Tax on stock trading in India

When you buy or sell stocks on NSE or BSE, you need to pay tax on the transaction amount. There are 2 types of taxes.

1. STT - Securities transaction tax
2. Capital gain tax

STT is applicable for each buy or sell transaction. It is very negligible approximately 0.2%.  This tax is automatically deducted by brokerage firms at the time of transaction.

Capital gain tax is applicable on the the profit. So if you make a profit of say 100000 by buying and selling stocks, you will have to pay tax on that amount. This tax has to be declared while filing your tax returns at the end of financial year.

Capital gain tax can be divided into 2 parts.

1. Short term capital gain
2. Long term capital gain

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