I have 9 lakhs in turnover from options Trading but I have incurred a loss of 18000. So, what is my taxable amount? 9 lakhs or 18000? Also, what would happen if my net profit is less than 8% of turnover (lets say 1 crore) ???
The trading transactions are treated differently under Income Tax. The calculation of turnover from the transactions, calculation of tax amount and checking the applicability of tax audit are different for every situation.
Income Head - Options trading is considered as a business income under income tax
Tax Calculation - Tax is to be paid at slab rates as per income tax act. In your case, there is a loss of Rs.18,000 and thus you are not required to pay tax if you do not have any other income
Carry Forward Loss - You can carry forward the loss for 8 years. It means that the loss of Rs.18,000 can be set off against profit earned in future
Calculation of Turnover
There is a concept of absolute profit under income tax. It is the sum of all positive and negative differences from all trading transactions. Eg: Profit from transaction 1 is Rs.10,000 and loss from transaction 2 is Rs.15,000
Realized Profit = Rs.10,000 - Rs.15,000 = Loss of Rs.5,000
Absolute Profit = Rs.10,000 + Rs.15,000 = Rs.25,000
Turnover of options trading = Absolute Profit + Sales
Hope this helps