As a trader, there are various expenses that you may able to claim as deductions in your Income Tax Return (ITR) to reduce your taxable income.
It includes expenses that are directly related to your trading business, such as office rent, utilities, office supplies, internet expenses, and phone bills. And some expenses that are incurred in the process of trading, such as brokerage fees, transaction charges, and data feed charges, may be claimed as deductions.
Basically, any expenses incurred in relation to trading activity and considered as business & professional income can be claimed while filing your ITR.
Hereās the list of Expenses:
- Rent Expense: If you have a separate office or workspace for your trading activities, you can claim rent as an expense. Make sure, you must have rent receipts and a rent agreement as valid proof.
- Insurance Expense: You can claim the cost of insurance premiums as an expense used for business purposes. For example, paying premiums of ā¹12,000 per year for the system youāre using for trading business.
- Office supplies: Expenses for office supplies such as stationery, printer ink, and other materials used for trading activities can be claimed as an expense in your ITR.
- Repairs & Maintenance: You can claim expenses paid for repairs to the laptop, furniture, or any other equipment used for business purposes.
- Legal & Professional Fees: You can claim legal and professional fees related to your trading business. For example, you may hire a lawyer to review a contract for ā¹50,000.
- Depreciation: Depreciation on the equipment you use can be claimed too. For example, if you purchase a computer for ā¹40,000 and use it for three years, you can claim ā¹16,000 as a deduction each year for depreciation.
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Trading Expenses: You can claim expenses related to your trading activities, such as Brokerage fees, Clearing Charges, Exchange Transaction Charges, STT, Stamp Duty, GST, etc.
For example, if you pay ā¹10,000 per month for a trading software subscription, you can claim that amount as a deduction. - Mobile & Internet Expense: You can claim the cost of your mobile bills and internet service if you use them for your trading business.
- Finance Costs: If you have taken any loan for trading business, you can claim interest on the loan as a deductible expense.
- Other Business Expenses: Any other expense can be claimed that is directly related to the trading business.
Other than this, any taxes paid such as STT (Securities Transaction Tax), Stamp duty, CTT (Commodities Transaction Tax), and Input GST paid on trading expenses can be claimed as trading expenditures.
Expenses that do not consider in trading expenses include Personal Expenses, Fines & Penalties, Taxes, Cash Payments, and Taxes such as Income Tax, Advance Tax, GST, etc.
Itās important to keep accurate records of all your expenses to ensure that youāre claiming all the deductions youāre entitled to.
Read more about Expenses a Trader Can Claim in ITR - Learn by Quicko.
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