSO: </strong><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/careers/news/desk-bombing-monk-mode-other-emerging-trends-at-the-workplace-as-per-linkedin/slidelist/98973217.cms">Desk-bombing, monk mode &amp; other emerging trends at the workplace</a><br /><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/banks/news/haircut-on-cases-resolved-through-ibc-not-very-encouraging-says-kotak-report/articleshow/98972743.cms">Haircut on cases resolved through IBC not very encouraging, says Kotak report</a>

Finance ministry clarifies on hike in STT on options trading

<ul><li>No changes, or announcements for the old tax regime</li><li>FMlowered the tax burden by increasing the standard deductions in the new regime </li><li>Tax slabs also revised under the new regime</li></ul> <keyword id="7706673" type="General" weightage="20" keywordseo="Finance-Minister-Nirmala-Sitharaman" source="Orion">Finance Minister Nirmala Sitharaman</keyword> presented the Union <keyword id="18656923" type="General" weightage="20" keywordseo="budget-2024-25" source="Orion">Budget 2024-25</keyword> in the parliament recently, unveiling the Narendra Modi-led government’s budget for the fiscal year 2024-25. While the government announced some changes to direct taxation, including revised tax slabs for the new tax regime, most experts called the budget lackluster. <br /><br /> Nitin Chaudhary, Founder of NC Financial Advisory Services highlights his disappointment, noting that this Budget has actually been not at all impactful as it was expected to be. <br /><br />"It is more of a Budget for Coalition rather than any common man and tax payer. Neither there was any major drastic change in allocation as such and nor there was any major relief and tax benefits that was passed on to the tax payer.<br />There is a slight change in the tax slab rate owing to which there will be a very limited benefit to the tax payer in terms of tax outflow", continued Chaudhary.<br /> <br /><h2>Changes in new tax regime</h2>In a bid to make the new tax regime more lucrative, the FM proposed to hike the standard deduction limit to Rs 75,000 from earlier Rs 50,000, exclusively under the new tax regime. Similarly, the deduction available for family pension is also proposed to be increased from Rs 15,000 to Rs 25,000.<br /><br />More than two-thirds of taxpayers have availed of the new <keyword id="6354751" type="General" weightage="20" keywordseo="income-tax" source="Orion">Income Tax</keyword> regime, as per <keyword id="129243" type="General" weightage="20" keywordseo="Nirmala-Sitharaman" source="Orion">Nirmala Sitharaman</keyword>. The FM announced a review of the comprehensive tax regime. Per FM, under the new regime, taxpayers will be able to save up to Rs 17,500 as taxes, annually.<br /><br />The government has revised the tax rate structure for the new regime, which are now as follows -<br /><br /><h2>New income tax slab rates</h2><br /><table style="border-width: initial; border-style: none;" class="redcator-table-advance"><colgroup></colgroup><col /><col /><tbody><tr><td style="border-left:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;background-color:#000000;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Income slabs<br /><br /></td><td style="border-right:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;background-color:#000000;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tax rate<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">0 to 3L<br /><br /></td><td style="border-right:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nil<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3 to 7L<br /><br /></td><td style="border-right:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5%<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7 to 10L<br /><br /></td><td style="border-right:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10%<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10 to 12L<br /><br /></td><td style="border-right:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15%<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">12 to 15L<br /><br /></td><td style="border-right:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20%<br /><br /></td></tr><tr><td style="border-left:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Above 15L<br /><br /></td><td style="border-right:solid #000000 0.5008695000000001pt;border-bottom:solid #000000 0.5008695000000001pt;border-top:solid #000000 0.5008695000000001pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30%<br /><br /></td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>Prior to the changes announced today, the new tax regime was structured as follows:<br /><br /><h2><table class="redcator-table-advance" style="border-width: initial; border-style: none; background-color: rgb(255, 255, 255); font-size: 16px; line-height: 1.6em; box-shadow: none; width: 850.594px; font-family: Merriweather; letter-spacing: 0.121826px; padding-bottom: 10px !important; background-image: inherit !important; background-position: inherit !important; background-size: inherit !important; background-repeat: inherit !important; background-attachment: inherit !important; background-origin: inherit !important; background-clip: inherit !important;"><tbody><tr><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;">Income Slab (In Rs)</td><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;">Tax Rate</td></tr><tr><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>Up to 3,00,000</strong></td><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>No Tax</strong></td></tr><tr><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>3,00,001 - 6,00,000</strong></td><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>5%</strong></td></tr><tr><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>6,00,001 - 9,00,000<br /></strong></td><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>10% (Tax Rebate up to Rs 7 lakh)</strong></td></tr><tr><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>9,00,001 - 12,00,000</strong></td><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>15%</strong></td></tr><tr><td class="se-table-selected-cell" style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>12,00,001 - 15,00,000<br /></strong></td><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>20%<br /></strong></td></tr><tr><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>Above 15,00,000<br /></strong></td><td style="border-width: 1px; border-style: solid; border-color: rgb(221, 221, 221); padding: 5px; font-size: 16px; vertical-align: top;"><strong>30%</strong></td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table><br /></h2>Says T Manish, Research Analyst, SAMCO Securities, "FM announces revised tax rate under new tax regime, apart from the above slab revisions, the Standard deduction from 50,000 to 75,000 for individuals opting for new tax regime. This would result in savings of around Rs. 17500 in net taxes in the hands of individual. This would benefit directly to the companies in FMCG segment such as HUL, ITC, Dabur, Nestle and second order beneficiaries would be suppliers to these FMCG giants such as Polyplex, Uflex. Further, increased saving would also boost the inflow to wealth management (AMC’s)in the form of SIP's, and to Stock broking companies through brokerage".<br /><br /><h2>Capital gains simplified</h2>FM also moved to rationalise and simplify short-term capital gain (STCG) tax. Going ahead, STCG on specific financial assets will be charged at 20%, while the remaining financial and other non-financial assets will be charges as per applicable rates. This threshold was set at 15% previously.<br /><br />The long-term capital gains tax on financial and non financial assets was raised from its earlier threshold of 10% to 12.5%. However, the exemption limit under LTCG has been enhanced. This means that now, all long-term capital gains tax earned during the year to the tune of Rs 1,25,000 will be tax exempt. This limit was earlier set at Rs 1,00,000. Specified listed financial assets will be considered long-term provided they have been held for more than 12 months.<br /><br />As Anand Rathi, Co-founder of MIRA Money notes, the FM aims to send a clear message to the investors: avoid short term trading and leveraging. This is reflected in the increased security transaction taxes on futures and options,<br />which is a positive step. However, the increase in short term capital gains tax from 15% to 20% is a notable drawback for many traders.<br /><br />"Previously, if your capital gain was 2 lakh rupees, 1 lakh was exempted, and you had to pay 10% on the remaining 1 lakh, amounting to 10,000 rupees. Now, with the same 2 lakh rupees capital gain, you would pay<br />12.5% tax on the remaining 75,000 rupees after the exemption, which is beneficial", Rathi explained. <br /><br /><br />                        <div type="Article" hostid="261" msid="111946291" title="Union Budget 2024-25 key highlights: Angel tax to be scraped" mstype="2" mssubtype="0"></div><br /><h2>Higher tax on F&amp;O trading</h2>In a bid to stop fund inflows into speculative trading, the securities transaction tax (STT) on trading in futures and options was increased. While STT on options was increased from 0.062% to 0.1%, while the STT on futures was raised from 0.0125% to 0.02%. While this might seem as a  major setback to those trading in futures and options, experts opine that this is unlikely to significantly trading volumes in the segment. Note that this change is set to come into effect starting October 1, 2024. <br /><br />Says Deepak Ramaraju, Senior Fund Manager, Shriram AMC, "Hike in short-term capital gains and long-term capital gains have been sentimentally negative for the equity markets. This has resulted in short-term selling pressure. However, this can be the beginning of reforming the capital markets and curbing retail participation in the F&amp;O segment. We can expect more measures in the F&amp;O space in the days to come". <br /><br /><h2>Other tax changes</h2><ul><li>The TDS rate on e-commerce operators has been reduced from 1% to 0.1%</li><li>Angel tax, the tax levied on the capital raised via the issue of shares by unlisted companies has been abolished.</li><li>TDS payable on insurance commission reduced from 5% to 2%, starting 1st October, 2024.</li><li>TDS payable on rent paid over Rs 50,000 to be reduced from 5% to 2%. </li></ul><br /><strong>SEE ALSO:<br /></strong>        <br />          <div type="Article" hostid="261" msid="111953230" title="Union Budget 2024-25: Mobile Phones to get cheaper, as FM Nirmala Sitharaman reduces basic customs duty to 15%" mstype="2" mssubtype="0"><payload><![CDATA[seealso]]></payload></div>          <div type="Article" hostid="261" msid="111952160" title="Sitharaman announces cut in customs duty on gold, silver to 6%" mstype="2" mssubtype="0"><payload><![CDATA[seealso]]></payload></div><br />

Budget 2024-25: New tax regime sweetened by FM, hikes standard deduction to Rs 75,000

Both Sensex and Nifty closed the day in red, w<keyword id="19989715" type="General" weightage="20" keywordseo="IT" source="keywords">it</keyword>h Nifty hitting an intra-day low of 24,074.20 points. It closed 0.12% down at 24,479.05 points, while Sensex also closed in red, down by 0.09% at 80,429.04 points. <br /><br />All broad market indices ended the day in red, with India VIX down by as much as 17%. As for sectoral indices, financial services was down by 1.37%, while FMCG (up by 2.68%), <keyword id="19936673" type="General" weightage="20" keywordseo="Media" source="keywords">media</keyword> (up by 1.16%) and consumer durables (up by 2.11%) closed the day in green. <keyword id="20304716" type="General" weightage="20" keywordseo="Realty" source="keywords">Realty</keyword> took a significant hit during the day and closed 2.29% down, on the back of long-term indexation benefits stripped off assets like real estate and gold. Oil and gas was down by 1.20%, while PSU banks were down by 1.4%. <br /><br />Titan (up by 6.56%), ITC (up by 6.52%), Tata Consumers (up by 4.42%) NTPC (up by 2.78%) and Adani Ports (up by 2.77%) were amongst the top gainers during the day. On the other hand, Larsen and Toubro (down by 3%), Hindalco (down by 2.97%), Shri Ram Finance (down by 2.79%), Bajaj Finance (down by 2.27%) and ONGC (down by 1.84%) were amongst the leading laggards. <br /><br />Out of the 2,779 stocks traded during the day, 1,177 saw advances while 1,515 saw declines. Another 87 remained unchanged. 85 stocks hit their 52-week high price, while 41 stocks hit their 52-week low as well. 103 stocks hit the upper circuit during trading today, and 150 stocks hit the lower circuit during trading today. <br /><br />Mr. Aditya Gaggar, director of Progressive Shares noted that market participants remained cautious with a positive bias ahead of the <keyword id="19908389" type="General" weightage="20" keywordseo="Union-Budget" source="keywords">Union Budget</keyword>. "As the budget speech was in progress; a steep fall was seen across the board followed by V-shaped recovery. With a marginal loss of 30.20 points, <keyword id="19925635" type="General" weightage="20" keywordseo="Nifty50" source="keywords">Nifty50</keyword> settled the trade at 24,479.05. The <keyword id="20421583" type="General" weightage="20" keywordseo="FMCG-segment" source="keywords">FMCG segment</keyword> was the top performer of the day by advancing over 2.60% followed by Media and IT while Realty and <keyword id="20830386" type="General" weightage="20" keywordseo="PSU-Banking" source="keywords">PSU Banking</keyword> were the major laggards. Mid and small caps also recovered from the lower levels but not sufficiently to outshine the index. By forming a small red candle with a big lower shadow, the Index has tested and defended its strong support of 24,200. We believe that as long as the Index holds 24,200, the uptrend will remain intact. On the higher side, 24,800 will continue to act as a strong hurdle", he continued.<br /><br />FM Nirmala Sitharaman increased the STT (securities transaction tax) on future and options trading, making them more expensive. The standard deduction limit for new tax regime was increased from the earlier Rs 50,000 to Rs 75,000. Annual exemption limit for long-term capital gains tax was also increased from the previous Rs 1,00,000 to Rs 1,25,000. <br /> <br />

Stock market closing: Sensex, Nifty close the day in red, markets recover after initial hiccups

Incomes of all kinds are taxable. While a few financially sound people understand the tax calculation on income from salary, rents and businesses, taxes on <keyword id="6357440" type="General" weightage="20" keywordseo="stock-market" source="Orion">stock market</keyword> income calculation is a tad more complicated. <br /><br />Here are a few steps to understand taxes on <keyword id="14528053" type="General" weightage="20" keywordseo="stock-market-earnings" source="Orion">stock market earnings</keyword>:<br /><br /><strong>Types of stock market earnings</strong><br /><br />In the first place, you need to know that the income generated through purchasing or selling shares is covered under the category of Capital Gains. <br /><br />The two heads under ‘Capital Gains’ are ‘Long Term Capital Gains’ and ‘Short Term Capital Gains’. Depending on their holding period, shares are classified either as long term or short term. Here the holding period refers to the duration for which the investment is held from the date of acquisition to the date or transfer or sale. <br /><br />The holding periods of shares and securities differ between different types of capital assets. For the purpose of calculating the <keyword id="6354751" type="General" weightage="20" keywordseo="income-tax" source="Orion">income tax</keyword>, the holding period is defined differently for equity mutual funds and debt mutual funds. The taxability also differs in these cases. <br /><br /><strong>How equity share gains are taxed</strong><br /><strong>Short-Term Capital Gains (STCG)</strong><br /><br />On a given stock exchange, if the equity shares are sold within 12 months from the date of purchase, the seller is said to make either short term capital gains (STCG) or incur short term capital losses (STCL). Short term capital gain results when the selling price of shares is higher than the purchase price. <br /><br />Short term capital gain calculation: Sale price of the share minus (Purchase price of the share + expenses on sale)<br /><br />Short-term capital gains are taxed at 15% irrespective of which tax slab you belong to. <br /><br /><strong>Long-Term Capital Gains (LTCG)</strong><br /><br />On a given stock exchange, if the equity shares are sold after 12 months of purchase, the seller is said to make either long term capital gain (LTCG) or incur a long term capital loss (LTCL). <br /><br />Long term capital gain results when the selling price of shares is higher than the purchase price. If a seller makes a long term capital gain of over 1 lakh on selling equity shares or equity oriented mutual fund units, the gains made will be taxed @10% plus whatever cess is applicable. The seller will not have the benefit of indexation. <br /><br /><strong>Short-Term Capital Loss (STCL)</strong><br /><br />If there are any short term capital losses from equity share sales, it can be offset against short term capital gains or long term capital gains ensuing from any capital asset. When not set off in entirety, the loss can also be carried forward for eight years and adjusted against short term or long term capital gains made over this eight year period. <br /><br />It is possible to carry forward the losses only IF the taxpayer files the IT returns within the due date. Hence even if the income made in a year is lesser than the taxable income, filing |IT returns are mandatory for availing the provision of carrying forward the losses. <br /><br /><strong>Long-Term Capital Loss (LTCL)</strong><br /><br />Any long term capital losses incurred from transfers can be off-set and carried forward. Hence it is possible to off-set the long term capital losses against any other long term capital gains. However, it is not possible to off-set long term capital losses against short term capital gains. <br /><br />If there are any long term capital losses that are unabsorbed, it is possible to carry them forward to the next eight years and can be set off against long term capital gains. To be able to avail of this provision, a person has to file IT returns within the due date. <br /><br /><strong>Securities Transaction Tax (STT)</strong><br /><br />STT is applied on the equity shares sold or purchased. These tax implications apply only to the equity shares sold or bought on a stock exchange. All sales and purchases on a stick exchange will invite STT. /<br /><br /><strong>Business income Vs Capital Gains Income</strong><br /><br />If you want to treat the income from the sale of shares as business income, the profits you made will be added to the total income generated in a given financial year. Such income is taxed according to your tax slab. <br /><br />If you want to treat income from sale of shares as capital gains, long term capital gains from equity above 1 lakh per year is taxable. On the other hand, short term gains are taxed at 15%. <br /><br />If the taxation rules allow treating the income from sale of shares as a business income is a big question. A lot of uncertainty hovers over this question since taxpayers have received notices from the income tax department seeking explanations on why they chose to treat the income from sale of shares as a business income. <br /><br /><strong>Options in front of taxpayers</strong><br /><br />Taxpayers now have the option either to treat the income from sale of shares as a business income or income from capital gains. However, once they make their choice, the same method must continue for subsequent years too unless there is a significant change in the situations of selling shares. This choice is available only to the shares or securities listed. <br /><br />CDBT circular says that the taxpayers can choose to treat the income from selling shares as business income by treating their listed shares as stock-in-trade, irrespective of how long the shares are held. <br /><br />If the taxpayer chooses to treat the income from the sale of shares as capital gains, it is possible to do it in case of shares held for over 12 months. Nevertheless, if the taxpayer makes this choice, the same stand will have to continue for the subsequent years too and changing the stand will not be permitted. <br /><br />In any of the cases discussed above, whether to consider the income from selling shares as business income or capital gains income depends on the concept of significant trading activity and the taxpayers intention to hold the shares either as ‘stock’ or ‘investment’. <br /><br /><strong>Sale of Unlisted Shares</strong><br /><br />In case of selling unlisted shares, the sale does not take place in any formal market. Therefore, the Income Tax Department has clarified that the income generated from the sale or transfer of unlisted shares will be taxed as ‘Capital Gains’ irrespective of the holding period. This rule is put in place in order to ensure a uniform approach.<br /><br /><strong>SEE ALSO:<br /><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/careers/news/zoho-vivifi-leadsquared-and-many-other-startups-are-looking-new-people-in-different-roles/articleshow/93054022.cms">Zoho, LeadSquared and other startups continue to hire amid industry layoffs</a><br /><br /></strong><a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/apps/niti-aayog-launches-new-app-to-help-with-ev-benefits-savings/articleshow/93054107.cms"><strong>Niti Aayog launches new app to help with EV benefits, savings</strong></a><br /><br />

You Searched For "STT on options trading" and got 7 results

Budget 2024: Tax alterations affecting stock markets — capital gains tax, STT on F&O, and more

Deekshith Pinto

SEBI proposed F&O norms to hit exchanges, brokers, says reports

PTI

Sensex, Nifty tumble after FM hikes STT on F&O

PTI

Finance ministry clarifies on hike in STT on options trading

IANS

Budget 2024-25: New tax regime sweetened by FM, hikes standard deduction to Rs 75,000

Sourabh

Ira

Stock market closing: Sensex, Nifty close the day in red, markets recover after initial hiccups

Ira Alok Puranik

How to calculate income tax on stock market earnings

BI India Bureau