List of all Taxes and information you have to know before investing in the Stock Market
                     LIST OF ALL TAXES AND INFORMATION YOU HAVE TO 
KNOW BEFORE INVESTING IN THE STOCK MARKET
 If you entered the market just to remain in the mainstream 
fashion, you have landed in for the wrong reason. 
 You should invest in the stock market after getting the 
basic knowledge about it and in accordance with your 
financial goals.
NEVER JUMP 
BLINDLY INTO 
STOCK MARKETS
Source: financialexpress.com
 Investing in the stock market is risky, and that means that 
you can potentially lose everything. 
 You need to decide your own risk tolerance considering 
your age, financial strength, retirement goal, etc., and 
accordingly should take the risk. 
INVEST ONLY YOUR 
SURPLUS FUNDS
Source: financialexpress.com
 Leverage simply means use of borrowed money to execute 
your stock market strategy. In a margin account, banks and 
brokerage firms can lend you money to buy stocks.
AVOID LEVERAGE
Source: financialexpress.com
 Never put all your money in one stock. Create a well-
diversified portfolio of stocks that can help you reduce the 
risk and save you from losing money if a few stock do not 
perform well.
DIVERSIFY, BUT 
REFRAIN FROM 
OVER 
DIVERSIFICATION
Source: economictimes.com
 A P/E ratio is the ratio of the current share price to the earning 
of the company per share. This ratio can tell you if the company 
is undervalued or overvalued in the market.
 While analyzing the P/E ratio of a company, it is important to 
know the industry benchmarks and assess its valuation 
accordingly.
PROFIT-EARNINGS 
(P/E) RATIO
Source: groww.in
 The RoE Ratio is a measure of the rate of return on the stock of a 
company. In other words, it tells investors how good the company is 
in generating returns on stock investments. 
 A company can also have a high RoE ratio because it has taken a 
lot of debt and its equity investment is low. 
 Hence, you must look at the equity structure of the company along 
with its complete financials to make the decision.
RETURN ON EQUITY 
(ROE) RATIO
Source: wallstreetmojo.in
 The price-to-book ratio is a simple comparison of a 
company’s market value (market capitalization) to its book 
value. It compares the company’s stock price to its book 
value per share.
PRICE-TO-BOOK 
(P/B) RATIO
Source: groww.in
 There are three major types of taxes on equity 
investments:
 Securities Transaction Tax (STT)
 Capital Gains Tax
 Dividend Distribution Tax (DDT)
TYPES OF TAXES 
INVOLVED IN THE 
STOCK MARKET
Source: edelweiss.in
 STT is a type of direct tax that is levied on the purchase or 
sale of each and every security that is listed in the stock 
market. In other words, this tax is payable by the investor 
at the time of each transaction. 
 This includes securities such as shares, equity mutual 
funds and derivatives. The main objective of this tax is to 
avoid tax evasion by investors.
SECURITIES 
TRANSACTION TAX 
(STT)
Source: moneycrashers.in
 ‘Capital gains’ is the profit earned when you sell a security 
at a higher price compared to its purchase price.
 Based on the holding period, capital gains are taxed 
differently:
 Short-term capital gains
 Long-term capital gains
CAPITAL GAINS TAX
Source: edelweiss.in
 Dividend distribution tax or DDT tax was levied on 
companies declaring dividends to their shareholders, prior 
to Budget 2020. 
 Under the tax regime, until March 31, 2020, corporates had 
to pay a DDT tax at an effective rate of 20.56% on their 
distributable profits to the government.
DIVIDEND 
DISTRIBUTION TAX 
(DDT)
Source: economictimes.com