ITR filing and clarifications on capital markets income

Income Tax Income from Business or Profession
1

I have nil income .
And .
Loss in share market 6~8 lakhs .
Turn over is less . So audit not required.

I want to declare and carryforward the loss in the i.t. returns .

My c.a. says :

uploading
the balance sheet
on the i.t. portal
Mandatory/compulsory
in my this case !

Is it so ?

2

Hey @HIREiN

If you have loss from intraday or F&O Trading, it is treated as a business income. You must file ITR-3 and reporting P&L and Balance Sheet is mandatory while filing ITR-3 irrespective of applicability of audit.

If you have loss under the head capital gains, you can file ITR-2 and reporting Balance Sheet is not needed.

3

If loss from intraday or F&O Trading, : reporting P&L and Balance Sheet is mandatory , irrespective of applicability of audit.

query :

If profit from intraday or F&O Trading, : reporting P&L and Balance Sheet is mandatory , only if applicability of audit.

and

If profit from intraday or F&O Trading, : reporting P&L and Balance Sheet is NOT mandatory , if there is NO applicability of audit.

===

am i right ?

4

Hey @HIREiN

In case of income from intraday or F&O trading, filing ITR-3 is mandatory which includes reporting P&L and Balance Sheet.

Thus, taxpayer must report Balance Sheet & P&L while filing ITR-3 even if audit is not applicable.

5

i am little confused !

my business profession is : intraday trader in nse cash equity fno .

====

my local C.A.s say :

If loss ; then : reporting P&L and Balance Sheet is mandatory , irrespective of applicability of audit.

If profit is more than 6% of the turnover : reporting P&L and Balance Sheet is mandatory , only if applicability of audit.

and

If profit is more than 6% of the turnover : reporting P&L and Balance Sheet is NOT mandatory , if there is NO applicability of audit.

===

pls kindly clear the ambiguity !!!

6

Hi @HIREiN

If you’re opting for presumptive taxation scheme (reporting atleast 6% of turnover as profit), you need to file ITR-4 and reporting P&L and Balance Sheet is not needed.

If you’re not opting for presumptive taxation scheme, you need to file ITR-3 and reporting P&L and Balance Sheeet is mandatory whether audit is applicable or not.

If you have further queries, you can connect with one of our tax experts - Ask an Expert

7

is it true that under “presumptive taxation scheme” , no expenses are allowed to deduct from the profit ?

==

are the below mentioned costs fees charges allowed to deduct from the profit under presumptive taxation scheme?

Brokerage , Securities Transaction Tax , GST , Exchange Transaction Charges , SEBI Turnover Fees , Clearing Charges , STAMP DUTY , ALIED CHARGES , penalty , interest , etc

8

C.A. here says :

if profit more than 6% of turnover , i can file return without uploading balance sheet .

i can file ITR-3 and reporting P&L and Balance Sheeet isNOT mandatory .

=====

i would be also allowed the business related expenses to deduct from the profit .

and the below mentioned costs fees charges also allowed to deduct from the profit !

Brokerage , Securities Transaction Tax , GST , Exchange Transaction Charges , SEBI Turnover Fees , Clearing Charges , STAMP DUTY , ALIED CHARGES , penalty , interest , etc

===

9

Hi @HIREiN

Yes. If you’re opting for presumptive taxation scheme, you cannot claim any expenses.

Read more about it here

10

Hi @HIREiN

If you’re reporting profit more than 6% of turnover

  1. Opting for presumptive taxation scheme
  • You cannot claim expenses
  • You need to file ITR-4
  • You need not report Balance Sheet and P&L
  1. Not Opting for presumptive taxation scheme
  • You can claim expenses
  • You need to file ITR-3
  • You need to report Balance Sheet and P&L
11

does it also include the statutory costs such as :
Brokerage , Securities Transaction Tax , GST , Exchange Transaction Charges , SEBI Turnover Fees , Clearing Charges , STAMP DUTY , ALIED CHARGES , penalty , interest , etc

these also cannot be claimed as expenses ?

12

Hi @HIREiN

Yes. No expenses can be claimed if you opt for presumptive taxation.

13

ok .
i agree with you .
BUT .
i called 5 of the C.A.s .
they all said as below .
this is contradictory of what you said .
This is making me confused in dilemma!

Other C.A.s say :

if profit more than 6% of turnover , i can file return without uploading balance sheet .
i can file ITR-3 and reporting P&L and Balance Sheeet isNOT mandatory . if the audit turnover limit is not reached and profit is more than 6% of the turnover …

=====
i would be also allowed the business related expenses to deduct from the profit .
!
and the below mentioned costs fees charges also allowed to deduct from the profit !
Brokerage , Securities Transaction Tax , GST , Exchange Transaction Charges , SEBI Turnover Fees , Clearing Charges , STAMP DUTY , ALIED CHARGES , penalty , interest , etc

This statements of the other C.A.s makes me under dilemma .

you said reporting Balance sheet is mandatory in the above case .
BUT . then . why . other C.A.s say that in the above case reporting balance sheet is not compulsory ?

pls enlighten me …

you are highly experienced and learned . But . then . why other C.A.s statement is contradictory of what you said ?

14

Pls kindly correct me if I am wrong !

What I have understood is as below !

If reporting profit more than 6% of turnover . and turn over BELOW the audit requirement .

In ITR - 4 In ITR 3
NO need to report balance sheet and P/L Need to report balance sheet and P/L
Following costs NOT allowed to deduct from the Profit Following costs allowed to deduct from the Profit
Viz … Viz …
Brokerage , Securities Transaction Tax , GST , Exchange Transaction Charges , SEBI Turnover Fees , Clearing Charges , STAMP DUTY , ALIED CHARGES , penalty , interest , etc" Brokerage , Securities Transaction Tax , GST , Exchange Transaction Charges , SEBI Turnover Fees , Clearing Charges , STAMP DUTY , ALIED CHARGES , penalty , interest , etc"

Am I right ?

Is there any other alternative wherein I need not show the balance sheet and allowed to deduct above costs from the profit ?

15

pls see all the attachments enclosed herewith of my ITR filing acknowledgements for the A.Y.s :
17~18 ; 19~20 ; 20~21 ; 21~22 .

in those all the years i have file ITR 3 ; without showing the balance sheet and p/L !!!

BUT . you say : in ITR 3 ; showing balance sheet is compulsory !

am i missing something?

pls kindly clear my confusion !

16

Hi @HIREiN

Based on all you queries, here is a final clarification:

Reporting of Balance Sheet & P&L

  • If profit is more than 6% of turnover and if you opt for a presumptive taxation scheme, you can file ITR-4 without reporting Balance Sheet and P&L
  • If profit is more than 6% of turnover and if you do not opt for a presumptive taxation scheme, you should file ITR-3 and reporting Balance Sheet and P&L is mandatory.

Claiming Expenses

  • If you opt for presumptive taxation scheme, you cannot claim any expenses including trading expenses.
  • If you do not opt for presumptive taxation scheme, you can claim all business expenses including trading expenses.

You can check download ITR Utility here to check that Schedule Balance Sheet and Schedule P&L must be filled when you report business income in ITR-3 - ITR Utility

If you need any further help, you can buy our Ask an Expert plan to get in touch with a tax expert to resolve your tax queries.