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

[ritesh.bafna88]

writing books is charged separately which is normally required when the quantity is not manageable to do on a excel sheet.

yes maintenance of books is compulsory when audit is required.

Regards

 

[a1b1trader]

writing books is charged separately which is normally required when the quantity is not manageable to do on a excel sheet.

yes maintenance of books is compulsory when audit is required.

Regards

Hi

Thanks for helping we traders, by your sincere advice.
Can you please post us an excel sheet format, showing how to manage our trades in the excel sheet. And if possible then with an example of a day trade with 4-5 entries in futures and options.

Thanks

 

[shravank30]

I have inquired with 3 different chartered accountants on how to enter details of F&O transactions in ITR 4 for a person having income mainly from F&O Transactions and these are the replies I got :

Show the total profits as sale and total losses as Purchase

Show the nett profits as sale and purchase as 0

Show the nett profit as other income in the same page

Any other advice also received by other members ?

 

[GD_Indo_US]

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

Dear Ritesh,

Thanks for your answer.

However, I have one doubt. You said: "hence turnover - direct expense (losses) = GP", shouldn't it be "hence turnover (-) 2 * direct expense (losses) = GP".

Shouldn't we subtract twice the amount of losses to correctly arrive at GP, because while originally calculating the turnover, we had removed the minus sign on losses.

Example:
Trade 1: -5,000
Trade 2: +10,000
Trade 3: -2,000

Thus turnover = 17,000. GP is really 3,000. To arrive at GP correctly, we need to calculate: 17,000 - 2*(5,000+2,000).

Now with regards to filling in the ITR4 form, in this case (please refer to page 4&5 of ITR4 form):

We enter turnover of 17,000 item against item # 1 in the P&L section of the form.
Then we show Purchases against item # 7 of the form as "nil".

So I have these three queries:

1) Please advise as to against what item # on the ITR4 form (I see debits to P&L cover items # 6 to 43 on pages 4 & 5) we need to enter the "direct expenses (losses)"?

2) And when we enter it, shouldn't we enter twice the amount of losses? Or am I missing something?

3) Or can we simplistically solve this problem by showing purchases (item # 7 on the form) to be 14,000 (which may not be technically correct, but at least then by using simple math, we get the correct GP figure)?

4) Or should we "Show the total profits as sale and total losses as Purchase" (copy pasted from shravank30's post directly above)? but if we do so, then the turnover figure will not match the guidelines of ICAI (where the minus sign for losses should be removed, and turnover should be calculated by grossing up purchases and losses)

What is your suggestion, Sir? And thanks again for your help on this forum.

 

[TJAvi]

Hello,

what is the % of tax a person has to pay if he receives more than 10 Lakhs income from foreign countries.

I know that the rate is 30% plus 10% surcharge but does the same rate apply to foreign income as well?

 

[sakiv]

Dear Ritesh,

Thanks for your answer.

However, I have one doubt. You said: "hence turnover - direct expense (losses) = GP", shouldn't it be "hence turnover (-) 2 * direct expense (losses) = GP".

Shouldn't we subtract twice the amount of losses to correctly arrive at GP, because while originally calculating the turnover, we had removed the minus sign on losses.

Example:
Trade 1: -5,000
Trade 2: +10,000
Trade 3: -2,000

Thus turnover = 17,000. GP is really 3,000. To arrive at GP correctly, we need to calculate: 17,000 - 2*(5,000+2,000).

having same confusion. but strange thing no one here can help?
this is the biggest forum having more than 1 lakh members, still NOT a single senior memeber trading since 2008 or before can tell how they or their CA file their return, its strange!!! are there any real traders actually mentioning trading in their ITR??? if yes plz help newones by telling how they do it. also help with above confusion and this one, in option, for turnover one add differences plus selling price of option or only selling price. 'plus' mention in many places like this -

◦ The total of positive and negative differences , plus
◦ Premium received on sale of options is also to be included in turnover

link - http://taxguru.in/income-tax/how-to...audit-us-44ab-of-the-income-tax-act-1961.html

 

[ritesh.bafna88]

Dear Ritesh,

Thanks for your answer.

However, I have one doubt. You said: "hence turnover - direct expense (losses) = GP", shouldn't it be "hence turnover (-) 2 * direct expense (losses) = GP".

Shouldn't we subtract twice the amount of losses to correctly arrive at GP, because while originally calculating the turnover, we had removed the minus sign on losses.

Example:
Trade 1: -5,000
Trade 2: +10,000
Trade 3: -2,000

Thus turnover = 17,000. GP is really 3,000. To arrive at GP correctly, we need to calculate: 17,000 - 2*(5,000+2,000).

Now with regards to filling in the ITR4 form, in this case (please refer to page 4&5 of ITR4 form):

We enter turnover of 17,000 item against item # 1 in the P&L section of the form.
Then we show Purchases against item # 7 of the form as "nil".

So I have these three queries:

1) Please advise as to against what item # on the ITR4 form (I see debits to P&L cover items # 6 to 43 on pages 4 & 5) we need to enter the "direct expenses (losses)"?

2) And when we enter it, shouldn't we enter twice the amount of losses? Or am I missing something?

3) Or can we simplistically solve this problem by showing purchases (item # 7 on the form) to be 14,000 (which may not be technically correct, but at least then by using simple math, we get the correct GP figure)?

4) Or should we "Show the total profits as sale and total losses as Purchase" (copy pasted from shravank30's post directly above)? but if we do so, then the turnover figure will not match the guidelines of ICAI (where the minus sign for losses should be removed, and turnover should be calculated by grossing up purchases and losses)

What is your suggestion, Sir? And thanks again for your help on this forum.

hello sir,

interesting question with interesting answers.

it will take time to explain being 31st july as the due date please accept my apologies that i wont be able to post for couple of days.

rest assured i will explain this treatment.

thank you

CA. Ritesh Bafna

 

[Smart_trade]

Ritesh,

After reading the defination of Turnover in case of options contracts and also guidelines issued by Institute of Chartered Accounts of India, my view on options is as under :

1) When options are purchased and sold in the contract period, then we have to calculate gross sum of positive ( favourable) and negative ( unfavourable ) difference in case of each trade on FIFO basis. Here if all contracts are squared off then sale value of contract is not considered as turnover but only sum of gross difference.o here the treatment of Turnover is just like futures contracts.

2) The provision for considering sale price of option premium as turnover is applicable only when the sell of contract is not settled by opposite buy transaction ( either by square off by trader or by excercise by stock exchange). That means when the options contract is sold and it expired worthless, the premium received by sale will be considered as Turnover because there is no opposite side transaction here and the premium received is fully kept by the seller as the option contract is out of money.

Will you please check these details as per your convenience and confirm ?

Smart_trade

 

[TraderRavi]

in case of each trade on FIFO basis.
Smart_trade

FIFO = ???

 

[Smart_trade]

FIFO = ???

First In First Out. That is the basis for calculating profits/loss in case of multiple transactions.

ST