Profits from intraday equity trading are taxed as speculative business income. They are added to your total income for the year and taxed at your income-tax slab rate. They are not capital gains, because no shares were ever delivered to you.
Why is intraday profit not a capital gain?
A capital gain arises when you sell a capital asset you actually owned. Shares that were delivered into your demat account. In intraday trading, you buy and sell the same stock within the same session, so no delivery ever happens. Income-tax law treats a transaction that is settled without delivery as a speculative transaction, and the profit from it as speculative business income.
That is why the rules you may have read about short-term and long-term capital gains simply do not apply here. There is no holding period to measure and no special capital-gains rate. Intraday profit sits in a different bucket altogether.
What does "taxed at slab rate" actually mean?
Say Ramesh earns ₹9,00,000 a year from his job and makes ₹60,000 from intraday trades in Kaveri Motors and Bharat Paints Ltd over the year. That ₹60,000 is added to his other income, and the combined total is taxed at whatever slab rates currently apply to him. There is no separate flat rate for intraday profits.
Because it is business income, expenses genuinely incurred to earn it, brokerage, exchange charges, a data subscription, part of an internet bill — can generally be claimed against it, the way any business deducts its costs. Keep proof of every expense you claim.
What happens when I make an intraday loss?
Losses are where the speculative label really bites. A speculative loss can be set off only against speculative profit, not against your salary, not against capital gains, and not even against profit from futures and options, which the law treats as a separate, non-speculative kind of business income (see how F&O trading is taxed).
If Ramesh loses ₹40,000 on intraday trades but gains ₹1,00,000 in F&O, he cannot net the two. The intraday loss can only wait for a future intraday profit.
An unabsorbed speculative loss can be carried forward to later years, but only for a limited window, currently four assessment years, and only if you file your income-tax return by the due date. Miss the deadline and the carry-forward is lost.
Does Rupeezy work any of this out for me?
Rupeezy's tax reports do the sorting for you. A tax P&L statement separates your intraday (speculative) results from your delivery and F&O results so that each lands in the right box of your return. See how to download tax P&L reports.
Things to keep in mind
- Intraday profit is speculative business income at your slab rate; the capital-gains rates you see quoted for delivery trades never apply to it.
- Intraday losses only ever set off against intraday profits. A bad intraday year cannot reduce tax on your salary or your investments.
- File your return on time even in a loss year; that is what preserves the carry-forward.
- Tax rules and rates change with Finance Acts. For your own situation, it is worth consulting a tax professional.
Read next
How is F&O trading taxed? — Derivatives get their own treatment again, with audit rules attached.