Taxes on Futures and Options (F&O)

Income Tax Income from Business or Profession
21

Hello @Hari_Moorthy,

Thank you for connecting to Quicko.

At Quicko, user can report Income from Trading either as Presumptive or Non-Presumptive.
We have served more than 5000 Tax Advisories this year filing ITR for Traders which also includes reporting of Trading Income under Presumptive Business Income.

Here are the answers to your queries:

  1. As per Section 44AD, you need to report income higher of (Actual or 8%/6% in case of digital). Thus your income will be actual profits and not 7.2 lakhs since actual is higher than 8% and pay tax on that.

  2. Yes, you can still report Trading as Presumptive Income and report capital Gains seperately. Since you will have Capital Gains and Business Income both, you will be required to file ITR 3. ITR 3 allows you reporting of Trading Income under Presumptive and capital gains in Schedule CG.

In case you want to clarify more details on one-on-one basis with one of our tax expert, you can book as slot using the below link:

Ask an expert

Thank you.

22

Thanks. Sorry to confirm it again. But still worth and useful to many.

  1. Since my income is 8L which is above min amount of 7.5L so i have to pay tax. Even though turn over is 80L and 8% of is only 6.4 L.

I will book your appointment for further questions and file via only Quicko.

One last question,

My capital gain is negative this year. Negative means no capital again so can I file presumptive taxation ?

23

Hi @Hari_Moorthy

Yes, I would re-iterate again since your actual profit is more than 8% you have to report that and pay tax on that.

Yes, no problem if capital gain is negative you can still file ITR 3 and show trading income as presumptive business income.

Thank you.

24

Hi, i have 7 digit profit in FnO, we have 1month left on this financial yr. i maxed my 2lakh benefit on lic and nps, 25k on health insurance. i want to know what i can buy(from list below) as business expense to reduce tax. If i cant directly show it as business expense can i claim as Depreciation?

my spend options are,

  1. Automobile
  2. Computer, electronics and furniture
  3. Construction (office rework)
25

Hey @Joe

Trading in FnO is considered as a business income and thus all expense you incur in relation to that business can be claimed as a business expense.

I recommend you to book a slot from the below link, where we can suggest you the various expenses you can claim and also its implications on the books.

Ask an Expert

Thank you.

26

Here are responses to your inquiries:

  1. Please refer to Quicko 21 to gain insight into the expenses that a trader can claim in their Income Tax Return (ITR).
  2. It is permissible for Mr. Satish to choose presumptive taxation, given that FnO constitutes business income.
  3. If opting for presumptive taxation on or before March 15th of the financial year, advance tax liability can be settled in a single installment rather than quarterly.
  4. The option for presumptive taxation can be exercised during the filing of the return.
27

Thanks for informative article, as you mentioned Mr Satish can opt for 44AD, so he will declare income as 6% of turnover whereas his income is much higher. With all the transactions being digital & profit being clearly more than 6%, can IT department not penalize the individual for reporting wrong income & evading tax
Kindly share your thoughts

28

Hey @Trader_R,

Under section 44AD, you need to report 6% of the turnover as profits or actual profits, whichever is higher, as income.

Hence, if your profits are higher than 6%, you need to report the actual profits.

29

Which month we should file the F&O loss?

30

Hey @Akshay_K,

For FY 2023-24, ITR filing will start post 1st April 2024. You must report your losses and file the ITR before the due date which is 31st July 2024 in order to carry forward your losses.

31

Hi,
I’ve made 7 digit profit this year.
I’ve invested that money in mf, equity & bonds.
I still need to pay the taxes for this year or I need to pay when I sold my holdings?

I’m managing my books of accounts.
Can’t we show those profit in my asset section?

Thanks

32

Hi,
I am a salaried person and have some capital gains(short and long term)
2023-24 FY, I also had some F&O loss.
Now I want to set off my F&O loss and at the same time I want to use old tax regime.
I know I need to file ITR3 and need to fill form 10-IEA for choosing old regime.
But this was one time F&O trading, from next year onwards I am not gonna do any F&O and will use new tax regime only.
So is it possible for me to switch to new tax regime If this year I choose old regime for ITR3?

33

Hi @Hitesh_Kumar1

In case of persons not having Business Income, the regime can be changed every year by merely selecting the option in ITR. In case of persons having Business Income, the option can be selected only once. Next year if you are not having any business income, definitely you will be able to switch to new regime again by selecting the option in this regard in ITR.

Hope this clarifies. For further concerns, pls connect with me on Instagram @FinTaxSnippets.

Thanks,
CA. Pulkit Garg