Carry forward and set-off losses

Hi…how to file losses from FNO in new itr 3 (p&L) for ay 2021-22

Hi @Shanmukh, you can declare your losses when filing your ITR to set off and carry them forward.

FY 2020-21
I have not opted for presumptive taxation. I have F&O loss. My total income excluding F&O loss is more than basic exemption limit. But, my turnover from F&O is not above 1 crore rupees (since all transactions are in non-cash mode, the limit is 5 crore rupees). Is tax audit applicable to me?
Continuing the above situation, what if my total income exclusing F&O loss is less than basic exemption limit?

Hi,

I needed some clarity on taxes on F&O trading. I have a loss of around 5 Lacs in F&O and a gain of 3 Lacs from short term equity. I wanted to know if I can offset the 5 Lacs loss with 3 Lacs gain from equity? Will I need to pay 15% tax on short term gain or it can be offset with loss from F&O.

I also want to know do I need a tax audit if I want to carry forward the net loss of 2 Lacs.

If anyone can suggest me what is the applied case here and guide me which plan to opt on quicko for filing my return with this scenario, it will be really good.

Thank You

Now the option under ITR 3 is not allowing to enter negative number under business head in no books case…

Hi @NotAtAllSatwik,

In case the profit is below 6% of the turnover, and turnover below the threshold and total taxable income less than the basic exemption limit - tax audit it not applicable.

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Hi @himanshukoli,

You can set off F&O loss against capital gains.

You can carry forward the loss when filing your ITR

Hope this helps :slight_smile:

If you can share your contact details on Quicko | Contact Us our team will get in touch with you to understand your income situation and suggest the applicable plan, pricing and discounts

Now the option under ITR 3 is not allowing to enter negative number under business head in no books case…

Hey @Shanmukh, you can refer to these two articles that explain how to enter your trading income details:

Let us know if you have any other queries.

Can I classify STCG gains as business income from this year onwards so last year FNO losses can be used to set of against current year short term gains.

Note:

Until last year, in my returns, STCG was classified under capital gains. From now on an not planning to get into fno.

Hey @yvjanard, yes, you can classify STCG as business income but it needs to be treated in the same manner in future years.

Thanks for your reply.

So, what I understood is,
Current year, STCG can be classified under business and can set off the current year STCG gains with last year’s FNO losses and continue classifying and categorising the LTCG under capital gains itself. Is business classified STCG non speculative business?

Hello @yvjanard,

Yes you are correct. Classification of trading in equity depends on the intentions of trader. If you intend to trade for investment purpose then it should be reported under capital gains (in your case- LTCG), similarly if you intend to trade for business purpose then you can report the same under business income.

Moreover, trading in equity shares (delivery) would be classified as non speculative business.

For better understanding you can also visit our article. Link is mentioned below.

Hope this helps!

I got FNO losses last year. Filed and reported in ITR3.
This year I got STCG gains and LTCG losses.
I want to consider STCG as business and set off against last year’s FNO losses and continue it to be business in the subsequent years. AND I want to continue to keep LTCG as capital gains category and continue to do so in future too.
Please let me know if that setup is possible?

Hey @yvjanard,

Yes, it is possible!

can we clasify stcg in speculative or non speculative buisness income as
speculative - intraday
non speculative - f&O
i am thinking of classifying it in speculative as they are cash market transactions

and also
how to show stcg in buisnees (just to take the stcg transactions and add it to the buissnes income)
eg speculatuve (intraday) -5l loss
stcg - 3l profit
so can i show speculative as 2l loss
thanks in advance for ur reply

mam non speculative is f&o whether
speculative is only intraday and cash equity transactions
so we should clasify stcg as speculative rather than non speculative

is my point correct as zerodha varsity also showing the same

thanks in advance for ur reply

Hello @Ramalingam,

Short Term Capital gain should be classified under the head Capital Gains. However, it is at the discretion of the assessee to treat it as Business Income.

If it is to be treated as Business income then it shall be classified under Non- Speculative business income.

For further clarification you can refer to the below article.

Hope this helps!

Hi @mukhilan

As per IT Act, intraday transactions are the ones that are periodically or ultimately settled to guard against loss or gain benefit due to price fluctuations.

If you treat Equity Delivery trading as business income it shall be classified under Non Speculative business income. STCG cannot be reported as Speculative Business Income and thus it cannot be settled against Speculative Income loss.

You can directly show STCG as Income under Business and Profession head. Intraday loss cannot be setoff against Non-speculative business income
In your case, you need to pay taxes on STCG at applicable rate if you show it as Non Speculative Business Income or at 15% in case you show it under the head Capital Gains.
Losses from Intraday Trading (Speculative Business Income) will be carried forward for 4 business years.

In the year 2020 .
Total income was : loss of 2.50 lakhs in share market trading . Returns was also filed .

In the year 2021 .
Total income was : profit of 2.50 lakhs in share market trading . BUT . Returns was NOT filed .

Now. In the year 2022 .

If the Total income is : profit of 2.50 lakhs in share market trading . Is it ok if i NOT file the return ?

If the Total income is : profit of 5 lakhs in share market trading . While filing the returns ; Can i setoff the loss of 2.50 lakhs of the year 2020 ?