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

[akrsrivastava]

T.O.= Add all the profit & loss figures (take absolute values, no minus for losses)
eg: Trade 1 profit of 100
Trade 2 loss of 90
Total T.O. = 190 for these 2 trades
Do similar for all the Futures trades.

If T.O. > 1 cr. = audit

If T.O. < 1 cr. & you have a loss in total (fno) & your total income > 2.50 lacs basic IT exemption slab (FY2014-15) = audit ; (ironic, isn’t it !)

If T.O. < 1 cr. & you have a loss in total (fno) & your total income < 2.50 lacs basic IT exemption slab (FY2014-15) = no audit

Audit cost heard in the range of 6-20K. You can find online CAs also who will do it if you send them the details. The figures have to be provided by you, do not expect them to go thru all your contract notes.

For option trades you have to add the premium received on sale of options also (This I do not understand, once we have opposite positon in an option we have profit / loss figure already then why add option premium also ??? Ideally premium should be added if we write the option & it expires worthless but the ICAI / CBDT does not understand it)

Caution: I suffer from bouts of amnesia, so better check with your CA.

Online CAs? What does that mean?

 

[niftychartreader]

T.O.= Add all the profit & loss figures (take absolute values, no minus for losses)
eg: Trade 1 profit of 100
Trade 2 loss of 90
Total T.O. = 190 for these 2 trades
Do similar for all the Futures trades.

If T.O. > 1 cr. = audit

If T.O. < 1 cr. & you have a loss in total (fno) & your total income > 2.50 lacs basic IT exemption slab (FY2014-15) = audit ; (ironic, isn’t it !)

If T.O. < 1 cr. & you have a loss in total (fno) & your total income < 2.50 lacs basic IT exemption slab (FY2014-15) = no audit

Audit cost heard in the range of 6-20K. You can find online CAs also who will do it if you send them the details. The figures have to be provided by you, do not expect them to go thru all your contract notes.

For option trades you have to add the premium received on sale of options also (This I do not understand, once we have opposite positon in an option we have profit / loss figure already then why add option premium also ??? Ideally premium should be added if we write the option & it expires worthless but the ICAI / CBDT does not understand it)

Caution: I suffer from bouts of amnesia, so better check with your CA.

Some taxation expert please clarify,
1. Calculation of TO for option trades.
Whether this addition of option premium received is meant for option writer only (whose option expired worthless) or for option buyers also who has squared off his position.

2. and secondly for
If T.O. < 1 cr. & you have a loss in total (fno) & your total income < 2.50 lacs basic IT exemption slab (FY2014-15) = no audit

Thanks

 

[rourkem]

1. Calculation of TO for option trades.
Whether this addition of option premium received is meant for option writer only (whose option expired worthless) or for option buyers also who has squared off his position.

Bumping this up please for a clarification.

 

[mmca2006]

hi!

i am sorry, i still fail to understand the turnover concept....i never filed tax....always incurred loss only this year i am in profit.......

mytrades since april (110 trades in nifty and 36 in banknifty...both futures)
41 : prf of 210000.......average lots (8 lots)
69 : loss of -88000.... average lots (2 )
110

36(bn)

22 : loss of 90000 ...average lots(1)
14 : prf of 175000 ... average lots(4)


profits excluding STT

how to calcultae turnover..?
do i need to audit?
i am told that nowadays audit can be done by accountants other than CA?
how much audit cost in tier 2/3 cities?



sorry for repetitive question and thanks to all the members for reading and answering queries

Please refer following links , u will get ur answer--
http://www.traderji.com/taxation-matters/94490-urgent-maintaining-books-accounts-2.html
http://www.traderji.com/taxation-matters/16885-tax-audit-share-trading.html

 

[carnot11]

http://trak.in/tags/business/2012/07/09/tax-return-filing-futures-options-fo-trades/

above link explains turnover as below
Quote:
Turnover Calculation
Now, here comes the point calculation of turnover. Determination of turnover in case of F&O is one of the important factors for every individual for the income tax purpose. Turnover must be firstly calculated, in the manner explained below:

The total of positive and negative or favorable and unfavorable differences shall be taken as turnover.

Premium received on sale of options is to be included in turnover.

In respect of any reverse trades entered, the difference thereon shall also form part of the turnover.


Here, it makes no difference, whether the difference is positive or negative. All the differences, whether positive or negative are aggregated and the turnover is calculated.

End Quote

Can you clarify? In Zerodha it includes one leg price also

Thanks.

T.O.= Add all the profit & loss figures (take absolute values, no minus for losses)
eg: Trade 1 profit of 100
Trade 2 loss of 90
Total T.O. = 190 for these 2 trades
Do similar for all the Futures trades.

If T.O. > 1 cr. = audit

If T.O. < 1 cr. & you have a loss in total (fno) & your total income > 2.50 lacs basic IT exemption slab (FY2014-15) = audit ; (ironic, isn’t it !)

If T.O. < 1 cr. & you have a loss in total (fno) & your total income < 2.50 lacs basic IT exemption slab (FY2014-15) = no audit

Audit cost heard in the range of 6-20K. You can find online CAs also who will do it if you send them the details. The figures have to be provided by you, do not expect them to go thru all your contract notes.

For option trades you have to add the premium received on sale of options also (This I do not understand, once we have opposite positon in an option we have profit / loss figure already then why add option premium also ??? Ideally premium should be added if we write the option & it expires worthless but the ICAI / CBDT does not understand it)

Caution: I suffer from bouts of amnesia, so better check with your CA.

Some taxation expert please clarify,
1. Calculation of TO for option trades.
Whether this addition of option premium received is meant for option writer only (whose option expired worthless) or for option buyers also who has squared off his position.

2. and secondly for
If T.O. < 1 cr. & you have a loss in total (fno) & your total income < 2.50 lacs basic IT exemption slab (FY2014-15) = no audit

Thanks

Hello friends,

Below is what my friend explained to me. He said -- it is always better to consider a higher turnover and undergo audit then to face a scrutiny.

Trade 1 - loss = 5000 (futures)
Trade 2 - loss = 1500 (option buy and then sell)
Trade 3 - profit = 7000 (options buy and then sell)
Trade 4 - option sold at 150, lot size 25, premium received 3750

Turn over

case 1 -
option allowed to expire price of 50 or reverse trade (buy back) at 50 resulting in profitable trade

hence turn over = 5000 + 1500 + 7000 + 3750 + 2500 (100*25)

case 2 -
option allowed to expire at price of 200 or reverse trade (buy back) at 200 resulting in losing trade

hence turn over = 5000 + 1500 + 7000 + 3750 + 1250 (50*25)


Friends, if any corrections / errors do let us all know.

Enjoy,
CArnot

 

[niftychartreader]

Hello friends,

Below is what my friend explained to me. He said -- it is always better to consider a higher turnover and undergo audit then to face a scrutiny.

Trade 1 - loss = 5000 (futures)
Trade 2 - loss = 1500 (option buy and then sell)
Trade 3 - profit = 7000 (options buy and then sell)
Trade 4 - option sold at 150, lot size 25, premium received 3750

Turn over

case 1 -
option allowed to expire price of 50 or reverse trade (buy back) at 50 resulting in profitable trade

hence turn over = 5000 + 1500 + 7000 + 3750 + 2500 (100*25)

case 2 -
option allowed to expire at price of 200 or reverse trade (buy back) at 200 resulting in losing trade

hence turn over = 5000 + 1500 + 7000 + 3750 + 1250 (50*25)


Friends, if any corrections / errors do let us all know.

Enjoy,
CArnot

Thanks CArnot
I am facing some confusion, here

For Case 1 : IMO, it should be either 3750 or 2500. OR 3750 + 2500 is correct
Similarly for Case 2 : It should be either 3750 or 1250 OR 3750+1250 is correct.

OR you mean that, for writing option TO is the premium received only (if allowed to expire)
And if squared off (buy back), then TO will be premium received plus amount of profit or loss,. If it is so, then it is totally illogical.

That means, suppose if I write a BNF option @ 300 and buy back @ 320 then my TO will be 7500 (premium) + 500 (profit) = 8000.
Please clarify.

Thanks

 

[carnot11]

Thanks CArnot
I am facing some confusion, here

For Case 1 : IMO, it should be either 3750 or 2500. OR 3750 + 2500 is correct
Similarly for Case 2 : It should be either 3750 or 1250 OR 3750+1250 is correct.

OR you mean that, for writing option TO is the premium received only (if allowed to expire)
And if squared off (buy back), then TO will be premium received plus amount of profit or loss,. If it is so, then it is totally illogical.

That means, suppose if I write a BNF option @ 300 and buy back @ 320 then my TO will be 7500 (premium) + 500 (profit) = 8000.
Please clarify.

Thanks

Hello niftychartreader,

Please note the below -

1. The total of positive and negative or favorable and unfavorable differences
shall be taken as turnover.

2. Premium received on sale of options is to be included in turnover.

3. In respect of any reverse trades entered, the difference thereon shall also
form part of the turnover.

Point 1 is very clear for futures.
Point 1 is very clear for options where you buy first and sell later.

Point 2 is very clear for option writers.
If the option expires worthless, the premium pocketed is the positive flow and hence it is part of turnover.

Point 3 is also with respect to option writing.
Premium received is positive inflow hence part of turnover.
Reverse trade (buy back or auto square off) also results in cash flow (positive or negative) and hence is part of turnover (by the logic of point 1)

For point 3 -
It makes sense when you say the net cash flow of the trade (in case of option writing and then reverse trade / buy back) should be part of turnover and the premium received should be excluded again by the logic of point 1.

i.e. 2500 for case 1 and 1250 for case 2

But then tax laws are not logical and reasoning with tax officer is totally illogical. The amount of time and efforts spent with a tax officer can be put to good use.

hence it better to consider 3750 + 2500 for case 1 and
3750 + 1250 for case 2

Hence my friend assertively advised - consider higher turnover if in doubt and go for an audit leaving nothing to doubt.

Hope it clarifies.

Again friends if my understanding is wrong, please do correct me.

Enjoy,
CArnot

 

[Blackhole]

hi!


1) can i use PPF account of my father to show in IT return as i am maintaing it and my dad does not show it in his IT.

2) I had started 2ELSS fund under my mom and dad's name, i still pay it can i use it to show in IT. My dad is senior citizen and has more 3lk per anum under 80c.



my Income is trading only.

 

[carnot11]

hi!


1) can i use PPF account of my father to show in IT return as i am maintaing it and my dad does not show it in his IT.

2) I had started 2ELSS fund under my mom and dad's name, i still pay it can i use it to show in IT. My dad is senior citizen and has more 3lk per anum under 80c.



my Income is trading only.

No Sir, you cannot.

For taxation every individual (above 18 yrs of age) is a legal and separate entity. It is always better and advantageous to take this approach and avoid the route of clubbing of incomes.

All your outgoings (in name of others) should be treated as gifts.

It is better to have a gift statement on a piece of paper with donor and receiver signature, to make them valid as gifts and not be treated as transactions to reduce / avoid tax liability.

Enjoy,
CArnot

 

[mmca2006]

No Sir, you cannot.

For taxation every individual (above 18 yrs of age) is a legal and separate entity. It is always better and advantageous to take this approach and avoid the route of clubbing of incomes.

All your outgoings (in name of others) should be treated as gifts.

It is better to have a gift statement on a piece of paper with donor and receiver signature, to make them valid as gifts and not be treated as transactions to reduce / avoid tax liability.

Enjoy,
CArnot

Regarding this aspect I need some more clarification.Even if clubbing provision applies , it may not cause extra taxation in the hands of son because PPF interest is exempt u/s10.If I am wrong please correct me.