Claming of expenses

If a business has a pending invoice to be paid from FY20-21 which is paid in FY21-22 before the IT deadline does it still count as an expenditure in FY20-21? @TeamQuicko

hi @d.r

Expenses can be claimed on accrual basis if you are using mercantile system for accounting. If there is an invoice of FY 20-21 for which payment is made in FY 21-22 it can still be counted as an expenditure of FY 20-21.

which type of expenses can be claimed for intraday, LTCG, STCG &FnO Trades…

can we claim Brokerage,SEBI Charges,SGST,IGST ,CGST,Stamp Duty,STT…etc…
kindly guide

Hi @Shanmukh, you can claim all the expenses directly connected to the trading income. Make sure the expenses incurred should be wholly and exclusively in relation to business and professional income which in your case is intraday trading.

some expenses are cant claim under intraday like STT…can this be claim for FnO…

Hi @Shanmukh

You can claim STT as an expense in case of equity intraday since it is treated as Speculative Business Income. And yes it can also be claimed against F&O.

However, you cannot claim STT against LTCG and STCG as they are treated as Income from Capital Gains.

Hope this helps :slightly_smiling_face:

can i claim internet expenses and mobile expenses in STCG or LTCG…?

Hi @Shanmukh

No, only the expenses related to the transfer of shares will be allowed against STCG or LTCG.

thank you for the reply…Can I claim DP charges, AMC charges(for the year), Brokerage,
Central GST, Clearing Charges, Exchange Transaction Charges, Integrated GST, SEBI Turnover Fees, Stamp Duty, State GST…

sorry for the long post…

Hi @Shanmukh

Yes, you can claim the expenses relating to the transfer of shares except for STT in the case of STCG and LTCG.

Let’s say I am a trader from a small town of Karnataka. I shift to Bengaluru with my family and I rent a 3 BHK flat whose rent is around Rs 45,000 per month. Its my home as well as trading office.

Now my question is:-

Can I claim Rs 45,000*12 = Rs 5,40,000 as my business expenses and reduce my taxable income ?

Hello @Satya,

As per Section 37 of Income Tax Act, 1961 any expenditure (not being a capital expenditure) which is incurred exclusively for business purpose is allowed as a deduction.

However, when the expenses are incurred partly for personal purpose and partly for business purpose, you need to segregate the personal and business component of the same. In your case, the rentals for the flat (which is used for both personal and business purpose) needs to be segregated by taking a reasonable approach (For eg, area used for office and area used for residence).

Also, you can claim the expenses only if you are self employed i.e. if you are not salaried.

Hope it helps!

Let’s say iam only a trader and not salaried at all. And I live alone in this flat and my family lives in the hometown.

Now can I claim deduction of Rs 5,40,000. Means I’ll never be audited whether the house is for both personal and business purpose or completely business purpose if I’ve proof of the rent receipts , right ?

@Saad_C @Divya_Singhvi

Hi @Satya ,

If you are having your sole income from business & profession and using your house for both business as well personal purposes (i.e for personal accommodation) then you need to claim the expenses proportionately.

Section 37 lays down conditions for claiming any expense as a business expense and one of the conditions is that “Expense should not be for personal purpose”. Accordingly, as the house would be used for personal accommodation as well as business purpose you should claim proportionately.

Hope it helps!

Hi Nireka, If I pay some amount to someone as a fees to provide me stock suggestions can that be considered as an expense? if yes, does this apply to me even if I am a salaried person?
@Saad_C, @Nireka.

Hey @deepak, Any fee paid to a professional for their services is deductible as a valid expense. This includes tax return filing, tax audit, legal advice, consultancy services, etc. You can read more about it from this article:

Thanks Maharshi, I did went through the link and it was helpful, my other question was whether I can claim these expenses when I am an salaried employee and do share trading additionally.

Hey @deepak, yes, you will be able to claim these expenses even though you are a salaried employee.

Hello,

I have a query regarding the value to be used for declaring income under STCG and Intraday.

  1. Should we use the total realised profit MINUS the expenses incurred while trading(such as brokerage, STT, SGST, CGST, stampduty , exchange transaction charges, etc)? This question is for both STCG and intraday income.

  2. Can I include indirect expenses such as furniture, internet, etc for reducing my income for intraday income? Note: I am not filing under presumptive income

Hey @Siddharth_Kumar, you can find out the detailed answers to your queries from the following links -