ITR change, Book of accounts,presumptive taxation in ITR3

I have three sources of income:
a. Salary and bank interest(exceeding basic exemption limit even after all possible deductions)
b. Short term capital gain from trading in equity cash segment only.
c. Intraday profit, again from trading in equity cash segment only ( Profit is greater than 8% of turnover, but does not exceed even 50000 )
Considering the above,

  1. I believe ITR 3 is applicable for me since I have STCG and ITR 4 is not applicable. Can you kindly confirm if that is right? Can I still file ITR 4 by claiming STCG as business income?
  2. Do I need to show book of accounts? From your earlier posts I got to know audit is not applicable, but there is no clarity regarding book of accounts
  3. Is there a presumptive taxation option in ITR 3? Or do I need to declare complete profit minus expenses.
  4. Can I switch back to ITR1 for next year without any questions from IT department if I only have salary income?

Thanks and regards,
Siddharth.

@AkashJhaveri @Kaushal_Soni @Saad_C @Divya_Singhvi @Laxmi_Navlani can you help with this?

Hello @Siddharth_Kumar,

  1. Based on the sources of income that you mentioned, ITR 3 is applicable for you. If there is Intraday income you are mandatorily required to file ITR- 3. STCG cannot be shown as business income, it is to be reported under Income from Capital Gains.

  2. As regards to maintenance of books of accounts, you can refer the below guide.

There are conditions based on your turnover & income from business activities for compulsory maintenance of books of accounts. If your turnover & income exceeds the threshold limit then books of accounts are to be maintained.

  1. Yes, you can declare profits at 6/8% of your turnover in ITR 3.

  2. If you do not have any F&O/Intraday/Capital Gains income in the next year, you can switch to ITR 1.

Hope it helps!

Thank you. Just a follow up based on your replies:

  1. and 4. It is clear. Thank you.

  2. I went through the link you provided and as per my understanding, I do not need to maintain book of accounts since my turnover is less than 120000. Is this understanding correct?

  3. Just to reiterate, even if my profit is 70% of the turnover, I may only show 6%(not 8% since all are non-cash based)? Won’t the ITD raise a question asking me to account for the remaining 64%?

Thanks and regards,
Siddharth

Hi @Siddharth_Kumar

  1. Financial statements are to be prepared while filing ITR 3. No books of accounts maintenance is required.
  2. Under Presumptive taxation scheme, profit has to be reported at higher of 6% or actual profits. Thus, in case your actual profits are 70% of Turnover, you cannot show 6% profits.

Hope this helps!

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Hello,

I am a self-employed medical professional earning income less than 25 lakhs per year. I also have some capital gains (less than 50000 LTCG and less than 50000 STCG) from sale of equity shares. So I understand that I have to file ITR3.

I have filled in my capital gains as well as my professional income and opted for presumptive taxation too.

I had tried commodity (futures) trading and suffered losses to the tune of Rs. 1 lakh. Where and in which schedule do I fill in the details of my commodity trading? Can I set off my losses against my professional income? How do I opt to carry forward the losses?

Thanks a lot in advance for your help.

Hey @amudhan, you will have to file ITR 3 and commodity trading details regarding expenses and income have to be filled under schedule BP - Computation of income from business or profession. Non-Speculative losses can be set off against LTCG or STCG. You can read more about set off and carry forward of losses under Income Tax Act from this article: