List of Expenses a Trader can claim

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.

Here’s the list of Expenses:

  1. 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.
  2. Insurance Expense: You can claim the cost of insurance premiums as an expense used for business purposes. For example, paying premiums of ₹12,000 per year for the system you’re using for trading business.
  3. 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.
  4. Repairs & Maintenance: You can claim expenses paid for repairs to the laptop, furniture, or any other equipment used for business purposes.
  5. 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 ₹50,000.
  6. Depreciation: Depreciation on the equipment you use can be claimed too. For example, if you purchase a computer for ₹40,000 and use it for three years, you can claim ₹16,000 as a deduction each year for depreciation.
  7. 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 ₹10,000 per month for a trading software subscription, you can claim that amount as a deduction.
  8. Mobile & Internet Expense: You can claim the cost of your mobile bills and internet service if you use them for your trading business.
  9. Finance Costs: If you have taken any loan for trading business, you can claim interest on the loan as a deductible expense.
  10. 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.

It’s important to keep accurate records of all your expenses to ensure that you’re claiming all the deductions you’re entitled to.

Read more about Expenses a Trader Can Claim in ITR - Learn by Quicko.

If any doubts, ask them out here!

1 Like

What about salary of Rs.30000/month paid to wife? Can that be included under “professional expenses” head?

Hi @M_Sridhar

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.

Hope this helps.

Hi

Can all these expenses still be claimed even if one chooses filing return under the new tax regime?

Hi @gdshan

Yes, you are eligible to claim all the trading expenses under New Regime as well.
Business expenses are allowed under both regimes.

Hi

I raised this query only because during an earlier interaction, I was informed that depreciation cannot be claimed as an expense under the new tax regime. Expenses a trader can claim - Income Tax / Income from Business or Profession - TaxQ&A by Quicko - Get answers to all tax related queries (qna.tax). Would be highly obliged if you can confirm if depreciation is indeed allowed as expense under the new tax regime.

Hi,

I know an intraday trader can claim carry forward and set losses. May I know what other benefits/expenses can be claimed by a trader.

Hi @gdshan

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.

Hi @Justin

Read more here Expenses a Trader Can Claim in ITR - Learn by Quicko.

Hi

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.

Hi @gdshan

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.

Hi

Thanks for clarifying.

1 Like

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?

1 Like

Hi @M_Sridhar

Yes, an accrued expense is recognized when they are incurred but not yet paid. It is considered an accrued liability.

Hene, the salary paid to your wife on an accrual basis can be claimed as a business/professional expense.

1 Like

brokers/trading members like finvasia / kotak etc paying for the loss occurred to the clients due to the technical glitch !

do the brokers have insurance for this ? or do they pay out of their own pocket as a goodwill gesture ?

and are they legally obliged to pay to the clients as per the SEBI / NSE guidelines ?

Hi @Muskan_Balar ,

Where/how exactly in ITR can i claim above mentioned expenses?

Could you please help me with screenshots of IT filing page(Expense) ?

Hi @Justin

You can claim all these expenses under trading income as business expenses. On Quicko, here’s how you can Add Business/ Profession Expenses : Help Center.

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?

Hi @drsaurabh3009

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.

1 Like

Hi

If I have around 50L capital, which is better way to do only F&O, Either in Company or Individual