Presumptive taxation for intraday trading

Income Tax Income from Business or Profession
1

The software shows that intraday equity trading gains need to be shown as business income and be taxes as per slab rate. But can one not consider it under presumptive taxation u/section 44AD and consider 6% of the turnover as business income

1 Like
2

@Sakshi_Shah1 can you help with this ?

3

Hello @YATISH01

Intraday Trading is considered to be a business income. The taxpayer has an option to report it as a preumptive income under Section 44AD and declare atleast 6% of turnover (absolute profit) as the income. Tax is applicable at slab rates.

However, if you opt for presumptive taxation scheme:

  1. You cannot claim expenses against the profits. If there are any losses, they cannot be carried forward.
  2. If you opt in for presumptive taxation scheme and in later years opt out of it, you can take benefit of presumptive taxation scheme for next five years

Read More
Tax on Intraday Trading
Presumptive Taxation for Business - Section 44AD

4

BESIDES INCOME FROM PENSION, RENTS, STCG, I GET INTRADAY TRADING PROFITS. Intraday annual gains are in small 3 digits. This petty sum necessitates filing of itr 3. Under business income I have only this small 3 digits gain of intraday profits to declare. Other columns / rows under business income will be nil. Can i claim stt, d.p charges , brokerage etc and arrive at a loss .(these expenses are more than the intraday profits). Is there any other requirement like maintaining of books , auditing of books etc to comply with.

5

Hi @Xavier_Thilagaraj_Gm

If these charges are related to intraday profit you can claim them under Speculative expenses in ITR even if the expenses are more than the profit earned.
Tax Audit applicability is dependant on your total income, turnover from trading, and income/loss from trading.
Maintainance of Books of accounts is required if Income from business and profession exceeds INR 1,20,000.

6

Thanks DIVYA

.

Pls REF TRAIL MAIL .

My intraday profits are meagre and the speculative expenses are more than the gains.

I DON’T HAVE ANY OTHER BUSINESS INCOME.

Can i avoid filing of ITR 3 and confine to itr 2 (when expenses are more than profit earned under business income- intraday )

THANKS

REGARDS

XAVIER

7

Hi @Xavier_Thilagaraj_Gm

If you wish to claim the expenses from intraday you have to file ITR-3. Since intraday is treated as speculative income it cannot be taken to ITR-2 as capital gains.

Hope this helps :slightly_smiling_face:

8

Thanks a lot Divya for your quick and clear reply.

THE FOLLOWING RULES ARE DIFFICULT TO DECIPHER DUE TO
“AND OR”

Tax Audit on Intraday Trading

:-Trading Turnover up to Rs. 1 Cr

If the taxpayer has incurred loss or the profit is less than 6% of Trading Turnover and total income is more than basic exemption limit, Tax Audit is applicable.##

1)HOW TOTAL INCOME IS ARRIVED . IS IT AFTER ALL DEDCTIONS.?
2)WHAT IS BASIC EXEMPTION LIMIT.?
3) CAN U GIVE EXAMPLE WHEN ASSESSEE INCURRED LOSS IN INTRADAY/PROFIT LESS THAN 6% AND TOTAL INCOME IS MORE TAN BASIC EXEMPTION LIMIT .

THANKS

REGARDS

XAVIER

9

Hi @Xavier_Thilagaraj_Gm

  1. Yes the total income arrives after all the deductions.
  2. Basic Exemption limit for individuals (below 60 yrs) is INR 2,50,000.
  3. When a person has a salary income of INR 10,00,000 and has intraday losses. In such a case, the total income would exceed the Basic Exemption limit.
10

Thanks a lot Divya for your quick and clear reply.

1 Like
11

Hi Divya if i want to show my STCG transactions as business income as suggested in tax audit, how can i generate the report in your quicko, As it’s showing everything under STCG

12

Hi @Rishabh_Kapoor, currently you won’t be able to show your short term capital gains as business income. However, this is in our pipeline and we aim to incorporate this feature under our Pro Plan. Our sales team will contact you for an assisted plan if you would like the same.

13

Are intraday losses set off against income from salary , rent, interest when I file ITR3 ?.I don’t maintain records for intraday trading except statement from my broker. Intraday losses are around Rs 25000 and total income is less than Rs 10 lacs. Am I required to maintain books for intraday Trading?

15

Hi @Xavier_Thilagaraj_Gm, Since intraday is treated as speculative business income, you can not set off business loss against any income except speculative business income.
You carry forward speculative business loss upto 4 years and set them off against future speculative gains.

Here is an article to help you understand set off and carry forward losses in detail

16

Thanks a lot Nireka for the reply

17

I don’t maintain records for intraday trading except statement from my broker. Intraday losses are around Rs 25000 and total income is less than Rs 10 lacs. Am I required to maintain books for intraday Trading?

18

@Sakshi_Shah1 can you help ?

19

YES Amulya.Thnak you and happy to hear from you

20

Hello @Xavier_Thilagaraj_Gm

If the trading turnover exceeds INR 25 lacs and total income is more than the basic exemption limit, it is mandatory to maintain books of accounts as per Section 44AA of the Income Tax Act.

You can read more about it here - Guide : Book Keeping and Audit for Business and Profession

21

Hi,

My sources of income are

  1. Salary,

  2. Long Term investments in Shares and Mutual Funds,

  3. Trading in F&O.

I want to file ITR4 so that I can avail of presumptive taxation.

My Query is where do I put my capital gains tax in ITR 4 ?