How are profits from intraday and F&O trading taxed?

Income Tax Income from Business or Profession
43

Hey @Vikash689,

Dividend income is considered as income from another source. Hence, you can file ITR 3 and report the same under “other source income”.

44

Thanks for the immensely informative content. I need one clarification. Whether equity delivery based income is categorised as non speculative business income similar to F&O income or it is treated as an investment under the Capital Gains Category? Whether the equity delivery based income is taxed in the same manner/ rate in both the cases?

45

Hey @Amitayu_Das,

Equity delivery-based income is classified as ‘income from capital gains’. It can be short-term or long-term based on the holding period. Short-term capital gains are taxed at 15% and Long-term capital gains will be taxed at 10%.

Moreover, if you do equity intraday trading, the same will be treated as a speculative business, and F&O trading is treated as a non-speculative business, and both of these are taxed at slab rates.

Hope this helps!

1 Like
46

Thanks @Surbhi_Pal for the prompt response & clarification.

Then, i presume that equity delivery based income is not a buinsess income. Please correct me if i am wrong.

47

Hey @Amitayu_Das,

Yes, it is classified as income from capital gains.

1 Like
48

Thanks @Surbhi_Pal

Will be using Quicko for filing itr

1 Like
49

@Surbhi_Pal

Further to my earlier query, I read in some article and it appears that income from frequent delivery based buying & selling (trading) of stocks will also need to be declared as income from business and not under capital gains. This is a major cause of confusion. Please clarify whether I am correct. This has been covered in the following links

50

Hi @Amitayu_Das,

Reporting of trading income depends on the intent. If you hold stocks with the intent of capital appreciation, the same shall be reported as capital gains.

However, if you engage in frequent buying and selling of stocks with the primary aim of earning profits, you can report delivery-based trading as your business.

Hope this clarifies your query.

1 Like
51

@Surbhi_Pal

Thanks again for the clarification.

52

GST registration is compulsory? PLEASE ANSWER MY QUESTION ,
THANK YOU.

53

Hey @Jaskaran,

Trading in shares and securities is not considered supply as per the GST Act and falls outside the purview of GST. Therefore, securities traders are not liable to register under GST.

Hope this helps!

2 Likes
54

TNANKING YOU , ma’am.

55

Hi, I am salaried person with income 6.5 lakhs gross and net taxable salary around 4.5 lakhs after deductions in old regime. I never opted for new regime.
Now, I tried F&O trading in Month of March 2024 and my turnover is Rs. 29000 and my net LOSS is 31000 including expenses. My transactions are totally 100% digital and no cash is involved.
Firstly, I never went for presumptive tax scheme as this is my first time and I will not choose that also in future, that is clear.

  • Q1. So, Am I liable to have tax audit?
  • Q2. Am I liable to maintain books of accounts?
  • Q3. And when The term ‘income’ is used under section 44AA, sec 44AB for identification of tax audit liability or maintenance of accounts, does it refer to only the gross receipts of business or revenue or profits from business, OR, it also includes my salary to calculate that basic income exemption limits under these section.
  • Q4. If anyone incurrs loss in business or trading, is he always liable to get audited or not?
  • Q5. Please mentions limits for maintenance of accounts of books and tax audit liabilities clearly assuming that we DO NOT opt for presumptive tax scheme under sec 44AD or 44 ADA.

PLEASE GIVE A ELABORATE ANSWER AS IT WILL CATER TO ALMOST 70% OF THE F&O traders and new people coming in this field.

Thanks in advance

56

Hey,

Audit applicability is determined based on the turnover. In cases where the transactions are 100% digital, the turnover limit for audit is 10 crores. Hence, in your case, an audit will not be applicable.

Moreover, income from F/O trading is classified as business income and hence, you will be required to maintain books of accounts.

Hope this clarifies your query.

57

Mam thanks for prompt reply.

But mam, as per Sec 44AA, Sub section 2, for an individual having income, profits from business less than 2.5 lakhs and turnover less than 25 lakhs in previous three years, do not have maintain books of accounts.

Right?

But in case of losses, is it mandatory to maintain accounts even if turnover is less than limit?

Again, only one main thing which is confusing, when the term ‘INCOME’ is used here in exemption limit, does it also tend include the income from salary of an individual?

Please help :pray:

58

Hi,

Yes, in case your income from ‘business’ does not exceed ₹2.5L and turnover is below ₹25L, it is not mandatory to maintain books of accounts. This limit only includes income from business (or businesses if you have more than one) and not salary or any other income.

Moreover, in case of losses as well, maintaining books of accounts is not mandatory.

59

Thanks a lot for clarifying queries promptly

Regards, Naresh

60

but while in itr 3 filing ; uploading balance sheet is mandatory ! then what to do ?

61

There is a no account case in the ITR3 as per my understanding

62

Hey @HIREiN,

If your income from business/profession does not exceed ₹2.5L and the turnover is less than ₹25L, you can file ITR -3 under the no-accounts case.

Hope this helps!

1 Like