Partner With Us NRI

Open Free Demat Account Online with ICICIDIRECT

How Gains From Day Trading are Taxed


Assets are classified into two categories. If you hold an asset for longer than a year, it is called a long-term asset. If you buy and sell an asset within a year, it is a short-term asset.

If you are a trader, and make a profit on selling long-term shares, you are exempted from paying tax on up to Rs. 1 lakh of profit earned. However, you will be taxed at 10% on the remaining profit. On the other hand, if you profit from the sale of shares held for less than a year, your gains are taxed at 15%.

Intraday trading comes under speculative business. Your gain from intraday trading is added to your income and taxed as per the relevant tax slab. Let’s assume that you earn an income of Rs. 15 lakhs per annum, and a profit of Rs 5 lakh from intraday trading. In this case, your total taxable income becomes Rs. 20 lakhs. This is taxed as per the applicable tax slab rate.

Here’s an example on how to calculate tax for all relevant scenarios:

Long-term capital gain (LTCG):

You buy 1000 shares of XYZ co at Rs. 500 each on August 3rd 2021 and sell them at Rs. 650 each on September 3rd 2022. Your profit will be (1000*650-5,00,000) = Rs. 1,50,000. For LTCG, you are exempted from paying tax on Rs. 1 lakh and will be charged 10% on the remaining Rs. 50,000, along with surcharge and cess.

Short-term capital gain (STCG):

In this scenario, you buy 1000 shares of XYZ co at Rs. 500 each on August 3rd 2021. You sell them each at Rs. 650 on December 3rd, 2021. Here your profit of Rs. 1,50,000 will be charged at the rate of 15%. Additionally, the applicable surcharge and cess as per the Income Tax Act will be charged.

An interesting point to note is that according to the Income Tax Act, Long-Term Capital losses can only be set off against long-term capital gains. Similarly, Short-Term Capital losses can only be set off against short-term capital gains. You can carry forward the loss for eight assessment years immediately following the assessment year in which the loss was first computed.

In day trading:

You buy 50,000 shares of XYZ co today at Rs. 150 each and sell all 50,000 shares during market-closing hours at a price of Rs. 175. Then, the gain of (50000*175- 50000*150) =Rs. 12,50,000 is added to your income and taxed according to the relevant income tax slab.

As per income tax rules, your loss from day trading cannot be set off against profit from long-term capital gain and short-term capital gain. It can only be set off against profit from day trading.


As a day trader, you would be aware of the risks arising from market volatility. Hence, it is important to understand how taxation works in day trading. This then enables you to make the right decisions to gain as much as possible after tax deductions.


ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.

Most Popular

  • 13 May 2022
  • ICICI Securities

The Five-Point Financial Planning Checklist For Your Family

Whether you just got married or planning to have a baby or have dependents, you should have financial plans for every stage in your life to ensure a secured future for your family members. Here are five things you can do financially for your family.   

  • 12 May 2022
  • ICICI Securities

What is a Zero Coupon Bond?

You get fixed returns in the form of interest until maturity when you invest in a bond. Zero-coupon bonds work a little differently. In this article, find out what zero-coupon bonds are, their advantages and whether you should invest in them. 

  • 12 May 2022
  • ICICI Securities

What are Cross Currency Pairs?

The forex market is the largest financial market globally. Currency trading is a lucrative and booming business. While most currencies trading happens in relation to the US Dollar, some don’t. That forms the basis of cross currency pairs. Here’s what you need to know about it. 

  • 12 May 2022
  • ICICI Securities

Investing principles from Benjamin Graham: The Father of Value Investing

Benjamin Graham was a British born economist, professor, and investor who taught at Columbia University. He was also a mentor to some of the most famous investors of the 20th century, including Irving Khan, John Templeton, & Warren Buffett. Buffett called him "the second most influential figure in his life, only after my father". 

  • 12 May 2022
  • ICICI Securities

How to Invest in Nifty 50?

The Nifty 50 is the benchmark index of the National Stock Exchange. It represents the 50 largest companies listed in India. Investing in the Nifty 50 can be a good idea for those looking to make index-linked returns. Here’s how you can invest in the index. 

  • 12 May 2022
  • ICICI Securities

Investment philosophy of Cathie Wood: The most powerful woman on Wall Street

Catherine Duddy Wood, also called Cathie Wood, is an investor who primarily invests in disruptive technologies and is the founder, chief executive officer, and chief investment officer of ARK Investment Management, LLC, an investment management firm mostly active in the United States.

  • 11 May 2022
  • ICICI Securities

How to Use Technology to Improve Your Finances

Technology has made life simpler for everyone. In the realm of personal finance, technology has streamlined many processes—from budgeting to automating your payments. On National Technology Day, let’s look at how technology has transformed our finances. 

  • 11 May 2022
  • ICICI Securities

How to Invest in your Every Goal with Mutual Funds?

Each of us is unique. We have different needs and goals in life. Some of us can ride along swinging markets, while some may need a relatively conservative investment tool. 

  • 11 May 2022
  • ICICI Securities

Four Reasons Why Entrepreneurs should Invest in Equity Mutual Funds

Equity mutual funds provide growth opportunities not just for individual investors but also for entrepreneurs and corporates. They make excellent investments for anyone looking for wealth creation. This article will give you four reasons why businesspeople should consider investing in equity mutual funds.