Income from trading is considered business income and if you are a trader, just like any other business, you can also claim the expenses you incur w.r.t trading as a deduction.
Say you made profits of ₹40,000 from intraday trading, but you also took a course worth ₹3000 to learn how to trade. Here, you can claim the course fee as an expense, and hence pay taxes on the net profits, which will then be ₹37,000.
Not just this, there are various other expenses that you can claim, here’s a list for you.
Rent Expense: If you rent an office or workspace that you use for your trading business, you can claim the rent paid as an expense.
Memberships and subscriptions: You must be taking certain memberships and subscriptions to various tools to help you trade and these are allowable expenses. Also, any courses or books that you buy to upskill yourself can also be added.
Depreciation: If you purchase an asset like say a laptop for trading, you will be using it for more than a year. Hence, for such assets, you can’t claim the entire amount as an expense in one financial year. But, you can claim depreciation on it, which means every year a small portion of its cost will be allowed as an expense.
Trading Expenses: Any trading-related expenses such as brokerage fees, clearing charges, exchange transaction charges, STT, stamp duty, etc.
Mobile & Internet Expense: You can claim the cost of your mobile bills and internet service if you use them for your trading business. If the same plan is being used for personal use as well, you can claim a proportionate amount.
Loan Interest: If you have taken any loan for trading, you can claim interest on the loan as a deduction.
Office supplies: Expenses for office supplies such as stationery, printer ink, and other materials.
Repairs & Maintenance: You can claim expenses paid for repair/maintenance of your laptop, furniture, or any other equipment used for business purposes.
Legal & Professional Fees: Any legal and professional fees related to your trading business. For example, the fees paid to a CA to audit your books of accounts can be deducted as an expense.
This is not an exhaustive list. You can claim any other expenses and reduce your taxable income. But, here are a few things you should keep in mind:
The expenses must be wholly related to your trading business.
Make sure to keep the receipts of these payments.
Opt for digital modes of payment and avoid cash transactions.
Yes, the salary paid to your wife is considered as a professional fee, which can be claimed as a ‘professional expense’, and if it exceeds the limit of ₹30,000 then the TDS will be deducted u/s 194J.
Under the new regime, depreciation can be claimed as an expense on the assets used for business purposes.
However, Additional Depreciation is not allowed to be claimed.
Additional depreciation is eligible for plant and machinery used in the manufacturing business as per u/s 32(1) (iia) of Act.
Other than additional depreciation, you can claim all relevant business expenses under the new regime.
Thanks for clarifying. I bought my laptop in 2021 and claimed depreciation under WDV for AY 2022-23 under the old tax regime? Can I continue to claim this on the book value of the asset for the AY 2023-24 and thereafter under the new tax regime? I am using this laptop for my trading purposes.
Yes, under the new regime, you can still claim depreciation as a business expense for AY 2023-24. A change in the regime will not affect claiming business expenses.
I made a delayed consolidated payment to my wife for 4 months (Dec-Mar) of 1.2Lakhs (30000 a month) on Apr 2nd. Since an accrual basis is the standard norm, can I still claim expenses under FY23?
On the Income Tax Portal, you can go on schedule Business & Profession, under Profit and Loss Account for the financial year 2022-23, you will be able to add expenses.
As of now, the utility for ITR 3 hasn’t been released yet for AY 2023-24 by the ITD, so you won’t be able to file your return.
Hi @Muskan_Balar ,
I am a salaried employee (AIIMS Delhi), and have made some decent profit from F&O trading last year. Can I still claim these expenses, apart from the 80CCD I claim on my salary?
Yes, these expenses are related to your business income (FnO Trading) and hence can be claimed from the business income. Additionally, you can also claim the deduction u/s 80CCD on your salary income.