Filing of ITR for intraday trading in equities

I am a senior citizen having income from salary, profession and interest on FDs. I have been filing ITR 4 myself for many yeats. This year I started intraday trading in equities and generated profit of about 40K also generated profit from delivery based trading having shaort term and long term gains.

My query: Can i show my income from trading undersec 44ADA/AD as business income under the activity mentioned in ITR4 return form: ’ Share broking and related activities’. Since all my income has accrued in my Zeroda trading account can I show my deemed profit as 6% of turnover (approx 20 lacs as per zerodha P&L statement)

Your guidance will be appreciated.

Thanks and rgds

Hey @Niraj1,

Profit can be reported as 6% or more of turnover under ITR-4, however, expenses cannot be claimed under the presumptive taxation scheme & losses cannot be carried forward.

The Nature of business code - Since no specific head available related to trading in the stock market, one can show the nature of the business under code “09028- Retail sale of other products n.e.c”. You should not be using “Financial Intermediation Services” as you are not providing service as Stockbrokers, sub-brokers, and related activities.

If equity delivery is shown as presumptive income, every year it should be considered as business income only and not capital gains. If equity delivery is shown as capital gains and intraday trading as presumptive business income, ITR-3 should be filed.

Hi
Iam also a senior all these days filing ITR1 with bank interest as income.
This year I have to file ITR3 as I have intraday equity, delivery equity (only STCG), equity F&O, Currency (CDS) F&O & Commodity Futures.

  1. Equity intraday Profit/loss & intraday equity spec turnover is clear.
  2. But for equity delivery trades - we have to take in to account Sales value or profit/loss absolute value in determing trading tiurn over under this head?3) For all Futures {equity/currency/commodity ) only abosolute sum of profit/loss or sale values to calcialte Tax turn over under this head ?

Hi @Skinny_Vegan

  1. In case of Equity Intraday absolute value of profit/loss is considered in determining trading turnover.
  2. In case of equity delivery trades you need to consider the actual sale value to calculate capital gains.
    3a. In case of futures absolute value of profit/loss is considered in determining trading turnover.
    3b. In case of options absolute value of profit/loss in addition to its sale value is considered in determining trading turnover.

Hope this helps!

Hi Ms Laxmi Navlani
1.you have clarified clearly calculation of tax turn over for F&O (Equity F&O,Commodity Futures, Currency Futures .)
2. Also Intraday cash Equity Speculative turn over / specualtive P&L is clear.
3. when it comes to delivery cash equity (from selling next day to less than a year STCG )
you are you saying i have to take in to consideration of total sale value or absolute value of profit & loss for calculating tax turn over?
I uploaded my Zerodha Tax P&L for Fy2020-21 in to quicko-
zerodha’s intraday equity turn over, all F&O turnover matches in quicko.
zerodha has given seperately all delivery trades scrip wise with all taxes paid .
My sale vaue of cash equity delivery trades is around 78 lakhs
Quicko is showing only intraday equity turnover+ combined F& O turn over (excludes equity delivery trade salevalue in turn over calculation but taking only account of STCG loss
In summary Quicko recommends ITR-3 with out audit!
4**)so if we file itr3 with stock trading as a business ** only STCG is considered & sale value of delivery equity trades is not needed to be added in to tax turn over? ( i took screen shots of quicko’s summary)- *so clarification needed on delivery equity turn over to be added in to tax turn over * or just combined STCG figure!
5) I have another brokerage Finvasia who dont give a tax PNL in zerodha like format & can not upload in to quicko.
6) If I have to use your services how to add data from Finvasia - what package you recommend to file ITR-3 {with or with out tax audit -in total a loss so tax audit audit may be must)

hi @Skinny_Vegan

Trading in F&O (Equity F&O, Commodity Futures, Currency Futures, etc) and Intraday is considered as a business whereas trading in delivery cash equity is considered an investment. For investments, there is no need to calculate turnover in any different manner. You just need to calculate the gain (sale value - purchase value) and pay taxes on that gains that may be short term or long term gains.

If you file ITR-3 there will be two parts of trading
1.Business Part - includes profit/loss and turnover of F&O trading
2.Capital Gains Part - includes capital gains from delivery cash equity.

If you need our help in filing returns you can reach out to us at support@quicko.com we will be glad to help you.

Hi Thanks for your reply…
I now understand why Quicko did not calculate turn over for Zerodha STCG equities & took only tax turn over from intra day equity & F&O trades.
Next I have to figure out the same method for finvasia data which is not in the same fashion like zerodha’s .I have to figure out how to upload in to quicko.

Also I found this eiether in your site or in zerodha university
Delivery based transactions**

  • guidance note on tax audit under Section 44AB by ICAI (Institute of chartered accountants of India, the governing body for CA’s). The article on Page 23, Section 5.12 of this guidance note has a guideline on how turnover can be calculated. It says:
    But remember that calculation of turnover for delivery trades is only applicable if you are declaring equity delivery based trades also as a business income. If you are declaring them as capital gains or investments, there is no need to calculate turnover on such transactions. Also, there is no need for an audit if you have only capital gains irrespective of turnover or profitability.

hi @Skinny_Vegan

For Finvasia data, You can download Tax PnL excel template from Quicko and put details in that excel sheet then import it.

Moreover, The guidelines you have mentioned here are correct.
a) Equity delivery based trades if considered an investment there is no need to calculate turnover in any different manner. You also have an option to declare capital gains as business income with certain conditions. You can refer to article linked below.
b) If you only have capital gains income from equity delivery based trades, there is no need for audit.

Hope this helps!

Hi Laxmi, I have a question… I am a intraday scalper who is predominently trading in Banknifty and Nifty options. i have not carry forwarded my position to next day i do squareoff on the same day.
In this scenario, how the turnover is calculateted? is it the sum of absoulte profit or the absolute proft + sale of option turnover?

Being a scalper, i will have multiple trades in a day however the profit would be less. In this scenario, if we consider the option sale turnover into the turnover calculation, it will be huge but profit will be less.

Shouldn’t we consider the option trading intraday as a speculative income and only absolute profit should be taken as a turnover?

requesting your advise
Also, i am having trading account with Kotak securities. Kindly confirm if Quicko will support the P&L provided from this broker

@Laxmi_Navlani @Divya_Singhvi @Kaushal_Soni @AkashJhaveri can you?