Income Tax News: This revelation may come as a surprise to you if you have also invested in penny stocks. Yes, the Income Tax Department is targeting individuals who invest in these inexpensive shares and make large profits quickly. Based on their income, the agency is requesting large taxes from these investors.
Financial Profits from Penny Stocks
If you or someone you know has profited financially from these shares, there may be significant issues down the road. These investors can be subject to significant fines and tax obligations. The income from these stocks is regarded as undeclared income by the Income Tax Department.
Unreported Income and Tax Implications
Unreported income is defined as income about which the person withholds information, and it is subject to a 60% tax. In addition, it can reach above 80% by imposing a 25% surcharge, fine, and cess on it. In other words, your income could drop to Rs 20 from Rs 100. That being said, there’s no assurance that you won’t run into any issues. However, investors can be released from this if they can demonstrate that they are sincere investors.
Filing an Appeal with ITAT or High Court
You can file an appeal with the Income Tax Appellate Tribunal (ITAT) or the High Court to receive up to 80% in tax relief. Experts in taxes advise that having all necessary documentation in this case is crucial. The “Penny Stock” hoax has officers from the Income Tax Department on high alert.
Some people are accumulating black money and abusing income tax through these kinds of frauds. This is used to claim business loss, short-term capital loss, or long-term capital gain (LTCG). Tax liability is decreased by adjusting income to reflect losses as short-term capital gains.
Unreported Income Treatment
When a “penny stock” swindle is discovered, the Income Tax Department officials treat the proceeds from such shares as unreported income rather than Long Term Capital Gain (LTCG) based on the findings of the inquiry.
The Income Tax Department mandates that additional tax be paid on income that is not stated. However, those investors who purchased these shares and received actual income are the ones who suffer the loss. According to regulations, if a share is invested in for more than a year, the profit from listed shares is deemed to be a long-term capital gain, and 10% tax is due.
Disclaimer: This information is intended for general knowledge only. Any financial decisions should be made in consultation with a qualified professional. DNP News Network Private Limited is not liable for any financial losses incurred based on the information provided here.