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

[shravank30]

Tax Saving advise required, please help.

If we create a Trading Firm a group of 50 Pro Trader can we save more income tax as compared if traders trade individually. The idea is we can create non taxable level salary structure & claim salary of these traders as an expense, office rent, commuting expense etc.
Could you please advise us the best we can create a structure to save income tax & how much we can save in this way.

Please refer the link given in my signature to have more idea about Trading group idea.

If you trade in a group, how would the margins and losses be accounted for.
A single trader can put the balance 49 traders at risk if he speculates wildly.
Im case he gets in a loss spiral, all open positions may be squared up by the broker of other members also
The risks outweigh the taxes saved in a big big way

 

[RavishReport]

If you trade in a group, how would the margins and losses be accounted for.
A single trader can put the balance 49 traders at risk if he speculates wildly.
Im case he gets in a loss spiral, all open positions may be squared up by the broker of other members also
The risks outweigh the taxes saved in a big big way

Let me explain, idea is to create a Equity investing/trading firm, will take a proprietary trading facility from a Broker & create a Prop Trading shop. Eeach trader will be given individual sub-account code to trade as per their margin only So each individual account loss/profit would be accounted as per their account code. A non taxable salary to traders as expense for Tax saving. RMS limits would be applied to each individual account @60% SL for the safety of each account. Could you advise other tax saving tips or better structure.

 

[shravank30]

Let me explain, idea is to create a Equity investing/trading firm, will take a proprietary trading facility from a Broker & create a Prop Trading shop. Eeach trader will be given individual sub-account code to trade as per their margin only So each individual account loss/profit would be accounted as per their account code. A non taxable salary to traders as expense for Tax saving. RMS limits would be applied to each individual account @60% SL for the safety of each account. Could you advise other tax saving tips or better structure.

I think it is better to take this issue further only through the other thread you have opened and let this be purely for income tax clarification purposes for which it is meant

 

[shankar86]

Dear seniors,

I am a full time trader trading in Nifty Options for last 8 months.I don't have any other income source.I didn't pay income tax up to now.I want to know the procedure to pay incometax.I mean do i have to pay it as advance tax quarterly(as it is considered as business income) or at the end of financial year. I am trading with ICICIDIRECT. Can i use Digital contract notes for my transaction to file my income.
Thanks&Regards

 

[shravank30]

Dear seniors,

I am a full time trader trading in Nifty Options for last 8 months.I don't have any other income source.I didn't pay income tax up to now.I want to know the procedure to pay incometax.I mean do i have to pay it as advance tax quarterly(as it is considered as business income) or at the end of financial year. I am trading with ICICIDIRECT. Can i use Digital contract notes for my transaction to file my income.
Thanks&Regards

I hope you are aware, Even as business income, you still get the benefit of 2 lakhs tax free income.
You can save another 1 lakh by investing in 80C
You can also claim amounts which you have spent for telephone, conveyance electricity from the profits as deductible expenses
In case you have borrowed money to trade and are paying interest, you can also claim the interest as deductions

if after all these deductions, you still have taxable profit, you can pay advance tax on 60% of your profits till 15th December 2013 based on the Tax slab you are falling.
For individuals the 3 % amounts and dates are 30% -15th Sep, 60% 15th Dec and 100% 15th March

Enter all the trades in an excel sheet to arrive at your profit. You can get all the details from the ICICIdirect contract notes
All charges deducted by the broker except STT can be claimed as deduction to arrive at the taxable profit.

As you are trading in options, it is quite possible that you may also lose some money before the end of the financial year and as such your tax liability would be lower then what you would have anticipated

In that case, to get a refund of the advance tax paid from the department is a time taking job.
As such most people who are unsure of their total income, prefer to pay the interest on the advance tax after the year end rather then pay the advance tax itself, as there is no penalty for not paying advance tax. You have to just pay interest @ 1% pm on the amounts since they were due and you actually pay.

Keep all the contract notes safely even after you have filed your return for the year incase your file is taken up for scrutiny and the ITO may like to see the same

 

[shankar86]

Thank you for the detail reply.

 

[mmca2006]

I hope you are aware, Even as business income, you still get the benefit of 2 lakhs tax free income.
You can save another 1 lakh by investing in 80C--------

Very good reply

 

[jaykdodiya]

hello experts i have a small quary.i have a grand mother 85 years old.for 80+ age there is no tax till 5lacs of income.my quary is if i open a trading account on my grandmother's name and earn profit 4lacs.will itofficer accept incometax return of my grandmother as a trader?.my grand mother dont know anything about trading or stockmarket.

 

[shravank30]

hello experts i have a small quary.i have a grand mother 85 years old.for 80+ age there is no tax till 5lacs of income.my quary is if i open a trading account on my grandmother's name and earn profit 4lacs.will itofficer accept incometax return of my grandmother as a trader?.my grand mother dont know anything about trading or stockmarket.

It is not necessary that every person trading in the stock market has to know all the intricacies

If you are doing it only to hoodwink the income tax authorities, it is not advisable. You should have a genuine intent of helping your grandmother to earn some money through your expertise and and along with it earn a small advisory fees for yourself

My advise is that she can trade based on your advise.
She can pay you a small fee for the same in her books.
All balance profits will accrue to her.

Of course I am presuming that she has a PAN Card and has a balance sheet in which she has some assets and bank balance from which she can use funds for trading or she can take a loan from her relatives.
She should also be in full possession of all her senses and should be able to understand the dangers of trading in the stock market

 

[narayan07]

Hi All,

I am full time employee usually trading (futures) in my free-time to earn extra income. I am already in the higher tax bracket thru my employment and wish to understand the details about tax reporting from my trading front.

I am sure some or all of this would have already been discussed here but since I could not find the information in the initial posts and lot of the IT structure has also changed since the thread started I am putting these here again -

1. Is it mandatory for a trader to file IT returns irrespective of profit/loss made?
2. IT returns need to be audited by a CA or broker statements/reports suffice?
3. Will my trading income be combined with my salary income?
4. If NO to 4 then how will my trading income be taxed?
5. If I had losses in my initial years can this be adjusted with my current and future income in stock trading ?
6. What is difference between short-term trading and long-term trading?

Currently these are the one's I could think of ....would put up more if I can think or find something relevant.