When is Intraday Profit Credited?

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  • 04 Oct 2023

Intraday trading, as it is called, refers to the purchase and sale of shares on the same day. Such purchases and sales result in a net position of zero at the end of each trading day. Accordingly, all profits and losses from intraday operations shall be credited or debited the following day. However, in your Demat account, you will not get any securities to hold.

If every intraday transaction is closed by the broker, you will be granted a loan equivalent to your profits within five hours. It can lead to loss in the absence of such closure. Therefore, it is important to ask your broker to claim the profits within the time limits by using stop loss or other trading tools.

On March 1, 2021, for intraday trading in India, new rules were laid down by the Securities and Exchange Board of India. The new guidelines make it clear that any funds generated by intraday trading will be available for use when the stock exchanges are scheduled to close on the next business day. Therefore, the intraday gains cannot be used in any further transactions on the same date, as they will be transferred into your account at the end of the next working day.

We should use the example to help us understand this. Let's say on March 12th, you had three intraday transactions, so let's call it Transaction Day.

You've bought 10 shares at a price of Rs. 1,000 each and 8 shares at a price of Rs. 1,200 each of the company in two transactions. This means that your entire purchase is worth INR 19,600. Consider that you earned Rs 23,400 after selling 18 stocks for Rs 1,300 per share on the same day. The above transactions will bring you a profit of approximately Rs. 3,800 on an intraday basis. Let's have a look at the three different scenarios for this new change.

Scenario 1: T Day Falls On a Weekday

As stated in the new Regulation, this intraday gain of Rs. 3,800 will be limited to a single T+1 day. This is March 12, so the T+1 will take place on March 13th. Here, it is presumed that March 12 is a workday and March 13 is a regular business day. On March 13 at 3:30 p.m., following the closing of markets for that day, you can use an intraday profit as long as it remains in your account.

Scenario 2: Friday is the day T Day falls

Let's assume that March 12 (T Day) happens on a Friday, like it did in 2021. In that situation, rather than having your intraday profit from March 12 unblocked on March 13, which is a Saturday, it would be unblocked towards the end of the T+1 working day. In this case, the next working day will be Monday, March 15. At 3 p.m. on March 15, your intraday profit will become available again.

Scenario 3: Market Holify is the T day

In the event of a market holiday on T+1 day, scenario 2 will be repeated as mentioned above. Suppose you've booked intraday profit on Tuesdays and Wednesdays, which is a market holidays. Than on Thursday at 3 p.m., your profit will be restored.

Conclusion

In the past, most brokers have credited intraday profits for immediate use. Even though this policy had been introduced for almost six months, there was still a lack of awareness among traders. Make sure, prior to placing an intraday position on your trading account online, that you factor in the fact that there will be no profit until after 3:30 p.m. for the following trading day. It's different from what many traders used to do because they used profits from trades on the same day. This will not be possible with the new rule, and you'll need to wait until the end of the next trading day before profits are made available. Moreover, if you want to start intraday trading and buy shares online, then go ahead with the Kotak Securities trading app, as this app offers tons of tools to analyze your trade.

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FAQs on Intraday Trading in India

Consequently, traders can't take advantage of their intraday profits on the same day. You will not be allowed access to this money until the end of the next trading day.

Depending upon your trade, you can hold intraday trading for a maximum of one to two hours, which will depend upon your trading strategies. You can even hold your trade-in short in the stock market.

To gain a better return intraday, you need to develop a simple and well-developed intraday trading strategy that meets your appetite for risk, style of business, and investment objectives. The rules for entry and exit points, stop losses, objectives of profit, and risk management should be part of your strategy.

If the market moves against your trading position, you could lose all of your capital in a single day. Not all days are profitable when it comes to intraday trading. In intraday trading, the level of pressure is extreme. In the case of intraday trading, constant attention is required.

To calculate the tax for intraday transactions, you need to check the gains made through intraday trading, which shall be added to your income and taxed on the basis of the applicable tax rate.

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