Clarification - Stock broker - Stock exchange

[DEVKUMAR KOTHARI]

Share Broker is a member of stock exchange. activities relating to brokerage is regulated by the stock exchange, as he is a member of S/E. Share broker, as such is not a share trader. As broker, he purchase and sell shares on behalf of his cleints. Therefore, any share purchased by him on his own account should be onsidered as 'capital asset' becasuse he is not a share trader.However, if share broker himself treat or conver shares purchased by him as his stock-in-trade acccount and enter purchase, sale and stocks in trading and P & l account, then only such shares can be considered as his stock-in-trade and those shall be subject to income as business.All other shares, held as investment will result into capital gain on their sale irrespective of vouleme and frequency.An investor while selling and buying shares is not acting as a share trader, he is not known as a share trader in commercial world of share and securities. Brain storming and feedback based on experience is desirable.

AI Summary

Stock Broker's Dual Role: Capital Gains vs. Business Income Tax Implications Explained Under Section 2. A discussion on the nature of a stock broker's activities and their tax implications highlights that a stock broker, being a member of a stock exchange, is regulated by it and primarily acts on behalf of clients. Shares purchased by the broker for personal investment are considered capital assets, leading to capital gains upon sale. If these shares are treated as stock-in-trade, they are subject to business income tax. The broker cannot simultaneously act as a stock trader and broker; gains from trading on behalf of clients are taxable to the clients.