Discussion on section 44AD of IT Act

[TradeJoker]

i've a doubt, not related to trading.
If i borrow some white money, say 5lac frm my friend, can i tranfer this thru my bank AC for my purpose , ?

 

[pakatil]

i've a doubt, not related to trading.
If i borrow some white money, say 5lac frm my friend, can i tranfer this thru my bank AC for my purpose , ?

Why not. You have to specify the reason, when asked.

 

[Smart_trade]

i've a doubt, not related to trading.
If i borrow some white money, say 5lac frm my friend, can i tranfer this thru my bank AC for my purpose , ?

Any amount above Rs 20,000 deal in only with cheque...no cash payment even if your friend claims that this cash is "White" money.

It is better to take a letter from your friend specifying interest payable ( or interest free), period of repayment,monthly/yearly installments and tell your friend that you will be showing this as a loan in your balance sheet and he should also show else there could be problems if IT department cross checks.

The loan will be unsecured loan and you can use it through your bank account for any purpose.

Smart_trade

 

[Smart_trade]

i've a doubt, not related to trading.
If i borrow some white money, say 5lac frm my friend, can i tranfer this thru my bank AC for my purpose , ?

I am also searching for such kind hearted friends....

ST

 

[sabharwal_RK]

Re: General Trading Chat

FOR Point 3: excerpt from the web:

SECTION 44AD(5)

Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.

The assessee is bound to get the books of accounts audited, if the following two conditions are satisfied:-

1. His profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) i.e. his net profit is lower than 8% of turnover.

and

2 Whose total income exceeds the maximum amount which is not chargeable to income-tax.

Here see both the conditions are simultaneous and the assessee required to get his accounts audit only and only if his profits from the business u/s 44AD are lower than 8% of this turnover and further his total income is more than maximum amount which is not liable to tax.

What if in case the total income from trading is 4Lakh and the savings done in sec 80C is 1.5L then taxable income is 2.5Lakh then?

 

[lemondew]

Thats the best way to take money from dad. Only then they might take it a seriously :rofl:

Any amount above Rs 20,000 deal in only with cheque...no cash payment even if your friend claims that this cash is "White" money.

It is better to take a letter from your friend specifying interest payable ( or interest free), period of repayment,monthly/yearly installments and tell your friend that you will be showing this as a loan in your balance sheet and he should also show else there could be problems if IT department cross checks.

The loan will be unsecured loan and you can use it through your bank account for any purpose.

Smart_trade

 

[lemondew]

Re: General Trading Chat

yes thats how i filed it last year.
PS: My knowledge comes from my CA

What if in case the total income from trading is 4Lakh and the savings done in sec 80C is 1.5L then taxable income is 2.5Lakh then?

 

[Smart_trade]

Zerodha based on the advice they received from CAs has been calculating Turnover by netting per scrip per settlement basis. This IT may not accept. Even the paper published by ICAI does not talk about this netting.As Zerodha has all the trade data captured, we can request them to give us both options 1) As per what they are doing now and 2) As per sum of profits/losses on trade basis ...this will be very useful to definately say whether audit required or not and this even IT assessing officer cannot challenge.

I can put a post giving examples of how these two are different in Zerodha thread and we should request Zerodha and they will definately do it if possible.

Smart_trade

 

[lemondew]

St,

Lest say I give order to buy 500 niftyfut. It may break it as 5 orders of 100 each so you will have 5 buy orders of 100 each.

When you give sell order of 500 niftyfut it may give 10 orders of 50 each so you 10 sell orders of 50.

How will you calculate profit/ loss when you have 5 buy orders of 100 and 10 sell orders of 50 each.
each buy order of 100 doesnt have a corresponding sell order of 100...????

Hence isnt it better to net 500 buy and 500 sell and calculate profit/loss

Zerodha based on the advice they received from CAs has been calculating Turnover by netting per scrip per settlement basis. This IT may not accept. Even the paper published by ICAI does not talk about this netting.As Zerodha has all the trade data captured, we can request them to give us both options 1) As per what they are doing now and 2) As per sum of profits/losses on trade basis ...this will be very useful to definately say whether audit required or not and this even IT assessing officer cannot challenge.

I can put a post giving examples of how these two are different in Zerodha thread and we should request Zerodha and they will definately do it if possible.

Smart_trade

 

[Smart_trade]

St,

Lest say I give order to buy 500 niftyfut. It may break it as 5 orders of 100 each so you will have 5 buy orders of 100 each.

When you give sell order of 500 niftyfut it may give 10 orders of 50 each so you 10 sell orders of 50.

How will you calculate profit/ loss when you have 5 buy orders of 100 and 10 sell orders of 50 each.
each buy order of 100 doesnt have a corresponding sell order of 100...????

Hence isnt it better to net 500 buy and 500 sell and calculate profit/loss

We have to do it using FIFO ( First In First Out method) . The question is not what is better....the question is what method the IT cannot dispute...and it is calculation of tradewise profit/loss and adding to get turnover.

Zerodha's calculation is beneficial to us but neither IT dept nor ICAI has accepted that. We are just interpreting and hoping that all is well....

I have seen few traders doing it with Excel sheet tradewise but it is too cumbersome...software programme will do it fast.

Smart_trade