Presumptive taxation for intraday trading

Income Tax Income from Business or Profession
#23

Sir/Madam, one small doubt,

I am an employee and a part time trader, I am earning consistently from very recently from positional trading, duration ranging from 1-5 days for each trade, I am earning good profits, but I want to create long term wealth creation by investing in Stocks and earn Dividends ( perfect source of income)

My doubt is if, I have gained a profit of 15-20 lakhs in a financial year from positional or Intraday trading and invest same profits in stocks for long term wealth creation

Am I still have to pay, taxes under income tax for that financial year

As net gains from stock market will be zero, only things will be Deductions from the trades, as I have invested entire profits in Stock market self

Please clarify my doubt, will be waiting for it

#24

Hello @Srinivasagri,

Under stock trading, Income arises whenever there is a sale of securities or derivatives. You must report profit from intraday trading as a speculative business income under the head PGBP. You can claim trading expenses and report the net profits as taxable income in the ITR. Income Tax is applicable as per slab rates. Such profits can be adjusted with loss under other heads such as Non-Speculative Business Loss and House Property Loss.

Investing the profit in stocks for long-term wealth creation would not reduce tax on the intraday profits earned. You can explore options for tax-saving investments under Chapter VI-A that would reduce the tax liability. On the sale of newly invested stocks, there would be a taxable income in future years and tax would be applicable as per prevailing rates and provisions.

#25

I am a part time trader. I do mostly F & O and intraday trading. My overall P& L is in loss of say (less than 10K.) + if i include bussiness expenses will be around 10K.
total = 20K loss

Is it still advised to carry forward the loss as the cost of filling the return and audit would not be able to justify the loss occurred?

any suggestions?

#26

Hi @TUSHAR,

It is always advisable to report all incomes and financial transactions when filing your ITR. It reduces the chances of getting a notice from the income tax department, especially after the SEBI and CBDT partnership.

When you report your losses, it allows you to carry them forward and set off against future gains. You can also claim expenses that are related to your trading such as brokerage, internet, transfer expense, etc.

You can use this tool to determine if tax audit is applicable to you

Hope this helps :slight_smile:

1 Like
#27

I have incurred losses under equity intraday trading. Can I adjust it against F&O trading income?

#28

Hi @Nihal,

Loss from equity intraday trading is a speculative business loss. Speculative loss can be set off against Speculative Profits only. Thus, it cannot be adjusted against F&O trading income. However, you can carry forward the loss for 4 years and adjust it against speculative profits in future.

Income From Business and Profession
#29

Hi Team ,

I am new to Zerodha trading platform. I started trading from May-2020 . Couple of thing i need to check:

  1. do i need to submit ITR for 2019-2020 ? I suppose i need to fill for FY-2020-2021 .Please clarify?
  2. If i need to fill the ITR then need suggestion i have traded in equity and intraday FnO then which ITR need to filed.
  3. I have faced losses during the trading so am i eligible for tax exemption ?

Please clarify?
Thanks
Ajay

Queries related to Income Tax eFiling
#30

Hey,

Here is the response to your following queries:

  1. If you have started trading from May-20, you do not need to file your trades from Zerodha for your return for FY 19-20. Trades from May-20 should be included in the return for FY 20-21.

  2. If you have traded in equity, intraday and FnO, you need to file ITR3.

  3. Learn more about how losses are set off and carried forward from trading in this article.

#31

As an F&O trader, is it necessary to fill in the assets and liabilities section such as cash balance, bank balance, proprietors capital etc under the business/profession section of Incomes? Or can I leave these sections blank?

#32

@AkashJhaveri @Saad_C @Divya_Singhvi @Laxmi_Navlani @Sakshi_Shah1 @Kaushal_Soni can you?

#33

Hi @ranjit

F&O Income is treated as Business Income. Thus, if you opt for ITR 3 with books of accounts you have to prepare Balance Sheet, Profit & Loss Statement and enter all the financial details. You can even opt for Presumptive Taxation scheme if you are eligible for. In that case there is no need to prepare any financial statements.

#34

I don’t understand this recommendation of presumptive taxation at all.

What if you’ve incurred losses and can actually set off those losses including expenses with other sources of income such as interest, etc.

Why will I increase my tax burden even more by going for presumptive taxation? Everywhere I go, I find people recommending this presumptive taxation and it just doesn’t make sense!

#35

Hi @gurjot_ahluwalia

Presumptive taxation scheme is recommended only when your profits are more than or equal to 6% of Turnover and Turnover is not exceeding 2 crore. Thus, if you have losses or profits less than 6% of Turnover, the scheme is not recommended.

1 Like
#36

Hello,
For F&O trading, do I need to show my savings account balance in current asset under bank balance…??

#37

Hey @Akshay_Yelve, savings account balance at the end of the financial year needs to be shown whilst preparing the balance sheet.

#38

Even if it is personal savings account…?? And out of two savings account which balance to show or both as combined…??

(Initial capital to fund the trading is taken from one of the savings account)

#39

Yes, you need to add the aggregate amount.

1 Like
#40

Hi Team, I am having salary , Capital gain from equity and F and O income. From your portal i have understood that I need to file ITR 3. Request you to please answer the following questions:-

  1. What all schedules do i need to fill- My assumption is Salary, Capital Gain, Business Income, deductions Chapter VI. Do i need to fill balance sheets and P& L as well

  2. My Options Turonver is 1.87L and profilt is 70K, i.e 38%, do i need to go an audit?

  3. I always fill ITR2, so this year for F and O income, what extra information do i need to fill in ITR 3

  4. What are the charges for your platform in this case

Regards,
Mohit

#41

While preparing BS, what amount must be considered as Proprietor’s capital? What should be considered as asset for salaried person? I am also invested in MF,Stock,SGB, so will that be considered as asset ? How to tally Asset and Liability? Where to mention Options turnover?

#42

Hello Team,
Looking for guidance.

Brief profile

  1. Income from salary until October 2022.
  2. Income from LTCG
  3. Income from STCG
  4. Income from option trading:-
    Turnover more than 2 crores
    Profits of more than 8% of turnover

Question:- under what section return can be filed?

Can I opt presumptive tax scheme u/s44AD?
OR
44AD is only for turnover upto 2 crores even for FnO traders ?
Some of my friend said for FnO trader theblimit for presumptive is 10 crore turnover?
If presumptive is opted what’s the income that needs to be shown?
8% or 6% since it’s all digital?
What deduction/expenses can be claimed in this case?
Car depreciation purchased two years ago but never claimed? If yes at what %
Laptop purchase?

Thanks much