My query on income from Trading as buisness

Please solve my below query.

If i make more than 50 lacs from a Trading stocks & show it as a Business. then i need to file ITR-4s right.

now my simple question is now i am in higher tax bracket.(aprox 13lacs as per tax bracket)
How much % of this 13 lac i can safe legally if i show business expenses like (rent/electricity bill/salary etc) ??

Hi @sorabhdhiman

If you show your income from trading in stocks as business income, you need to file either of the below ITR’s:

  1. ITR-3 (Regular Income from B&P) or
  2. ITR-4 (Presumptive Taxation Scheme)

If you fall into the highest tax bracket (30%), you will save (30%+Cess 4%= 31.2%) on expenses. Since expenses shall reduce the amount of income and eventually you will have to pay lower tax.
For example: If my income before claiming expenses is INR 20,00,000

  1. Tax on same shall be: INR 4,12,500 (before cess)

  2. Tax after claiming expenses of INR 2,00,000:

  • Net Income= 20,00,000-2,00,000= 18,00,000
  • Tax on above= INR 3,52,500 (before cess)

Hope this helps :slightly_smiling_face:

thanks divya for your time and reply .helped alot

1 Like