sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
News Headlines »
 5 things you should not forget while filing income tax return
 10 Easy Steps to File ITR 1 Online
 How to e-verify income tax return?
 What to do when you receive a notice from the tax department
 How to use your Form 16
 Which ITR form applies to you for financial year 2017-18?
 Income tax returns filing form-2 released; should you use it? Find out
  Are you planning to file ITR 1 form? here's how to do it Income Tax Return (ITR) filing
 30 LPA-Opening Financial Controller
 ITR form 2 in java release by CBDT for return filing by individuals
 How to file your income tax return using ITR Form-1 Income Tax efiling for AY 2018-19

Income from stock lending is taxable
February, 27th 2008
Income generated from the business of stock-lending and sale-repurchase of shares by a borrower will be taxable.

TAXING TIMES

  • The Central Board of Direct Taxes (CBDT) has exempted stock lending/borrowing from the purview of securities transaction tax (STT) and capital gains tax
  • Borrowers will make some payment to lenders of shares by way of interest or fees that will be income in the hands of the lender
  • While selling the shares, borrower will not be paying any tax as the gain from such sale is not known
  • However, the Central Board of Direct Taxes (CBDT) has exempted stock lending/borrowing from the purview of securities transaction tax (STT) and capital gains tax. CBDT has issued a circular in this regard to the income tax field formations.
     
    Borrowers will make some payment to lenders of shares by way of interest or fees that will be income in the hands of the lender.
     
    It will be treated as income from business of lending/borrowing or income from other sources of income and will be taxable at applicable rates, said a finance ministry official.
     
    While selling the shares, borrower will not be paying any tax as the gain from such sale is not known. But when a borrower repurchases shares to return to the lender, the margin between sale and re-purchase will be treated as profit from business or capital gains depending on the tax treatment of shares as per CBDT rules, the official said.
     
    If the shares transacted are treated as capital assets, then short term capital gains tax will be levied at the rate of 10 per cent. If they are treated as trading asset, the tax rate could be as high as 30 per cent.
     
    Another big issue likely to come up is - whether stock lending and borrowing will be treated as a speculative activity. According to sources, the income tax assessing officers can treat the stock lending/borrowing as speculative transaction.
     
    That means, losses on speculative business will not be allowed to be set off against income from normal business for claiming tax refund or reducing tax liability.
     
    According to the government official, there were two issues before the CBDT - (i) whether lending/borrowing of securities under securities lending and borrowing scheme will amount to transfer under clause 47 of the Income Tax Act, in the hands of lender?
     
    (ii) Whether lending/borrowing of securities will be subjected to securities transaction tax?
     
    Both the issues have been taken care of in the circular.
    Home | About Us | Terms and Conditions | Contact Us
    Copyright 2018 CAinINDIA All Right Reserved.
    Designed and Developed by Binarysoft Technologies Pvt. Ltd.
    Software Development Software Programming Software Engineering Custom Software Development Requirement Based Software Development Software Solutions Software Serv

    Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions