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?
The due date to file an Income Tax Return for individuals without tax audit for FY 2021-22/ AY 2022-23 was 31 July 2022.
However, you can still file a belated return under section 139(4). Since you have income from salary & FnO trading, you must file ITR 3.
A business including F&O trading with a turnover of up to INR 2 Crore can opt for presumptive scheme of taxation under Section 44AD and since F&O trading is conducted digitally you can report profit at 6% of turnover. The turnover calculation for F&O is different though, which can be read from here: Tax on F&O - Futures and Options Trading - Learn by Quicko
Hi Team, Last year i have filed ITR 4 for FNO trading (Turn over - 1.1 Cr, Profit -7 L). This Year my Turn over is 2.5 Cr and profit is 9.5 L. This year i cannot file ITR 4 due to Turn over above 2 Cr so i have to file ITR 3. Is Tax audit applicable to me?
ITR 4 is filed when an individual has opted for a presumptive taxation scheme under Section 44AD, Section 44ADA, or Section 44AE of the Income Tax Act.
However, if the turnover of the mentioned business exceeds INR 2 crores (INR 50 lakh in the case of professionals), the taxpayer will have to file ITR 3, as you cannot opt for presumptive taxation anymore.
Moreover, as per section 44AD of the Income Tax – 5 Year Rule rule, if a taxpayer opts for the presumptive taxation scheme in a financial year, he/she should opt for it for the next 5 financial years continuously. However, if the taxpayer fails to do so, he/she would not be able to take benefit of the presumptive taxation scheme for the next 5 financial years. Hence, a tax audit is applicable in such a scene.
As said above as well, according to section 44AD of the Income Tax – 5 Year Rule rule, if a taxpayer opts for the presumptive taxation scheme in a financial year, he/she should opt for it for the next 5 financial years continuously. However, if the taxpayer fails to do so, he/she would not be able to take benefit of the presumptive taxation scheme for the next 5 financial years. Also, a tax audit becomes mandatory in the year in which the rule was not followed. So, if the taxpayer opts out of the presumptive taxation scheme due to the turnover exceeding 2 Cr, then an audit will be applicable to the taxpayer.
Hello Team…
Hoping to get some relief in this chaos.
I have made some 4L income from offline tutoring. Most of it is cash of which have deposited 3L in bank.
From oct to dec, had broken some FDs in parents account, and used it along with my deposited income for equity trading through my demat account. Resulted in 80K loss (20k loss from Intraday, and 60K from delivery). Have withdrawn all money from equity and invested in FDs (different accounts - totalling 7lakh, including a 1.5L tax saver FD.)
Now what I understand is that just because of Intraday loss, I have to include it in speculative loss under Business Head and since it’s a loss, I might need to go for tax audit.
Is there any way to avoid it. Should I show profit on intraday above 6% in speculative income tab under profits from business head (despite broker statement showing loss) or should I show my taxable income less than 2.5L (by including deduction and short term capital loss on delivery trades) to avoid tax audit.
FYI Previously had filed ITR 1 for three years to get some refund of quiz/freelancing income in college days.
The conditions for a tax audit are mainly dependent on the trading turnover.
For trading turnover up to Rs. 2 crore,
Tax Audit as per Sec 44AB(e) is applicable if there is a loss or profit is less than 6% of Trading Turnover, total income exceeds the basic exemption limit and the taxpayer has opted out of presumptive taxation scheme in any of the previous 5 years.
Tax Audit is not applicable if the profit is more than or equal to 6% of Trading Turnover.
Hi Shrutika, I am really thankful for your response. I have some doubts.
I only made minor intraday transactions, turnover 42000 and loss 28000. While filing the Excel sheet for ITR 3 available on IT website, I put my professional income under Section 44ADA and Intraday Loses in Sl no. 65 of P&L schedule (for speculative income), Since I am claiming profits from professional income around 5Lakh and loses from speculative intraday at 28K (all under presumptive income, no account case )
Will this still require audits? I have attached two images here to make my doubt clear. I will be really grateful if you could check it and help
Also will there be a problem if I simply forgo all intraday loses and don’t report in ITR3. (Don’t wish to carry it forward) ???
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Madam i have salary income of 900000, intraday loss of 2500p, can i tske presumptive 44ad, my ca says yes but as i read out, it is not clear, interesf income is 3000. Pls guide
Presumptive taxation is a scheme designed to give relief to small taxpayers engaged in a specified profession (i.e., legal, medical, engineering or architectural, accountancy, technical consultancy, interior decoration, or any other profession as notified by CBDT.
If the turnover of any business is less than Rs 2 crore, then they can opt to be taxed presumptively. They must declare profits of 8%/6%, whichever one is applicable.
You can opt for presumptive showing profits at 6% or 8% instead of losses.
Madam in new amended form disclosure of intraday turnover and income has been incorporated for ay 23-24. Can we still show as 6% profit as presumptive scheme if the profit are below 6% and turnover is 160000 or it is now mandarory to show intraday separately and get it audited being profit less than 6%…its little bit now confusing
Turnover from intraday trading is to be reported separately under Part A- Trading Account
[ITR 3 and 5 ]
The gain or loss arising from intra-day trading, being a speculative transaction, is always taxable under the head’ Profits and Gains from Business or Profession’. ‘Speculative transaction’ means a transaction in which a contract for the purchase or sale of any commodity, including stock and shares, is periodically or ultimately settled otherwise than through actual delivery or transfer of the commodity or scrips
The new ITR forms have been amended to seek separate disclosure related to intraday trading under Part A – Trading Account. The ITR forms seek the following two additional details from the assessee engaged in intraday trading:
(a) Turnover from Intraday Trading; and
(b) Income from Intraday Trading – transferred to Profit and Loss account.
By Googling, it is mentioned that ITR4 is used for presumptive taxation. If we are Salaried, get dividend, LTCG and F&O can we opt for ITR3 for presumptive taxation ?
Lets say profits are more than 6% of Turnover (eg 20% of turnover), then should we pay tax on 20% or 6%
@Shrutika_Shah ,
regarding pt 2,
I read the article, but I fail to understand if my profits are 20% of turnover and I pay taxes on the same, what is the benefit of presumptive taxation. I am of the opinion that we can save taxes by only showing profits as 6% of turnover. Pls clarify this part.
