Tax Filing - Salary & Trading Income

I am a salaried person (private). I do share intraday trading only (No derivatives or delivery trades). I have queries regarding whether I need to file my trading income or not. Below are my incomes and turnovers

Salary income is 900000
Taxable income from salary post deduction- 550000
Trading turnover(Absolute profit + Absolute loss)= 30000
Loss from trading = -5000

Now how much should i file tax for trading? What is the limit? If I need to declare it, what will be added to my taxable income?

Thanks in advance.

Hi @Justin

Filing an Income Tax Return is a sign that you are a responsible citizen.
According to the Income Tax Act, every resident individual whose income exceeds the basic exemption limit of ₹2,50,000 in a financial year is required to file a return.

In your case, you have salary income and business income (intraday trading is considered speculative business income) which exceeds the limit of ₹2,50,000. So you will be required to file a return reporting both incomes.
You will be required to disclose the intraday trading income under the head “Income from Business & Profession”.
While filing a return, you will be required to show the turnover and profit/loss. The loss can be set off and carried forward if the income has been disclosed and the return has been filed on or before the due date.
Trading income and salary income will both be added to come to the total taxable income.

Hope this helps.

Hi @Shrutika_Shah

Thanks for helping out.

I have two more queries.

1. Filing
So far ,I have filed my IT for AY 2022-2023 with ITR-1 through my company portal. Recently I started intraday trading (equities) from Jan 2022. So I am planning to add my trading income and modify my ITR to ITR-3.

But when I log in into Income tax website, I see below options:
u/s 92CD Modified Return
139(8A) Updated return

What should I opt for and continue adding my trading income?

2. What will be added to taxable income from trading?

Say I participated three trades.
| |Gross Profit/Loss| Tax | Net PL |
|Trade 1| 500 | 60 | 440 |
|Trade 2| -400 | 60 | -340 |
|Trade 3| -300 | 60 | -360 |

From above table,
Absolute Gross PL is Rs 1200
Absolut Net PL is Rs 1140
Gross PL is Rs -200
Net PL is Rs -260

So what all should I consider from above?

Hi @Justin

  1. In this case, you should file an updated return (ITR U) u/s 139(8A) to add your trading income from intraday.
    Please note that when you file an ITR U, you cannot carry forward losses. Also, a late filing fee must be paid, as the return cannot be filed without tax payment.

You can either file it yourself, or with expert assistance by booking a MEET.

  1. For calculating income from trading, absolute turnover and profit/loss are considered.
    In your case, the turnover shall be absolute P/L ₹1200. Taxable income shall be calculated based on the net P/L less expenses, ie, ₹260 (loss).

Hope this helps.

Hi @Shrutika_Shah ,

Thanks for your reply. I have a question.

Part 2 - previous post - My net PL is 260(200 - actual trade loss + 60 -tax and charges). And these trades happened in FY2022-2023. So while filing before July 2023. I can carry forward/ reduce my 260 from my total taxable income.

Now What happens when i gain say Rs 500 in FY2023-2024. How will the setoff or carryforward work here? I am bit confused. Could you please help me with an example.

Hi @Justin

Since you’re involved in intraday trading, which is a speculative business income, you will be able to set off the speculative business loss only with speculative business income. Also, the speculative business loss can be carried forward for 4 years only if the return has been filed on or before the due date.

If you have a gain in FY 2023-24, you will be reporting the same when filing ITR for FY 2023-24/AY 2024-25 in July 2024 (the due date of filing is subject to government extension).
You can set off the 500 gain if it’s a speculative gain against a speculative loss.

Hope this helps.

?hi…need clarity on the old and new tax regimes.

i have a salary income and fno income if i have opted for new tax regime they i have only one chance in a lifetime to go back to old regime… as the business income people can switch only once ? give clarity on it…

I am claiming the medical expenses of my parents (>60) in my exemption and not claiming the same while filing my parents’ ITR…is it okay to file this way ?

Hi @Shanmukh

Individuals with business income are not eligible to choose between new and old tax regimes every year. Once they have opted for the new tax regime, they only have a one-time option of switching back to the old tax regime in their lifetime. Once they switch back, they cannot opt for the new tax regime again.

You can claim deductions while filing your ITR for the medical expenses paid for parents if you have paid for the same under the old regime. You can read more about Section 80D: Deduction for Medical Insurance Premium - Learn by Quicko for a better understanding.

Hope this helps.

thank you for your response.

my doubt is can I claim the exemption towards the medical expenditure of my senior parents under 80d even though they are filing the returns ( they are not claiming 80d in their return )…

Hi @Shanmukh

You can claim the medical expenses of your senior citizen parents u/s 80D under the old regime if you pay the same.
Any one of the people (either parents or you) who is paying can claim the deduction.

Hope this helps.

Hello @Shrutika_Shah ,

Mam , I have income from Salary (government, 13 Lk), Trading F&O (4 Lk), and LTCG (2 Lk). I plan to file ITR-3. Can I claim deductions on salary income under 80 CC, as well as deductions of expenses ( electricity, laptop, internet, brokerage) for business income from trading ?

Hi @drsaurabh3009

Since you have a trading income (FnO) which is a non-speculative business income, along with salary and capital gains income, you will be required to file ITR 3.

Yes, you can claim a deduction under section 80CC. You can also claim all the expenses incurred related to your trading. Here’s a List of Expenses a Trader can claim.

Hope this helps.

1 Like

Your explanation is clear. But I am an housewife with my own savings and rotation of family expenses credit to my sb a.c . Mostly Short term (3 to 5 days) and intraday (sell holdings at an high and buy at a low - CNC in zerodha or buyback. Just two or three trades of intraday Misc. My intraday profits 1100 and short term 290 Gross Net income around 820.
Should I file taxes for this year or leave it. If i shouldfile can I file it in ITR2 or ITR3. AIS is under reported for shorterm trades.

Hi @mathi

It is always advisable to file an ITR, as even the AIS is showing.
Since you’ve intraday it is a speculative business income, you should file ITR 3.