Reporting Trading as a Business Income

Income Tax Income from Business or Profession
#1

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) ??

#2

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:

#3

thanks divya for your time and reply .helped alot

1 Like
#4

How to prepare balance sheet from Zerodha reports for ITR 3

#5

Hey, here’s how you can prepare your balance sheet on Quicko.
In the Filing tab, navigate to INCOMES > BUSINESS & PROFESSION from the side nav
Enter details
From Summary Screen navigate to Financials
Click on Prepare Your Balance Sheet
Add Assets and Liabilities
Click on Save

Here’s an article that can help you with the same: Add Business & Profession Income : Help Center

Hope this helps :grinning:

#6

Let’s say I received 100000 as gift from my father,
out of that I decided to use 50000 for trading
so do I have to show just 50000 on my balance sheet or entire 100000

Also if I have temporarily parked that 50000 cash in liquidbees, fd, stocks
how do I show it on balance sheet?

#7

Hey, the INR 100000 will not reflect in your Balance sheet as it is a gift and the amount you have invested in liquid bees, need to be shown under investments. Hope this helps

1 Like
#8

If stock trading is my primary source of income (including F&O, Intraday and dividends but make up small percentage of net profits), then it should come under STCG or Business income?

#9

Hi @Aaryan

According to the Income Tax Act, intraday and FnO transactions are considered as Income from Business & Profession under section 43(5).
However, it is determined as income from capital gain (STCG/LTCG) or income from business & profession depending on the nature of trades and the holding period.
Here’s a read on Capital Gain Tax : A Complete Guide - Learn by Quicko & Income Tax on Trading - Learn by Quicko for your reference.

#10

I have been showing both LTCG & STCG as business income and have been paying tax according to the tax slab I fall in. But in the upcoming days, I will be taking up a job with Fin Ministry, a central govt job. Since no business is allowed while on the job, I will be having only LTCG from now on and no intraday and F&O, once I join the service. So from FY24, can I show LTCG as capital gains and pay flat 10%, rather than the tax slab I am paying right now (and 15% for STCG, if any) ?