Accounting Entries and Taxation for Stocks & F&O-A thread for settling these issues.

#12
Re: Accounting Entries and Taxation for Stocks & F&O-A thread for settling these issu

Sunil,
I think speculative loss can't be carried forward. Current year loss can be offset by other speculative and non-speculative income. For eg, if there is loss in commodity trading (speculative), it can be adjusted against profit from derivatives (non speculative).
Anjan
 

Sunil

Well-Known Member
#13
Re: Accounting Entries and Taxation for Stocks & F&O-A thread for settling these issu

I would request any error or discrepancy to be notified to me without any hesitation.
 

Sunil

Well-Known Member
#14
Re: Accounting Entries and Taxation for Stocks & F&O-A thread for settling these issu

Sunil,
I think speculative loss can't be carried forward. Current year loss can be offset by other speculative and non-speculative income. For eg, if there is loss in commodity trading (speculative), it can be adjusted against profit from derivatives (non speculative).
Anjan
Read the ducument in Post #10

I had carried forward my speculation loss of financial year 2007-08.

It can be carried forward for 4 years, and can be set-off only against speculation income.
 
#15
Re: Accounting Entries and Taxation for Stocks & F&O-A thread for settling these issu

Sunil

Hats off to you ;-)

I never expected such a fast & thorough response to my post. I am going to print all this take a pencil and mark clarifications & queries for you and anyone to answer & comment upon.

So much material cannot be absorbed immediately and I'm not even gonna try!

Off the top of my head, and mind you from logical point of view only...no legal knowledge about it...I have one question only at this stage. I hope you will answer it with your thoroughness.

Purchase/Sale and Payment are two parts of a transaction. In case of an option, I can understand treating just the amount paid as the transaction amount.

But in case of futures or Intraday Shares, the Purchase or Sale amount is the amount of shares cost or the cost of the entire futures contract, regardless that you have done the transaction by paying margin money or you have paid off the purchase amount with the sale amount and during the transaction got a profit or a loss.

I would think that Sale/Purchase Amount would go to the Sale/Purchase heads and other side to the payables & receivables and margin deposit would be debited to the broker. All these entries to be setoff against a closing trade entry.

How else would you compute Sales of a trading firm? Mind it, question is about a trading firm only.

And regarding other questions, I am going to eat a lot of Badaams and have an oil massage and then I will sit and tackle your postings :clapping:
 

VJAY

Well-Known Member
#16
Re: Accounting Entries and Taxation for Stocks & F&O-A thread for settling these issu

Dear Sunil,

Thanks for the detailed posts.I am sure too many are helped form this posts.

Regards
VJAY
 

VJAY

Well-Known Member
#17
Re: Accounting Entries and Taxation for Stocks & F&O-A thread for settling these issu

Dear Sunil Bhai,
Can you put an post about how we make it on Tally of our tradings.so can we update it daily.eg.Intraday.derivative,short term and long taerm trading.not in urgent ....whenever you get time please post it.Any info from you are getting into our brain directly....you are a great teacher i think......
 
#18
Re: Accounting Entries and Taxation for Stocks & F&O-A thread for settling these issu

If I am doing arbitrage activities say buying in capital and selling in future today and squre off my position a week later and gaining from future transaction and incurred loss in capital market. During the period of arbitrage, i company had fixed record dates for the purpose of dividend and i received dividend. Whether section 94(7) of income tax applies on these transaction even my purpose for transaction was arbitrage not dividend striping?????
 

AW10

Well-Known Member
#19
Re: Accounting Entries and Taxation for Stocks & F&O-A thread for settling these issu

I don't know how I missed this thread real GEM thread so far.

Thanks a lot Sunil for providing such an important information on this key topic, that is specially important part of trading Business.

Do you have any idea about right software / excel sheet to maintain the books of account for trading business for Indian Market.
Best would be that the software also comes with trade, portfolio mgmt related reports.

Currently, I use excel sheet to track poisition, open risks etc. But it takes me lot of time to reconcile and prepare year end data to file for tax return from my trading tracker.
Any tips/idea/ approach that you can share with us from your experience.

Happy Trading
 
#20
Re: Accounting Entries and Taxation for Stocks & F&O-A thread for settling these issu

Dear Sunil, I think you have taken lots of pain to elucidate various aspects of taxation with regard to derivatives, futures and options . t is going to take sometime for ordinary mortals to imbibe this. I am new to trading but willing to learn . I am still in cash market only . i would be grateful if anyone can put up a dummies step by step procedure for accounting these entries in tally both for daily and year end entries. I have seen lots of requests made but only sketchy replies. Thanks in advance
sankar
 

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