Taxation Discussion

[pratapvb]

Re: General Trading Chat

1. for audit turnover requirement is of 1 crore

BUT

2. if you have loss or profit < 8% of turnover then also audit is required or you will have to pay tax on deemed income of 8% of turnover

 

[Iron_Man]

Re: General Trading Chat

1. for audit turnover requirement is of 1 crore

BUT

2. if you have loss or profit < 8% of turnover then also audit is required or you will have to pay tax on deemed income of 8% of turnover

Here is a scenario pertaining to your point 2 (as stated above by lemondew)

Loss is < 8% and turnover also < 1 cr. Now how can they deem income as 8% of 60 lakhs which is 4.8 lakhs ?

 

[pratapvb]

Re: General Trading Chat

Here is a scenario pertaining to your point 2 (as stated above by lemondew)

Loss is < 8% and turnover also < 1 cr. Now how can they deem income as 8% of 60 lakhs which is 4.8 lakhs ?

how can they is not the Q. That is the law as it stands currently. either take a hit as tax on deemed income OR get it audited. If audited then can carry the loss upto 8yrs to adjust with future F&O income

 

[Iron_Man]

Re: General Trading Chat

I think, if the interpretation read as, "premium collected from writing options" rather than "sale of options" there would be more clarity to the turnover issue.

No dear. if you trade options, the turnover is calculated as total amount (price*quantity) both the sides. Sell as well as Buy. eg - You buy a nifty strike for 10/- about 1000 quantity and you sell at 12/-. Your turnover is 10*10000 + 12*10000 = 22000.

However, this is not the case for futures/cash. If trade is only future/cash, turnover is the exact profit+loss. Eg - Today your profit from nifty future trading is 5000/-. Tomorrow your loss is 4000/-. Then your total turnover is 9000/- (In futures/cash the total quantity is not considered)

 

[Smart_trade]

Re: General Trading Chat

Here is a scenario pertaining to your point 2 (as stated above by lemondew)

Loss is < 8% and turnover also < 1 cr. Now how can they deem income as 8% of 60 lakhs which is 4.8 lakhs ?

It is called "Presumptive Taxation" .It should not have been made applicable to trading...but Government in its wisdom has made it applicable to trading in stocks and derivatives.

Smart_trade

 

[lemondew]

Re: General Trading Chat

What in the world are you talking. does the below statement mean you dont have to pay 8% of turnover it is below limit of 1 crore???

"If there is a loss in F&O, here provisions of section 44AD will apply and accordingly audit of books of accounts will also be required. The provision of this section mandates disclosure of at least 8 % of net profit on the gross turnover.

So, in case the assesse does not discloses the same (less than 8 per cent or loss) , the assesse will be required to maintain books of accounts and is required to get tax audit under provisions of section 44AA and 44AB. Thus, pursuant to this change, income from business cannot be below 8 per cent of the gross turnover in any circumstances."

Limit is 1cr..not 60lacs ... read carefully

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.

cinder,

I would be filing my returns and paying off the taxes. but I vent earned 8% of my turnover and wouldnt want to show my income as 8% of turnover which is considerable large but less than 1 CR. I would prefer not to audit for the same

For the specific case lemondew posted, the IT department is not going to spend even 1 minute worth "man-hours" pursuing the case. The cost of pursuing lemondew's case will be worth more than any potential recovery even if he were making a modest profit!

So, there's really NO chance of an IT inquiry here. BUT, it's good to file a return to keep the records updated and a chance to net losses in future years.

 

[XRAY27]

Re: General Trading Chat

What in the world are you talking. does the below statement mean you dont have to pay 8% of turnover it is below limit of 1 crore???

"If there is a loss in F&O, here provisions of section 44AD will apply and accordingly audit of books of accounts will also be required. The provision of this section mandates disclosure of at least 8 % of net profit on the gross turnover.

So, in case the assesse does not discloses the same (less than 8 per cent or loss) , the assesse will be required to maintain books of accounts and is required to get tax audit under provisions of section 44AA and 44AB. Thus, pursuant to this change, income from business cannot be below 8 per cent of the gross turnover in any circumstances."

cinder,

I would be filing my returns and paying off the taxes. but I vent earned 8% of my turnover and wouldnt want to show my income as 8% of turnover which is considerable large but less than 1 CR. I would prefer not to audit for the same

if turnover is below the limit then it is ordinary IT return .."ITR 4"...and for your information i'm a CA !!! anyways enjoy your search !!!

 

[Iron_Man]

Re: General Trading Chat

OMG discussion on audit is going no where and people are getting annoyed with each other

Presummtive tax I understand but if if the income is less than the taxable income the Govt doesn't chart pressumtive tax of 8% (this is the case in lemondew or anyone making only losses). It is not legal. Anyways, I never had < 8% of my turnover so I have no idea. I always paid my taxes and my turnover is < 1 Cr so never needed audits.

Another point is, if anyone is continuously failing to make even 8% of the total turnover, he should quit trading right away. What is the use you are only working for your broker. They are becoming rich and you are wasting your time looking at chart and breaking head.

I give up now, can't argue more on this subject. Everything is clearly available online. Search and you will know what I'm talking about. If you are still not convinced, make list of the questions, contact a CA, pay small consultation fee and clarify all the doubts.

 

[lemondew]

Re: General Trading Chat

One thing i wish to highlight most professionals including CAs in india dont study their subject before they do their work. Thats the reason i wont blindly trust a CA. But i dont evaluate you with them.

The question is not having 8% of of turnover as profits.
And not paying taxes on 8% of my turnover.
Not doing audit

Can these 3 be satisfied. this is the last from me on this subject.

if turnover is below the limit then it is ordinary IT return .."ITR 4"...for your information i'm a CA !!! anyways enjoy your search !!!

 

[niftychartreader]

Re: General Trading Chat

Bhai logan
Leave tax discussion aside
Market is obliging us and we are discussing taxes :lol: :lol: