Carry forward and set-off losses

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 ?

@Sakshi_Shah1 can you help ?

If the total income from all sources is less than the basic exemption limit, it is not mandatory to file the Income Tax Return.

If you have reported and carried forward non-speculative loss in the ITR of a financial year, you can set off against future incomes for 8 years.

However, it must be noted that the income tax department has details of all your trading transactions and there are high chances of receiving a notice for non-filing of ITR.

i think : my query is not understood properly .

my query is : in the 2nd year , i did not file the returns and , i did not setoff the loss of the 1st year .

now , in the 3rd year , can i set off the loss of the 1st year ?

Then . There is loophole in the tax system .

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

In the year 2021 .
Total income was : profit of 2.50 lakhs in share market trading .
BUT .
I did not file the Returns .
Because. I do not want to set off the loss in this year.

Now. In the year 2022 .

If the Total income is :

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

=====

So . I paid nil tax .

:face_with_monocle:

I had invested 25lac in dhfl and got back around 5.9lac. Can i show it as loss and offset against salary or other income?

Hey @Parameshwaran_V ,

If it is a loss under the head Capital Gains, it can be set off only against Capital Gains Income. If it is a Non-Speculative business loss it can be set off against any other income except salary. You may read about set off losses here.

Hi @HIREiN

Yes. There is a loophole in the system considering this situation. However, if your PAN is picked up for scrutiny assessment by the AO, he may not allow setting off the loss against the profits in such a situation.