Tax Treatment as Investor or Trader

A friend of mine was subjected to Income Tax Scrutiny. The assessing officer treated my
friend’s profession as “Trader” and subjected him to 30% tax [Short Term].

Strategy: What we advice our clients is choose one family member who doesn’t TRADE or have any other business income in their name. Do all long term investments in this family member’s name and you will not be liable for 30% tax [even if you had to SELL the stock in SHORT TERM] and be just liable for short term gains of 10%. Long Term will be exempt.

Remember it is the discretionary of the Income Tax officer scrutinizing your case. Some people said they maintain a different TRADING Account and INVESTMENT account but if both are in the same name, the IT Officer can still make you liable for 30% tax on short term. So use the strategy we have suggested or whatever your Chartered Accountant / Tax Consultant suggests.