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

[traderniftybull]

Dear All learned members - I am doing intraday trading in equities and derivatives regularly. Also,in the current financial yr I made only 2 or 3 trades in these instruments from my wife's demat account too. Unfortunately, have incurred losses in both accounts. We both are senior citizen ( me 70 and She 60+). We have no other source of income except bank deposits and may be some long term income/loss from shares in our demat accounts.
Kindly advise/enlighten me on the following:
1. Is it mandatory to get audit done from CA for both accounts for filing returns.
2. Since CA fees are high ( 30000/-) can I self file the ITR on line at least for my wife ( as there are very few trades)and save 15000/- , if so which ITR Form to be used.

I m a novice and have zero knowledge on taxation matters.For past years this has been handled by my tax consultant.
Thanks and apologies in advance for troubling you all.

more details of other (and total) income needed for a reply, in both cases (as far as audit requirement is concerned)
secondly, what is the total turnover in your case (presumed that in other case TTO is not much), needed for looking for other options, to avoid audit

BTW, AFAIK, if gross total income (all sources) is below 300k (in both cases, being sr citizens) then you wont require an audit.

 

[traderniftybull]

if you go online and read what the Tax filing guys have mentioned : they have added the word "PLUS" to substantiate their claim / interpretation :

Incorrect interpretation:
• The total of positive and negative differences , plus <--- incorrect
• Premium received on sale of options is also to be included in turnover ,plus
• In respect of any reverse trades entered, the difference thereon

Read more at: https://www.caclubindia.com/experts/f-o-transactions-turnover-for-sec-44ab--122521.asp

Taxguru has added even more pluses:

• The total of positive and negative differences , plus <--- incorrect
• Premium received on sale of options is also to be included in turnover , plus <--- incorrect
• In respect of any reverse trades entered, the difference thereon But not the total value of contract.

https://taxguru.in/income-tax/how-t...audit-us-44ab-of-the-income-tax-act-1961.html


Correct quotation of the rule:

b) Derivatives, futures and options:
Such transactions are completed without the delivery of shares or securities.
These are also squared up by payment of differences.
The contract notes are issued for the full value of the asset purchased or sold but entries in the books of account are made only for the differences.
The transactions may be squared up any time on or before the striking date.
The buyer of the option pays the premia.

The turnover in such types of transactions is to be determined as follows:
(i) The total of favourable and unfavourable differences shall be taken as turnover.
(ii) Premium received on sale of options is also to be included in turnover.
(iii) In respect of any reverse trades entered, the difference thereon, should also form part of the turnover.

clearly mentioned in The Guidance note on Tax Audit under section 44AB of the Income Tax Act, 1961
https://resource.cdn.icai.org/30357dtc19988.pdf

However, there is no "plus" mentioned anywhere...

A more reasonable explanation is mentioned here :
https://www.caclubindia.com/articles/tax-audit-of-assessee-in-share-trading-business-34666.asp

- got your point,
but what we have been told and discussed previously in this and other taxation threads, requires inclusion of premium received on sale of option (in other words it is the sale value of the option)

- in first 2 links they have added plus for their clarifications/convenience, otherwise I have not read this plus word, so far, this is for the first time I saw this plus mentioned

lets see if some clarification is given by the CA members of this forum.

 

[abb24]

more details of other (and total) income needed for a reply, in both cases (as far as audit requirement is concerned)
secondly, what is the total turnover in your case (presumed that in other case TTO is not much), needed for looking for other options, to avoid audit

BTW, AFAIK, if gross total income (all sources) is below 300k (in both cases, being sr citizens) then you wont require an audit.

 

[abb24]

more details of other (and total) income needed for a reply, in both cases (as far as audit requirement is concerned)
secondly, what is the total turnover in your case (presumed that in other case TTO is not much), needed for looking for other options, to avoid audit

BTW, AFAIK, if gross total income (all sources) is below 300k (in both cases, being sr citizens) then you wont require an audit.

Thank you very much Sir for your prompt response.
There is no other source of income except interest on FDs and Sr Citizen Saving A/c. Income is well below 3lac for each(in both cases). Last yr also income was below 3lac and no tax liability ( as per CA calculation and balance sheet). This year also scenario is same rather worst( more losses). As regards to total turnover- Sir I have no idea how to arrive at or find out. I trade through Zerodha, RKSV and have ICICIdirect ACCOUNT.
Kind Regards.
ABB

 

[traderniftybull]

Thanks
First of all, please pease do not call be Sir. Just TNB, TNB bro chalega.
(BTW, no connection with RaGa asking a gathering, in a college, calling him sir and to call him Rahul )

When you are trading with, Zerodha, RKSV and others, then they may be providing with IT details.
However, if you want to do it yourself (I mean to learn taxation) then, go through various threads on taxation of this forum and posts thereof, particularly posts by member CANikhil, his posts are a gem of posts, explaining clearly various aspects of taxation, with examples.

BTW, you may go through various links posted by member Raj232 on previous page (and quoted by me, above in post 2632), for TO calculation

 

[abb24]

Thanks
First of all, please pease do not call be Sir. Just TNB, TNB bro chalega.
(BTW, no connection with RaGa asking a gathering, in a college, calling him sir and to call him Rahul )

When you are trading with, Zerodha, RKSV and others, then they may be providing with IT details.
However, if you want to do it yourself (I mean to learn taxation) then, go through various threads on taxation of this forum and posts thereof, particularly posts by member CANikhil, his posts are a gem of posts, explaining clearly various aspects of taxation, with examples.

BTW, you may go through various links posted by member Raj232 on previous page (and quoted by me, above in post 2632), for TO calculation

Thanks a lot TNB Bro.

 

[canikhil]

Not sure if @canikhil is reading all posts, but one of my friends who happened to have assessment did his audit and the calculation was the one which I mentioned.

I think there should be some examples online, but I need to check and will post the link..

I have posted examples for turnover calculation and audit application in past. So you can refer to those posts.

 

[canikhil]

Thanks . turnover details..one of my broker shows 15000 turnover for 5 bnf futures trades n 16 lakh for 220 weekly option trades.

But one broker shows 16339156 for just 10 banknifty weekly option trades.hence all this headache.no other income

not sure if your broker has got it right for Banknifty. You need to consistently calculate the turnover but be advised the options turnover has to be computed properly ie sell side premium plus the absolute difference between sell and buy.

 

[canikhil]

dont think an audit is applicable in your case. just filing ITR-3 without audit should be sufficient.

 

[traderniftybull]

but I am still confused for rational behind adding sale value (premium received, as they say it) of an option, when option are first bought.. I am sure that whoever has/have drafted the rules for option TO, is not aware of, the various ways, these option are traded in stock market
OR
if they knew it, then they, all the taxation people, treated traders as a fool, who (a trader) had no say in it.

In general business TO is the sale price of a trade, and
in future trading, absolute difference between sell and buy, is the TO
but the fun is
for options, it is the sum of both.
why so, they have no answer
ridiculous