Business Income from Trading

Income Tax Income from Business or Profession
1

I have swing trading income and not other sources of income on Trading. I want to declare it as my legal business and primary source of income. So what is the taxation requirement and which ITR do I file?

2

Hey @dhruvi16 ,

Income or loss from Swing Trading will be taxable under the head Income From Business and Profession. You need to prepare and maintain books of accounts for your trading activities. You can claim all the trading related expenses while preparing your books of accounts. Hence keep the invoices and supporting of all the expenses with you. For example, keep the invoices of fees paid to an advisor, software purchased for trading analysis, online subscriptions paid etc.

You need to file ITR-3.

3

I am a full time share market investor. Do I need to have a current bank account?

4

Hi Aayushi,

Investors and traders are usually required to have trading accounts to participate in capital markets. The preference between savings and current bank account may vary depending on the individual.

5

In case of individuals if turnover doesnot exceed Rs 25 lacs and/or income doesnot exceed Rs 2.50 lacs and option of Presumptive income not availed then books of accounts are not mandatory.However,for reporting loss in F and O you have to fill up data on PAnd L account inITR 3.However,PAnd L in ITR3 Is for those who maintain books of accounts.So will this lead to problems in validation?

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7
  1. While filling itr -3 under asset head in quicko it’s asking about bank balance on 31st march 2021.
    So my doubt was whether to include only savings account balance on that date or to also to include fixed deposit account? I also have an fd overdraft account that too be included?
  2. under asset head also asking for demat account balance on 31st march -…in demat account balance What to include holdings on the date 31st March or zerodha fund balance on that date
8

Hey,

  1. In this case, you need to include only savings and current account balance and not Fixed deposits
  2. And in this case, it will be your fund balance with Zerodha.

Hope this helps

10

Hi,

I started trading in FY 20, and has filed trading income as business income (rather than STCG). Till FY 21, I never had sold any stock after holding it longer than 1 yr. In FY 22, I sold shares both with holding period less than 1 yr and more than 1 yr (first time ever). Can I continue to classify former (less than 1 yr) as business income but LTCG for those held for more than 1 yr.

All these transaction are done from same zerodha account.

11

5 posts were merged into an existing topic: List of expenses a trader can claim