As per regulatory guidelines, Tax (if applicable) has to be deducted at source for all the profits done in the equity market transactions. Before crediting sales proceeds it is the responsibility of the broker and the PIS cell to determine the appropriate Tax and deduct it at source.TDS rate is different as per the tenure of the investment. It can be classified as-:
Long-term capital gain – If the period of holding is more than 1 year i.e. the difference between the date of purchase and sell is more than 1 year, then the TDS rate applicable is 0 %. Before 1st Oct 2004 this rate was 10% now it is tax-free
Short-term capital gain - If the period of holding is less than 1 year i.e. the difference between the date of purchase and sell is less than 1 year, then the TDS rate applicable is 10%. Before 1st Oct 2004 this rate was 30%.TDS is computed on the profit amount or the gain as per the applicable rate i.e. short term or long term on a First-In, First-Out (FIFO) basis.
For any TDS to be deducted and money to be remitted to bank account, there are three things which have to verified-: Amount of gain = Selling price – Purchase price
Duration of holding i.e. long term or short term = Selling date – Purchase date
Source of fund for purchase i.e. NRE or NRO
Important: TDS is deducted only at the time of crediting sales proceeds.
We Analytix provide you detailed Tax related solutions for your everyday need. We have got a strong team of Tax practitioners who provide Tax consultations to provide effective documents and procedures. We do services that include Preparation and filing of quarterly return, preparation and filing of TDS correction statements, Computation and e payment of TDS, Timely issuing TDS certificates, providing regular updates related with TDS, Effective tax advice on salary and non salary and TDS compliance.