Fire your tax related queries and i would get it solved!!!

[GD_Indo_US]

Dear Ritesh & other forum members,

I'm an NRI and have F&O income in India.

1) Can an NRI like me who has F&O income in India choose to show 8% of turnover as profit, in order to avoid audit u/s44AD (total t/o below 1 CR so 44AB not applicable) and to avoid the need to maintain books of accounts?

2) I read that 44AD is not applicable to NRIs, so then would that mean that I MUST maintain books of accounts u/s 44AA if the turnover is more than 10 lakhs?

and if 44AD is not applicable to me due to my non-resident status, then does this mean that:

3) I am allowed to show the actual figure of profit (even if it is lesser than 8% of the t/o) and still do not need to get it audited even if it is less than 8% of turnover as sec 44AD is not at all applicable to me ? (please also note that my gross total income exceeds the maximum amount not chargeable to tax and my total turnover is less than 1 cr)

Thanks for your help.

 

[ritesh.bafna88]

Dear Ritesh & other forum members,

I'm an NRI and have F&O income in India.

1) Can an NRI like me who has F&O income in India choose to show 8% of turnover as profit, in order to avoid audit u/s44AD (total t/o below 1 CR so 44AB not applicable) and to avoid the need to maintain books of accounts?

2) I read that 44AD is not applicable to NRIs, so then would that mean that I MUST maintain books of accounts u/s 44AA if the turnover is more than 10 lakhs?

and if 44AD is not applicable to me due to my non-resident status, then does this mean that:

3) I am allowed to show the actual figure of profit (even if it is lesser than 8% of the t/o) and still do not need to get it audited even if it is less than 8% of turnover as sec 44AD is not at all applicable to me ? (please also note that my gross total income exceeds the maximum amount not chargeable to tax and my total turnover is less than 1 cr)

Thanks for your help.

yes you r correct.

you have answered your own query.

Regards
CA. Ritesh Bafna

 

[GD_Indo_US]

Hi Ritesh,

So that means the answer to point # 1 above is NO, and answer is YES to the other points. Am I right?

 

[GD_Indo_US]

I have to file ITR 4 - and I am required to maintain books of accounts.

My query involves filling in the figures for "purchases" & "sales" on pg 4 (Part A - P&L) of ITR4 form (I have only been doing nifty futures trading in F&O):

I understand that "turnover" is defined as sum of profits and loss - so to provide a simplistic example, if I made a profit of 5,00,000 and a loss of 3,00,000, then my turnover is 8,00,000.

So my First Question is:

is this calculation to be done only for determining eligibility for tax audit u/s44AB - OR - is this turnover figure also to be actually entered in ITR form on page 4? - OR - in ITR form, should the total notional sales figure from the Contract notes (that may run into many crores) be entered against "sales" on page 4?


Now my Second Question is:

If the 8,00,000 is to be entered as turnover, then what do I enter as "purchases" against point 7 on the same page in ITR4 form?

Can I just deduct the profit of 5,00,000 and show enter the 3,00,000 as "purchases"?

And if above is not right, please advise how to ascertain the figure for "purchases"?


Thanks in advance
p.s.: In my books of accounts, I have maintained daily mark-to-market margin acct, hence no purchases and sales accts.

 

[GD_Indo_US]

One more query:

This is actually a simple question, but I just want to be 100% sure of the answer.

For the purposes of calculating turnover in F&O trading, do we:

1) Take the sum of all profit and loss trades (after removing the minus sign on losses) as per actual contract notes

or

2) Take the sum of daily mark to market gains & losses?


For clarity, what I mean in point (1) is, if I buy nifty futures where the Contract Note shows cost price of INR 10 lakhs and I sell it THREE days later for Rs.10,20,000/-, then will 20,000 be my turnover?

OR

If during the 3 days that I held the contract, my daily mark-to-market was +25k on Day 1, -10k on day 2, and +5k on day 3, so will my turnover be 25+10+5 = 40,000?

Hence is my correct turnover for tax purposes 20,000 or 40,000? I'm pretty sure it s/b 20k, but I want to check again, hence I'm posting.


Appreciate the help from other forum members here - honestly, I just wish that Indian tax authorities would simplify the tax code, but I guess that would be wishful thinking!!

 

[ritesh.bafna88]

I have to file ITR 4 - and I am required to maintain books of accounts.

My query involves filling in the figures for "purchases" & "sales" on pg 4 (Part A - P&L) of ITR4 form (I have only been doing nifty futures trading in F&O):

I understand that "turnover" is defined as sum of profits and loss - so to provide a simplistic example, if I made a profit of 5,00,000 and a loss of 3,00,000, then my turnover is 8,00,000.

So my First Question is:

is this calculation to be done only for determining eligibility for tax audit u/s44AB - OR - is this turnover figure also to be actually entered in ITR form on page 4? - OR - in ITR form, should the total notional sales figure from the Contract notes (that may run into many crores) be entered against "sales" on page 4?


Now my Second Question is:

If the 8,00,000 is to be entered as turnover, then what do I enter as "purchases" against point 7 on the same page in ITR4 form?

Can I just deduct the profit of 5,00,000 and show enter the 3,00,000 as "purchases"?

And if above is not right, please advise how to ascertain the figure for "purchases"?


Thanks in advance
p.s.: In my books of accounts, I have maintained daily mark-to-market margin acct, hence no purchases and sales accts.

determination of turnover is to be made for 44AB and also to enter turnover figure in itr.

purchase will remain nil.

losses can be claimed as direct expense

hence turnover - direct expense (losses) = GP


all your expense can be claimed P&L expense.

GP - other expenses = N.P.
Regards
CA. Ritesh Bafna

 

[ritesh.bafna88]

One more query:

This is actually a simple question, but I just want to be 100% sure of the answer.

For the purposes of calculating turnover in F&O trading, do we:

1) Take the sum of all profit and loss trades (after removing the minus sign on losses) as per actual contract notes

or

2) Take the sum of daily mark to market gains & losses?


For clarity, what I mean in point (1) is, if I buy nifty futures where the Contract Note shows cost price of INR 10 lakhs and I sell it THREE days later for Rs.10,20,000/-, then will 20,000 be my turnover?

OR

If during the 3 days that I held the contract, my daily mark-to-market was +25k on Day 1, -10k on day 2, and +5k on day 3, so will my turnover be 25+10+5 = 40,000?

Hence is my correct turnover for tax purposes 20,000 or 40,000? I'm pretty sure it s/b 20k, but I want to check again, hence I'm posting.


Appreciate the help from other forum members here - honestly, I just wish that Indian tax authorities would simplify the tax code, but I guess that would be wishful thinking!!

yes 20000 is right.

mark to margin has nothing to do with taxation.

please observe mark to margin is just notional accounting done by broker to safe guard himself against big surges and hence the broker by this means can ask for additional margin from clients.

notional profits has nothing to do with taxation.

notional losses are to be provided for at the end of the financial year. but due to the model of FNO where the future contract can be of max 3 months, the contracts pending on 31/03/20xx will be expired by the due date of ITR. hence the appropriate calculation of turnover is possible and hence can be arrived at the actual profit and losses.

Regards
CA. Ritesh bafna

 

[a1b1trader]

the price on which a CA file ITR is difficult to answer.

[.....]

i personally charge a minimum of 5k for ITR4 and the final quotation is given only after seeing the quantum of work.

Regards,
CA. Ritesh Bafna

Hi

The scope of work included in the charges. Please elaborate some more.

Whether it includes computation of turnover and other details also.

What about writing of accounts books if required to maintain.
Is it necessary to maintain account books also for a TO less than 1 crore and profit less than 8% or loss. I mean audit case of less than 1 crore TO.

What are the parameters to see the quantum of works. I mean, is it the number of contracts or the number of entries in one contract or both. And so how much quantum is included is this minimum charges.

Is it possible for a CA to undertake outstation jobs (F&O jobs) as well. Then what is the procedure, you follow to file ITR, documents required to file ITR and to judge the quantum of work.

Thanks

 

[ritesh.bafna88]

Hi

The scope of work included in the charges. Please elaborate some more.

Whether it includes computation of turnover and other details also.

What about writing of accounts books if required to maintain.
Is it necessary to maintain account books also for a TO less than 1 crore and profit less than 8% or loss. I mean audit case of less than 1 crore TO.

What are the parameters to see the quantum of works. I mean, is it the number of contracts or the number of entries in one contract or both. And so how much quantum is included is this minimum charges.

Is it possible for a CA to undertake outstation jobs (F&O jobs) as well. Then what is the procedure, you follow to file ITR, documents required to file ITR and to judge the quantum of work.

Thanks

in minimum charge, computation and filling of ITR is done provided there is no audit and account of the contract note upto maximum of 5 contracts with 4 entires in each are covered with forming of BS and P&L.

Audit charge is much higher which is also dependent on the quantum of work.

please note the above is rough idea. its not always easy to specify a price based on assumptions as the real work can be lengthy then anticipated. only after going through the entire work physically a proper final quotation is possible.

we also undertake outstation jobs provided the work is big enough to be cost effective.

the traveling expense and overnight stay hotel (if required) is to be borne by client or depending on the verbal arrangement.

Regards,
CA. Ritesh Bafna

 

[a1b1trader]

Hi

The scope of work included in the charges. Please elaborate some more.

Whether it includes computation of turnover and other details also.

What about writing of accounts books if required to maintain.
Is it necessary to maintain account books also for a TO less than 1 crore and profit less than 8% or loss. I mean audit case of less than 1 crore TO.

What are the parameters to see the quantum of works. I mean, is it the number of contracts or the number of entries in one contract or both. And so how much quantum is included is this minimum charges.

Is it possible for a CA to undertake outstation jobs (F&O jobs) as well. Then what is the procedure, you follow to file ITR, documents required to file ITR and to judge the quantum of work.

Thanks

Hi

Please answer this query also.

Thanks