Investor Earns ₹7 Lakh but Pays ₹74,000 Tax Despite ₹12 Lakh Limit — Here's Why

A tax expert explained how a retail investor earning ₹7 lakh from the stock market faced a ₹74,375 tax bill due to misclassification of income. Despite assuming his income was below the ₹12 lakh exemption limit, Rahul failed to consider how different types of gains are taxed separately. Intraday trading, futures & options, short-term, and long-term capital gains each have distinct tax rules. Losses can’t always offset gains across categories. Notably, long-term capital gains above ₹1.25 lakh are taxable, and Section 87A rebate doesn’t apply. The expert urged investors to understand tax rules thoroughly instead of assuming low income means low tax.