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Retail Investors

 Dos and Don’ts for Retail Investors:

1. Please deal with SEBI registered intermediaries only. Ensure that you have complete knowledge of the products and the risks involved before investing.
2. Offering fixed/guaranteed/regular returns/ capital protection schemes in stock markets whether written or oral is not allowed. Brokers or any of their representatives or Authorised Persons cannot enter into any loan agreement to pay interest on the funds/securities offered by you.
3. Do not fall prey to emails, SMSs and online videos luring you to trade in stock/ securities / schemes promising high returns/profits.
4. Ensure to fill all the required details in the 'KYC' document by yourself and receive duly signed copy of your 'KYC' documents from your broker.
5. Trading in derivatives involves high risk and accordingly investors should understand the product well before trading in such segments/products.
6. Opt for electronic (e-mail) contract notes/financial statements only if you are computer savvy and have your own e-mail account.
7. Do not share your login ID, password, OTP, TPIN with any person including employees of the broker or Authorised Person under any circumstances.
8. Ensure that all your trades are executed as per your instructions.
9. Insure you receive the payout of funds and securities within 1 working day of settlement. In case you have chosen running account of funds, ensure your account is settled on first Friday/Saturday of every month / quarter as opted for.
10. Dealing in cash is prohibited. Do not place any securities with the broker or associate of the broker or authorized person of the broker. Do not transfer securities as margin/ collateral to the broker and such securities only must be pledged from the client demat account.
11. Opt for Demat Debit and Pledge Instruction (DDPI) only for transfer of securities for deliveries/settlement obligations, initiating pledging of securities for margins, and for mutual fund/open offer transactions on Exchange platform. DDPI/PoA are optional and should not be insisted on for opening the account.
12. Always keep your mobile number and email id updated with your broker. Don't ignore any SMSs / e-mails with regards to contract notes/trades/funds and securities balances sent by broker/Exchange. Verify the details of the same and report discrepancy, if any, to your broker in writing immediately.
13. Please verify the bank account details of the broker from the website of broker/Exchange before transferring funds to the broker.
14. Claims for funds or securities given to the broker under any arrangement/ agreement of indicative return or claims for funds, without transactions on the Exchange will not be accepted by the Exchange in case of default by your broker.
15. For more details on Investor awareness, please visit-www.nseindia.com/invest/investors-home
16. For more information related to investments in securities market, please visit SEBI Investor Website - https://investor.sebi.gov.in and SEBI Saa₹thi Mobile App.

Budget 2024 Update

 Budget 2024 has proposed the following amendments effective from FY 24-25 - 

• For classifying assets into long-term and short-term, there will only be two holding periods: 12 months and 24 months. The 36-month holding period has been removed.
• The holding period for all listed securities is 12 months. All listed securities with a holding period exceeding 12 months are considered Long-Term. The holding period for all other assets is 24 months.
• The taxation of Short-Term Capital Gain for listed equity shares, a unit of an equity-oriented fund, and a unit of a business trust has been increased to 20% from 15%. Other financial and non-financial assets which are held for short term shall continue to attract the tax at slab rates.
• The limit on the exemption of Long-Term Capital Gains on the transfer of equity shares or equity-oriented units or units of Business Trust has increased from Rs.1 Lakh to Rs.1.25 lakh per year. However, the rate at which it is taxed has increased from 10% to 12.5%. 
• The exemption limit to Rs. 1.25 lakhs has been increased for the whole of the year, whereas the tax rate has changed on 23rd July 2024.
• The tax on long-term capital gains on other financial and non-financial assets is reduced from 20% to 12.5%. While on the other hand, the indexation benefit that  was previously available on sale of long-term assets, has now been done away with. So, any sale of long term asset made after 23rd July, 2024, will attract tax rate of 12.5% only without indexation benefit. 

Types of Capital Gains Taxation

There are two types of capital gains –

1) Short-term Capital Gain Tax

Any asset that is held for less than 36 months is termed as a short-term asset. In the case of immovable properties, the duration is 24 months. The profits generated through the sale of such an asset would be treated as short-term capital gain and would be taxed accordingly.

2) Long-term Capital Gain Tax

Any asset that is held for over 36 months is termed as a long-term asset. The profits generated through the sale of such an asset would be treated as long-term capital gain and would attract tax accordingly.

Assets like preference shares, equities, UTI units, securities, equity-based Mutual Funds and zero-coupon bonds are also considered as long-term capital asset if they are held for over a year.