What expenses can a trader claim while filing the ITR?

Income Tax Income from Business or Profession
22

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…

23

Hi @Shanmukh

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

24

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 ?

25

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!

26

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

27

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!

28

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.

29

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:

30

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.

31

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

32

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

33

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

34

Thank you. Apologies for missing response to this same query earlier… The link explains it quite clearly.

35

I am a resident Indian and my husband is an NRI. He has an NRE account and transfers the money to my savings account periodically. Currently, I am doing F&O trading with that money, and also I take advice & expertise regularly from my husband to help my F&O trading business. In this case, can I pay a salary / fee to my husband for the above-mentioned services and claim the expenses under the professional consultancy??

Please advise.

36

Hi @Newtrader

Section 40A(2) of Income Tax Act, 1961 deals with payments to relatives.

As per this section, you can claim the amount paid to relatives. However, if you incur any expenditure in respect of which payment is to be made to relative and the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the service for which the payment is made, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as expense.

Hope this helps!

37

Thank you Laxmi_Navlani.
As per my understanding, I can pay monthly fee or lumsum to my husband for his services and I can claim the expenditure under professional consultancy, but I must make sure claim amount should be reasonable regards to the fair market of the service for which the payment is made, right??

38

Hi @Newtrader

Yes, you can pay fees to your husband and claim the same as expenditure if that is reasonable.

39

WHICH EXPENSES ALLOWED ON SHARES IN INCOME TAX?

BROKERAGE,
SEBI CHARGES
IGST
STAMP DUTY
STT
Exchange Transaction Charges

ABOVE CHARGES ALLOWED TO IT EXPESNES?

PLEASE HELP ME

40

Hi @MAHESH_M, you can add Brokerages, SEBI Charges, IGST, Stamp Duty and STT as expenses for Intraday and F&O trades.

This article will help you understand the expenses a trader can claim.

41

What is the maximum rent that can be shown as expense? Also, can I hire my parents and show their salary as expense?