TomorrowMakers

Know how investment gains from the stock market are taxed for homemakers.

Are you a homemaker who invests in the stock market

Financial independence is crucial for all women. Unfortunately, due to many reasons, not all women find the time to take on a full-time or even a part-time job. However, the good news is that you do not necessarily need to be employed to earn money. You can also earn money and build your savings pool through other means, such as investing. Investing in the stock market is one of the best ways to increase your savings and secure your future. It can help you earn money while offering you enough time for your personal work and responsibilities. 

But before you start exploring the stock market for financial growth opportunities, it is important to understand how your investment gains will be taxed. Read on to know more. 

How are the gains from stock market investments taxed?

Here are two scenarios that you should know of

1. You invest your own money

To understand the taxation rules on stock market investments, it is first important to understand the basic exemption limits for income tax in India. As per the laws prevailing in the country, you have to file an income tax return, also known as ITR, if your overall income from all sources is more than the basic exemption limit. Here are the exemption limits as per your age:

  • For the general category of taxpayers below the age of 60, the basic exemption limit is Rs. 2.5 lakh.
  • For taxpayers between the ages of 60 and 80, the basic exemption limit is Rs. 3 lakh.
  • For taxpayers over the age of 80, the basic exemption limit is Rs. 5 lakh.

Your overall income is calculated after adding deductions under Chapter VIA. This includes deductions under Section 80 C, Section 80 CCD, Section 80 D, Section 80 G, Section 80 TTA, and Section 80 TTB. 

  • Income below the exemption limit: If your total income for the year, after all deductions, is less than the basic exemption limit, you do not have to file an ITR. Moreover, if your total income from all sources is below the limit of Rs. 5 lakh in a year, you do not have to pay any tax, as long as your aggregate tax liability does not exceed Rs. 12,500 due to the rebate available under Section 87 A. For those of you who do not know how Section 87 A works, this Section allows you to claim an income tax rebate of Rs. 12,500 if your total income is less than Rs. 5 lakh in a financial year.
     
  • Income above the exemption limit: If your total income is more than the exemption limit, you will be taxed as per short-term gains and long-term gains tax. Short-term capital gains on equity funds held for less than 12 months are taxed at 15%. Long-term gains higher than Rs. 1 lakh on equity funds held for more than 12 months are taxed at 10%.


Related: Why do homemakers lag behind when it comes to finances?

2. You invest your spouse’s money 

If you invest your spouse’s money, the gains from your stock market investments will be clubbed with your spouse’s income and taxed as per the spouse’s total income for the financial year. You will not be held responsible to pay the tax. Moreover, your gains will be taxed in this manner until you are legally married. 

Related: 25 Stock market terms for beginners

Last words

Investing will help you attain financial freedom by safeguarding your interests in the long run. It will also help you fulfil your goals and leave behind a legacy. In fact, stock market investing is ideal for all women, regardless of whether you are a homemaker or a working woman. 

​So, now that you know how your gains from the stock market will be taxed, you can go ahead and start investing. You can also check these 40 tips for beginners looking to invest in the stock market if you need guidance on stock market investing.