Taxation for Traders / Investors

For those who are submitting their ITR as per salary rules , furnish Income from F&O as Income from STCG.

Those who file ITR4 have to show it as business income obviously.

Although this information is again not from an authoritative source but seems to have credibility.

FnO income is business income always (whether there is a salary component or not) and ITR4 is to be used. STCG is for delivery transactions in equity. Intraday equity is speculative income.

hi all,

If we file itr4 from a CA( non audit) does he usually provide an excel sheet from him which shows all the entries which he has taken into account for calculating turnover and profit/loss statement.

Hi All,

In spite of having collected so much information about derivatives taxation, I am filing tax returns with derivatives as a source of speculative income.

Advantages - easier to calculate taxable income, no need for turnover calculation, audit requirements, etc.

Disadvantages - I let go of expense claim, setting off loss with other sources, pay high tax, etc.

I concentrate on getting more money out of the market rather than worrying about tax dept. requirements.

The best part is peace of mind.

I am able to conserve my energy and focus on other important aspects of trading.

This is what suits me.

Others are free to have their own opinion.

Enjoy,
CArnot

Hi lemondew,

If CA is a professional, she/he should return back all the documents and calculation sheets used in the course of filing your returns.

In any case it is your responsibility to collect them, check them and ensure that figures are factual and not hypothetical.

It is your tax return not CA's, hence you are liable to tax department even for the mistakes of CA's.

Enjoy,
CArnot

Yes regarding STCG my view was also the same that STCG is only regarding delivery equity but recently through two sources [involved in tax filing]I came to know that if a person is salaried and wants to file ITR 2 then he or she could include futures and options under STCG provided they are not planning to claim losses and expenses. [Not my View]

However as I am also in the same boat of being not a chartered accountant, therefore I am too in a fix over all these issues.

For those who are salaried regarding the form to be used I must say that if the volume for futures and options for them is very low then they must consult their chartered accountant for the clarity on return form provided they are not planning to claim losses and expenses.

I agree with carnot11 that its better to prefer what IT dept. likes.

Actually it doesn't help if you classify F&O as STCG...reason, it is not equity. It is the equity transactions that attract 15% tax rate. F&O, even if classified as STCG, would be taxed at slab rates!

Further, given that most of the people make losses on F&O instead of gains, making business loss is better with regards to carry forward of losses compared to capital gains.

carnot thx very imp

If you are filing an ITR4 from a CA then first give him a log of the tradebook and ask him to calculate and comeback with the profit and loss statements and turnover.

Then recheck it to ensure hes got it right and have a basic discussion on all entries. Only after you are satisfied ask him to file itr4 through the website rather than ask him to calculate and file directly

Can we treat Intraday equity business income and file ITR4 ?

Edit Few search got this

That mean ITR4 file can be file if you only Intraday equity
Only thing is set off loss can be carried forward only for a period of 4 years in Speculative Business Income

Source
http://taxguru.in/income-tax/all-ab...t-off-of-losses-under-the-income-tax-act.html
http://justtrading.in/getting-started-with-trading-tax-guide-for-traders-in-india/
http://justtrading.in/tax-benefits-implications-of-declaring-trading-as-a-business-activity/

Hello All,

One may claim speculation (equity intra-day or other) as your business, provided you can prove that your main source of daily bread and butter is from speculation, allowing for deduction of expenses related to business activity.

Else speculative gain is taxed a flat rate of 30 % (please correct me if I am wrong) and no deduction of expenses allowed.

You may challenge her/his view if tax officer refuses your explanation and proof, similarly a person who deals in 3rd month contract and holds the position for longer duration (2-3 months) can claim gains/loss as STCG/STCL instead of the normally accepted business activity...now the fact is, this all is easier said than done.

Enjoy,
CArnot