If I make profit in trading in equities will that profit be taxed as business income or short term capital gai

Suppose I made 50,000 in 3 months in same financial year in equities and mutual funds in Indian market. What will be my tax liability. Assume I fall in 33% tax bracket

See that depends on nature of your equity trading. As you yourself describe purchase and sale in shares as TRADING, Income tax department shall take it as Business Income and tax @33% shall be charged on that amount.
However, if you can prove that the transaction in equities and MF are not trading was investment , then that will be Short Term Capital Gains and RS 50000 shall be taxed at 10%.

Some Days ago, you must have heard that Senxes fell considerably on account of a draft circular of CBDT on the treatment of such transaction of share traders because everyone whether he does investment trade or business trade in Shares want to show the transaction as short term capital gain on account of low tax rate.

That should be short term capital gain.
Check this stuff out at:
http://in.taxes.yahoo.com/primer_capital...

This is tricky. You have to convince your asseing officer that you are an investor and not a speculator. Some issues are that you should not have taken loans and not shown the shares as stock in trade. Also there should be some gap in buying and selling.. No single factor work here really . it will also help if you have analysis of finanacial data of the companies in which you invest.

If you can convince your IT authorities that you have traded as an Investor, it could be assessed under the head "Short term capital gains." Both Business Income and Short term capital gains are also taxable @ 33%. The rate of tax on Long term capital gains is 20%.

However, the advantage of getting this income assessed under the head "Income from Business or Profession" is that you can set off your current year 'Business Loss' with "Short term capital gains'. The brought forward Business Loss cannot be set off against Short term Capital Gains.

Threfore, if you are not looking for setting of your brought forward business losses, this does not matter.

Buisness income.

assuming you question if you fail in 33% of a tax bracket you can put you trade levels at a higher standard so that way were you fall will be replaced!! i am certain you will be taxed as a business income per annual.. depends on what India's' requirement are !
contact a tax consultant at:
chandakmahesh@rediffmail.com There may be a charge depends on the services requested