New options trader, need urgent help

IKAR

New Member
#1
Hello, Slightly late in the day to ask this, but to keep the story short - new options trader, no other income other than bank interest. Made a loss of about 50000 on turnover about 17 lakhs. I never realized requirement to calculate turnover etc., assumed only profit or loss need to be shown.

My queries are

1. Shall I submit on Sugam (ITR 4) with presumptive tax?

Reasons - It is almost impossible to for me to understand all sections of ITR 3 and fill it. Also I read that traders who have shown losses have got limited scrutiny notice for turnover - sales mismatch.

Problem - Realized that there is lot of confusion about options turnover calculations and AOs sometimes puts arbitrary high amounts. In Sugam if there is a confusion about turnover, the income and hence presumptive tax changes accordingly.

2. Shall I submit (ITR 3)? Reasons - My loss remains constant (50000) even if the AO decides higher turnover, so no chance of higher outgo of taxes.

Problem - 50000 loss on 16 lakhs turnover may invite scrutiny. Plus I dont know where to fill these details in ITR 3. Is there any website or youtube video link for traders to fill ITR 3?

3. Can scrutiny notice be served even if there is no taxable income?

4. For no taxable income, do I still need to file tax return by July 31? Is there a penalty for late filing?

and finally 4. What is sundry debtor and sundry creditor amount for a stock/fno trader to be filled in ITR form? (already asked in CA Nikhil's thread, will cross link wherever I get the answer first).

Thanks in advance.
 

canikhil

Well-Known Member
#2
Hello, Slightly late in the day to ask this, but to keep the story short - new options trader, no other income other than bank interest. Made a loss of about 50000 on turnover about 17 lakhs. I never realized requirement to calculate turnover etc., assumed only profit or loss need to be shown.

My queries are

1. Shall I submit on Sugam (ITR 4) with presumptive tax?

Reasons - It is almost impossible to for me to understand all sections of ITR 3 and fill it. Also I read that traders who have shown losses have got limited scrutiny notice for turnover - sales mismatch.

Problem - Realized that there is lot of confusion about options turnover calculations and AOs sometimes puts arbitrary high amounts. In Sugam if there is a confusion about turnover, the income and hence presumptive tax changes accordingly.

2. Shall I submit (ITR 3)? Reasons - My loss remains constant (50000) even if the AO decides higher turnover, so no chance of higher outgo of taxes.

Problem - 50000 loss on 16 lakhs turnover may invite scrutiny. Plus I dont know where to fill these details in ITR 3. Is there any website or youtube video link for traders to fill ITR 3?

3. Can scrutiny notice be served even if there is no taxable income?

4. For no taxable income, do I still need to file tax return by July 31? Is there a penalty for late filing?

and finally 4. What is sundry debtor and sundry creditor amount for a stock/fno trader to be filled in ITR form? (already asked in CA Nikhil's thread, will cross link wherever I get the answer first).

Thanks in advance.

1. Shall I submit on Sugam (ITR 4) with presumptive tax?

Reasons - It is almost impossible to for me to understand all sections of ITR 3 and fill it. Also I read that traders who have shown losses have got limited scrutiny notice for turnover - sales mismatch.

Problem - Realized that there is lot of confusion about options turnover calculations and AOs sometimes puts arbitrary high amounts. In Sugam if there is a confusion about turnover, the income and hence presumptive tax changes accordingly.



Doesn't matter if you file ITR3 or ITR4, there will be a turnover mismatch because income-tax department calculates turnover on gross notional value of contracts!

If you are ok with offering 6% of the turnover as income and pay tax on it, then you may file ITR-4. please note that the choice has to be kept consistent for next 5 years. So it is not only about the current year but also the impact of your choice on next years' taxes.


2. Shall I submit (ITR 3)? Reasons - My loss remains constant (50000) even if the AO decides higher turnover, so no chance of higher outgo of taxes.

Problem - 50000 loss on 16 lakhs turnover may invite scrutiny. Plus I dont know where to fill these details in ITR 3. Is there any website or youtube video link for traders to fill ITR 3?

Get a local CA to do it for you. Make sure that there is no error in the filing.

3. Can scrutiny notice be served even if there is no taxable income?

Subjective matter. Notices are sent on basis of various factors. No one can guarantee you anything in this matter.


4. For no taxable income, do I still need to file tax return by July 31? Is there a penalty for late filing?

Not for the current year. But you would not be able to carry forward the loss if the return is not filed on or before the due date.


and finally 4. What is sundry debtor and sundry creditor amount for a stock/fno trader to be filled in ITR form?

Only if you have any. Otherwise it is zero.
 
#3
Doesn't matter if you file ITR3 or ITR4, there will be a turnover mismatch because income-tax department calculates turnover on gross notional value of contracts!

If you are ok with offering 6% of the turnover as income and pay tax on it, then you may file ITR-4. please note that the choice has to be kept consistent for next 5 years. So it is not only about the current year but also the impact of your choice on next years' taxes.
Nikhil ji

1. As per department calculations, what is gross notional value, of an option contract taken. Buy value or sell value.
Say BN call option 25000C Buy @ 90.00 and sell @ 100.
Is it 4000 or something else.

Then they wont add up profit (say 400 here ) to get TO

Please elaborate.

2. What are the conditions laid down to avail presumptive tax @ 6%.
What if some cash (10-20K or if more) has been deposited in bank account linked with trading account.

Thanks
 

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