Biogen Earnings: New Drug Sparks Life. This is my first visit to your blog! I visited several web sites except the audio quality for audio. Many international travelers exchange currency before they depart, divergeent they have at least a little money for a cab at the …. You could speak to your CA about this. Can u please provide me traidng relevant section or rule or any such circular which substantiate the fact, that the forwards commodity contracts does not come under speculative transactions. I have 5 lakhs of Gross Profit and 2.

There are a bunch of reasons for writing this post: Om Prakash Jain a brilliant Chartered accountant who is a Zerodha client and also runs TaxIQ will be assisting us in putting up the blog and also trading divergent forex y answering queries. We will together try to keep the post and the answer to the queries as simple as possible. We would appreciate if the post and the queries are pertaining to Income tax and related topics while trading stocks, futures and options, currency and commodity.

Do note that this is our view and recommend you to consult your CA before taking any decision. Irrespective of the nature of trades you carry out your income tax returns have to be filed before July 31 for individuals and September 30 for companies. In case your turnover exceeds Rs. Under section B, failure to submit the tax audit in time has a penalty of 0.

These slabs are on your total income as an individual which is the sum of all your incomes, this may include salary, rental, trading profits and etc. First most important thing to do for every trader is take a stance on your trading activity because the tax liability would change based on this. Any profit you make by sale of shares that you have held for more than 1 year is considered as long-term capital gain and if this transaction is done through recognized stock exchanges for which the STT Security Transaction Tax is already paid, is exempt from Income tax under section 10 Any income from buying and selling shares even if more than a year is considered as a business income.

This gets added to your income and then taxes paid according to the above mentioned slabs. But since it is a business income you can show expenses in terms of internet, advisory charges etc, any charge that you have incurred for the business of trading and reduce your income liable to be taxed. An interesting thing to note is that if you do the same transaction without stock exchange off the market transactioni.

This is a loop hole that exists in the system presently. Any gain made by sale of shares through a trading divergent forex y exchange is considered as a short term capital gain if bought and sold within 1 year. Please note that it is considered short term capital gain only if you take delivery of the shares to your demat account and then sell the shares. This will have to be added to your other income and you will be charged taxes based on the slabs mentioned in the table above.

Since it is a business income you can show business expenses to reduce the taxable income, for the business of trading some of the expenses can be broadband charges, rental charges, advisory charges, computer charges, electricity bill, professional fees and etc. Note that as a trader you are probably paying higher taxes than an investor, but this is the right approach to take. Any short term loss arising from the sale of shares can be net off against any short term capital gain or long term capital gain in the future upto 8 years provided you have declared the loss while filing the income tax.

What this means is that if you made a loss of Rsdoing short term trading and you made Rsin a property transaction, your net tax liability would be only on RsWhile day trading the rules stay the same if you have declared yourself as an investor or trader. Any profits or losses from day trading is called Speculative; either Speculative Profits or Speculative Losses.

Profits from intraday trading is considered as a business income, so this will have to be added to your other income and pay the tax accordingly. So if you have earned a profit of Rs 1lk from day trading and Rs 4lks from your salary and other sources, your total income would be Rs 5lks and taxes has the be paid accordingly. But you can show the expenses you incur towards trading to reduce the net tax outgo.

Speculative losses or loss from intraday trading can be carry forwarded for the next 4 years provided you have declared the same while filing your returns within due date. Important to note with speculative losses is that it can be net off only against any other speculative profit you make within the next 4 years and not against any other profits Section 73 1 of the Income Tax Act, So assuming while trading this year you made profit of Rs 1lk from short term trading and Rs 1lk loss from intraday trading, you cannot net off both these.

You will have to pay taxes for the Rs 1lk profit and carry forward this loss of Rs 1lk for intraday and net it off against any other intraday profit you make in the next 4 years. Any profit made from trading derivatives is considered as a business profit. You would have to add this income with all your other income and pay tax according to the slabs mentioned above.

But since trading income is now considered as a business income, you can show all expenses that you incur to earn this income and reduce trading divergent forex y net tax outgo. Expenses like computer depreciation, internet bills, advisory bill, software tool, salary you pay to people whom you have hired and more. Any loss is a business loss and this can be net off against any income other than salary either in the same year or if you file your losses in time anytime in the next 8 years.

This loss would include the trading loss and sum of all expenses that you have incurred towards trading. What this means is that if you have had a Rs 10lk loss trading derivatives and earned Rs 20lks in any other business trading divergent forex y than your salaryyour taxable income would be only Rs 10lk Rs 20lk — Rs 10lk Calculation of turnover is to determine if you need your books audited or not, so audit by a CA is required if: Turnover is being calculated here just to determine if you need a tax audit or not.

Back in Mr. Chidambaram our Finance Minister made the long term capital gain tax zero to attract investments in the country and to make up for this revenue loss to the exchequer STT was introduced. Until the assessment yearSTT was given as a rebate and was omitted from the assesment year What this meant to traders like us was that untilany STT paid could be deducted from our tax liability, but today paying STT gives us no such advantage.

Hence the trading community has been pushing the finance ministry to reduce STT or atleast give a rebate like before. I have tried my best to keep this blog simple and do away with all the financial lingo that chartered accountants use. To end this very serious topic with a little rhyme and humor: Post your questions here, Om and I will try to answer it at the earliest.

Please note that the post and the answers to the queries are our personal view and advise you to consult your chartered accountant before taking any decision. Love playing poker, basketball, and guitar. Is there a consolidated statement for the year that i can obtain from Zerodha or should i attach my trading account statement or should i attach all the individual contract notes that i have received in that financial year Number of contract notes in one year would be too high.

Bank statements would anyways be required while filing your returns and this also will be used to determine the payins and payouts made from your trading account. We provide a profit and loss statement for your trading account, but you will still need the contract notes and other statements. All the contract notes will be accessible to you on our backoffice whenever you trading divergent forex y for as long as you want.

That said we are still improving on our reporting structure so that all your income tax needs can be pulled out from our backoffice in a click of a button. The bank account is linked with trading account is also used for other general household expenditure on daily basis. Thanks When you are trading, you move funds to trading account and then withdraw it back. So reconciliation is quite simple. From to till i never submitted it return as i think i have each year loss.

But my total TURNOVER of year is more than 2 crore each year from So is their any requirement to submit any document to Incometax dept. I have no profit any year. Information code :- CIB, Description :-Share transaction or more. From i am Senior Citizen, pensioner of state Govt having annual pension near 2 lakh each year. Please help, any TAX AUDIT required if there is loss??

Is their penalty for ,,? If RIL shares bought x qtyand sold x qty So which case is true???? How to really calculate turnover ,which I required for only Audit which is costly for me nowas I am in loss. Please suggest too much confusion my mind. Go and file for the last 3 years immediately if there was any income. Like I replied earlier, taxes is not just for trading, it is for all your income. Intraday trading is considered as a speculative Business.

Again, audit is applicable only if your total income falls in a tax bracket. Turnover calculation is wrong, I have explained in the post above. Can you really file Income tax return for the previous years. My brother got similar notice for AY FY in July, He tried to file the return,but was not allowed to do so as last date for filing return for FY: was 31st march, You would have to go meet the ITO income tax officer and see how it goes.

My father is a pensioner. His annual pension is In intraday he made profit of and in delivery based equity he made profit of So, his total taxable income will become His total turnover is less than 1 crore. Scenario 1: If he purchases ELSS mutual funds worth rs. In this case will he be required an audit or not? Scenario 2: If he shows business expenses worththen his total taxable income will be Do go through the link I have provided. Very good article and a detailed explanation.

What has to be done in case of audit, check the last chapter of the module. Make sure to start from the first chapter. Thanks for detailed info on income tax. But I read at maximum places that losses of business can be set off up to RS only. So I made profit of 12lax in fno and loss of my business was 4lax but I can set off only There is no Rs limit.

Trading is like any normal business, you can setoff any other business loss with it for any amount. You mentioned that it is also important to file losses when filing returns. Is there a provision to accommodate them now? Shakeel, To get the benefit of carry forwarding the losses, it has to be filed before the due dates otherwise you let go of the benefit.

You can however ensure that you start filing your returns from this financial year onward so that you can use any losses to set off against other profits and save on your taxes. Here i have few clarifications — Can we deduct total brokerage paid, other total charges like STT, stamp duty, sebi charges, turnover charges for the particular year from the profit to reduce the tax liability.

When I have to pay tax? How to determine which tax slab I m into because another 6months remaining, and I may not be in profit? Once money comes to bank account and again I transferred the money to trading account. How IT Dept treat this credit amount? You can pay your taxes before 31st March. Quarterly Settlement is treated as normal payout of funds for the sake of filing IT returns. I was under the impression that STT paid can be considered as business expense.

So what this means is if you bought stocks at Rs and all your costs including brokerage, STT etc adds upto Rs 15, then your actual buying price becomes If you sell this stock atthe actual cost becomes Hence your net profit is Rs 70 and not Rs Traders had always many tax doubts in trading…Thanks for simple writeup…. This I believe what we call adding value to the customers. Such initiatives will be a distinct USP in a market where competition trading divergent forex y cut-throat.

Can you please confirm how turnover is to be calculated for audit purpose. Is it the sum of total profits and losses, as stated by you or is it the total value of the contract? In the above example, Rs50, is profit for the trade but for the trading divergent forex y trade the guy runs a loss of Rs10, then what would be the turnover? I had also made STCG and LTCG from MF SIP investments which i had redeemed this FY 1 Gross Salary Income before PF Deductions — 1,98, Mutual funds in the capital gains head.

Positive turnover of intraday trading in Sales and Negative turnover in Purchases. Since you need an ITR4, it is best to do this through a CA. Can I show business expenses Brokerage Charges, Internet Charges, Advisory Charges, Computer Charges, Electricity Bill etc. If you carry equity for more than a year and make a loss it becomes a long term loss, this can be net off against any long term capital gain like gain in gold, real estate or any other capital asset.

You cannot carry trading divergent forex y a profit even if you keep the cash in your trading account. If you make profits you have to pay the taxes the same year, but if you make losses you can carry forward. If we make a loss in Free cot indicator for metatrader blu ray and equity short term, can we net off from other income like salary, interest etc??

Alok, Tushar is correct. This is a very very useful information for all traders. Usually I file my returns myself thru online and last FY, I could not do so because I had to declare the losses and was not knowing where to declare… Then had to contact one of the professional who did the online return with my ID itself and asked me to courier the acknowledgement myself and he charged me a hefty fee.

Profits in Trading divergent forex y should be added to my salary income and will be taxed according to tax slabs. Losses in Derivatives can NOT be deducted from salary income but offset against any other income in 8 next years. I even approached a CA and he advised me not to show Derivatives income. Which ITR form should be used to file IT when one is doing trading in Derivative?? I am assuming it is ITR 4 Really helpful and clear info.

Thank you for info about a very critically important topic. Best regards and cheers. Thanks for your initiative in the taxation, in which many of us almost get confused. I have few questions. I am resident, living in Indiausing whichI am actively trading in Zerodha. The money sent to me by my husband is taxable? Or I have to pay tax only to the Profits in trade?

Money sent by Husband to wife is not taxable, it is not an income but a capital receipt. While filing your taxes, you just have to show this money as a capital receipt from your husband. While trading if you make profits in your trading account, then you have to pay taxes on the profit, but even if you make a loss make sure you declare it. The blog above explains on the same. I have doubt on US shares allocated by my company which are listed in NASDAQ.

My company allocated unvested shares last year on Feb28, That shares will vest on this month. How can decrease tax on those shares? Please request to advise? In your case it is not so as they are listed on Nasdaq. In such a case any gain will be considered as an income and should be added to your other income salary, rent etc and you have to pay taxes according to normal taxation as per the slab you are in. This year i got 3L income from sold the Nasdaq listed shares.

I have nearly 2. Can i set off this income with last 2 years losses? Can i get refund with setoff profit with this year returns. I have Over Draft for Fixed deposti. Monthly i am getting interest. I paid interest on Overdraft. Can i OD interest setoff against FD interest? The critical thing here is if you have filed your losses of the previous year and if you have, is it done like a trader or as an investor. If you have filed it as a trader, yes you can setoff the 2.

So what this means is if you have as SB interest income, the first is considered as deduction and the remaining is added to your taxable income. Yes if you can show that the overdraft on FD is for the purpose of trading, you can show the interest as a business expense for trading. This can be setoff against your other income. I disagree with you on setting off losses from business income against gain arising from shares sold on NASDAQ. Any gain arising from the sale of such shares form the part of employees income under the head salary and any business loss cannot be offset against salary income.

So the gain of 3L will be added to salary and taxed according to normal slabs. However interest earned on FD, RD etc which is normally taxable, can be used to offset loss in business income. Thanks Neo, I also had the same doubt and you clarified the same. Nithin, can you also comment so that there is a conclusion? Accordingly set-off against the capital-gains part is possible if someone has capital losses short term or long term. My question is related to declaring the loss in derivative trading.

I have bank deposits which return Rs 75, as annual interest. So, can I declare my income from sources other than salary as Rs 25, 75k — 50k now? Say the loss you made this financial year trading markets was 1lk and your rental income is 75k. If you are declaring trading as a business active traderyou can net it off against the rental income this year. So you can net off 75k of your trading loss to your 75k rental income.

You are still left with a loss of 25k, which you can carry forward to the next year. Now this loss that is carry forwarded to the next year cannot be net off against your rental income, this carry forwarded loss can be net off only against any other business income of yours. Is it still mandatory to file returns because he trades in market? If yes which form he has to use? Can he get benefit of carry forwarding the losses if his salary is the only income?

But my advise would be to still file it as it brings about a financial discipline and will help you in future when you approach a bank for a loan or other such activities. It is not mandatory to file, but if you are filing you still use the same forms which I have mentioned in the article above. Yes you can get the benefit of carry forwarding the losses even if salary is the only income.

But to get benefit of carry forwarding the losses, you need to ensure that you have filed your returns before the due dates otherwise you let go of this benefit. How and where one can declare that he is trader or investor What I could gather is choice of ITR form says it all? Is there any difference in taxation rules for intraday derivatives and derivatives trading with carryover position? Yes the choice of your ITR forms itself tells about if you are a trader or investor.

A person who is doing BTST trading is not really an investor, he has to consider himself a trader. As a trader, the profits from BTST becomes business income. Your assumptions are correct. Here is something that makes it tricky with BTST, a lot of brokerages including some big names when you buy shares and sell as BTST, still end up taking delivery before selling them, so they can also earn on the DP charges.

There is no grey here. It is clearly a case of delivery transaction as you have paid STT which is applicable when buying and selling. The NSE records will show that it was a delivery based transaction. Thanks for nice initiative of z-connect. Would like to know if we make a loss in FO short term, can we net off from salaried income in the same Financial year or we need to wait for profit next year for the setoff. How to get tax benifit out of the short term losses? When I say business income it could mean your rental income, interest income this can be set off only in the first year or any other similar gain you make trading divergent forex y than salary.

Thanks a lot for this great initiative. Request to keep this thread alive. Kindly let me know what would be my tax trading divergent forex y. Note that this income from markets though is business, what it means is that for a salaried person it adds to his salary income and you have to pay taxes according to the slabs. As I said earlier, it is not being compliant to have 2 different demat accounts to show you as an investor in one and as a trader in another. As per below CBDT Circular.

Where an assessee has two portfolios, the assessee may have income under both heads i. One of the reasons I was advising to show everything as trading portfolio in such a case. Only intraday trading in equity would be speculative. For a trader, Long Term Capital Gains for equity held for more than an year remains tax free or the same has trading divergent forex y be included in business income.

For a trader, the long term capital gain is a tricky thing, it depends on how you have treated the investment on the books. In this case you have to pay a long term capital gain tax. To explain you as an example. On 31st march, assume Reliance is atso your notional loss is Rs When filing your return you can net off this notional loss on the stock with your trading gain and hence you pay tax only on Rs 1lk — Rs loss on reliance.

You are supposed to do this as a trader and in such cases your long term capital gain tax will not be zero. Intraday equity trading is considered speculative. Can u please provide me the relevant section or rule or any such circular which substantiate the fact, that the forwards commodity contracts does not come under speculative transactions. As per section 73 there is no such distinction given in respect of speculative contracts which requires actual delivery.

Also from the judgement of ITAT Delhi in the case of ITO v. Ethno Financial Research Pvt. There are certain things which are debatable and what we are posting is our view, please ensure that you clarify with your CA before filing your returns. There are many cases which you can google for where the case has gone in favor of the argument that we have mentioned.

Just have a small clarification, suppose I receive 50k as rental income every year, and I have made a lost 1 lac can I set off every year against my rental income. If the loss is intraday equity trading then it is considered as speculative loss and that cannot be set off against your rental income. This blog is really very informative, thanks to Zerodha for educating your clients and also for giving such a nice brokerage services in India.

A If we are filing IT Returns as business profession in current financial year as a professional trader and in the next year if we stop trading can we file a IT returns as salaried employee ITR 1 or as an investor if there is any small investmentis there any impact if we change our IT returns method year on year. How the losses of current financial year can be recovered in the future? B Can we adjust our trading losses for income from dividend and bank deposit interest.

Yes you can change yourself from a trader trading as a business to an investor or vice versa when filing your returns from one year to another. But to do this there has to be some kind of justification, trading divergent forex y your case if you stop trading, definitely you can say trading divergent forex y you have gone from being a trader to an investor. Our advise is to not do it frequently and not to do it for mere tax planning, it will show up in the future.

Since you have already filed your loss, you can keep netting it off even when you convert yourself from trader to investor. You anyways get the benefit for the next 8 years to set off your losses. If you make 12lks profit then it becomes your business income and you will have to pay taxes as per the slab provided above in the blog. But while filing your return you can declare the various costs like internet, advisory charges, electricity etc any charge that you incur for trading in the markets.

I am a student, hence I have no source of income. I trade say, once a week and delivery based to make very small profits which I can spend as pocket money. Am I liable to pay any form of tax? I have one query. I am trading derivatives. You have explained we can deduct our internet charges, software tool charges etc.

Is there any option to mention that while filing. I mean this is not a business firm, but I trade from my home. So can I deduct my home net charges for the whole year considering it as my loss? Do we need to submit any proof for that? I have made some losses in previous years, but has not declared those while filing. Is it possible to do that this time? Any expense that is incurred for trading is a deductible.

In ITR form there are specific exenditure like conveyance, telephone, trading divergent forex y, electricity and a complete list which is available. Even if there are expenses which are not on this list, you have a section called other expenses, mention it on them. Whatever you mention as an expense keep the supporting document or any further reference.

If you have not declared the losses in time for previous years, nothing much can be done about it. Make sure you start following it from this year, better late than never. I have few query. I doing intraday in equity. Now I want to know that. If my total income from salary and trading cross Rs. Which ITR to be used? If your total income say goes to 2. But because you are doing intraday equity trading, you are doing trading as a business and hence can use business expenses to reduce your taxable income.

Now your taxable income is 2. ITR4 to be used. Even if you make a loss and not under tax brackets, make sure to file your returns. Thanks for the informative article and especially for your answers to all the queries. I would just like to have a clarification, though it may have already been posted. My queries are as follows 1. How can a loss shown in previous years be offset against gain in subsequent years when declaring the IT returns for the current year where a gain has been made 4.

Depends on interest from what, on Savings bank interest you have a deduction of upto Rs 10k under section 80 TTA, so what this means is that only interest above 10k is taxable from savings bank account. No such deductions for FD. Assuming you have a interest of Rs and loss of 20, you can only offset of the gain and can carry forward the remaining Rs of the loss to the next year.

In ITR 4 there are specific sheets for current year loss, brought forward loss and losses to be carry forwarded to next year. We send you quarterly statements from Zerodha and there are reports available on the Backoffice available all the time. Will be running a blog on backoffice explaining this soon. Got to say you guys are doing a fantastic job.

I have been active trader on zerodha from last 6 months and my experienece is wonderful. I have one query related to tax filling. How much maximum limit is there for advisory charges mean can I pay unlimited advisory charges to my family members There is no limit on any expense that you show, just that if tomorrow someone questions it has to be justified. In past 2 monthi do intraday share trading sometimes.

The total turnover in intraday is more than 2 crores of rupees. Whether I had to go for tax audit under section 44AB of Indian Income Tax? What you are considering is turnover of traded value. Let me explain you the difference. If you buy shares of RIL at and sell shares at All such settlement profits and losses together if exceeds Rs 1crore, only then is the audit required. Zerodha is doing best working for trader and investor for many issue. I am very thankfull to ZERODHA.

I have to say this is one best thing you did as this is one confusing and tricky matter. Hats Off to Zerodha. I am a salaried person. I have profit of in equity short term. Currently, I have invested in equity for more than a year and its current value stands at Since October I have been trading in Options and have loss in that. No loss whatsoever can be netted off against my salary, am i right? All the profit and loss I mentioned will be business income, am I right? If its a business income, then trading divergent forex y I add purchase of laptop, internet device etc in expenses?

Is there any difference between intraday and positional Option trading? Is there any loss i can net off against salary? As a business when you buy laptop, internet device etc ,it is an asset for you and not expense. One more query i have. My friend bought shares and took delivery from my demat account. He made profit in that as short term capital gain. I am an active trader.

I would not like to pay tax on his behalf. So what procedure can i follow in this scenario? Thanks Amit, this trading divergent forex y a tricky situation and upto you on how you would want to take it forward. In your case if the other guy transferred money to you which was invested into stocks then it is alright, but in any case try to refrain from such activity. Best thing would be to tell your friend about Zerodha and get him to open an account with us, which we will in a jiffy.

I have incurred loss of more than Put option break even formula hybrid. I am a salaried employee. I have only done long term equity trading shares held for more than 1 year. Kindly clarify my doubts. If you have been investing into the markets long term, holding for more than 1 year you ideally should not suddenly declare yourself as a trader just because there was a loss that you want to adjust with your other income.

As a trader you can set off the losses against interest income, but as an investor if this is your long term loss you cannot set it off against anything else. Thanks a lot for this extremely useful blog regarding taxation. I truly appreciate your efforts for traders. I am an options trader. My queries are as follows.

Can I show my home use as business premise expense and how much? Is there a limit to these expenses? I had purchased a laptop 3 years ago for rs. I did not knew this rule then. ITR 4 is what you need to use. You as a trader still need to use ITR4. Yes you can show whatever is the cost for your trading as a business expense. If you are using an entire room for trading, there is a cost for keeping that room, so yes that much of the rent could be an expense.

There is no limit to the expense, as long as it is related to your business of trading you can claim as an expense. Typically how depreciation for computers is calculated is this. You cannot go back and claim for the first 2 years now. Excelent initiative from your side…. I am a full time trader with no other source of income. I have 2 queries:. Can i deduct EMI on home loan as an expense for calculating taxable income?

But you are an individual right?? So you get the benefit of tax slabs as an individual conducting trading business. You can use the home loan to deduct your taxable income as per section 24 and section C. Your home loan EMI will have 2 components to it. Every year you can show upto Rs 1. Every year you can show upto Rs 1lks which you pay as principal as a deduction to reduce your taxable income under section 80C If you want to know how much of your EMI is going for principal and how much as an interest, ask your bank for the home loan statement.

So you can take benefit of upto Rs 2. You guys are doing the best work. You have really made it very simple for taxation. The related tax consultants costs too much for the points you have discussed here. I appreciate your efforts and hope that you would continue this blog. This is a wonderful initiative from your end to educate investors on Tax Matters. Thanks a lot and keep up the great work.

Thanks a lot for the informative article and your patient responses. I have some questions for you as well on full time trading. I am planning to take up full time trading as a Business from Trading divergent forex y 1, I would not be earning a Salary on the side. Are there any benefits to registering as a business in terms of tax rates? If I trade in my own house on an already available laptop can I still claim deductions towards expenses depreciation on comp, trading software, rent etc?

You can consider you trading as an individual or as a business. Yes you can claim deductions like what you have mentioned as an expense as long as there is a logic behind it if tomorrow questioned. It is upto you. You can take the gross profits and show expenses like brokerage, turnover charges, other expenses and then deduct it from your gross profits or just take the net profit and deduct your other expenses.

Yes subscription charges are a definite expense you incur while trading. So all charges like data feed charges, subscription, advisory etc can be used as expenses. Our Backoffice itself has comprehensive reports which can be exported to excel and analysed. If you are looking at outside vendors, Direct sharesMprofit etc are the options available. If you are doing trading for a living and in profits, it is best to start paying advance taxes. Forex transactions by an Indian individual is not permitted as per FEMA guidelines.

You are allowed to trade currency pairs that trade on recognized Indian exchanges. Do consult your CA on this, because this is not allowed legally. Point 1 The total of positive and negative differencesplus. Point 2 Premium received on sale of options is also to be included in turnover ,plus. Point 3 In respect of any reverse trades entered, the difference thereon.

Confusion in calculating Turnover for Options: Option shorted at Rs. Option covered at Rs. Premium received on sale of option Point 2 : Option paid on account of having to cover the short option position Point 3 : Positive Difference Point 1 : What will be the options turnover if we first buy Trading divergent forex y PE 10, lots and sell the PE afterwards 20, lots. Sorry abrar about the previous answer, the turnover on that particular trade would be just your settlement profit which is Rs It has been answered wrong on this question.

Bank Interest earned: 5, Last date for tax payment online? Chalan no for online tax payment? Though I m a Trader, but can I show as investor while filling Returns? Chalan numnber for online tax payment: Use challan for your tax payment and make sure to select the right asessment year. Did my profits come under short term capital gains covered under section A Ex:my net profit is 10lac. All profits that you make is added to any other income forex trading tax laws yes yours and then you have to pay according to the slabs as mentioned in the blog.

Is it ok or any illegal issue? I have a query. I made a loss of 45k in FNO trading in FY Do I need to trading divergent forex y my account audited? Books of accounts need to be audited only if turnover crosses Rs 1 croreSo audit is not required in your case. But do make to file your returns on time and declare these losses so that you can set off against any future profits.

As per your blog above no matter what size small or big everybody should get accounts audited. Correct me if I am wrong The answer to this question was given before adding the new changes on the blog. This year between June to now, many people received notices from the IT department and we found that this is because of change in section 44AD. Nithin — you are maintaining a very good blog.

We find it very informative and useful. Please keep up the good work. I have a couple of questions as below: 1. I am trading in options. My turnover is below Rs. Or am I required to maintain books of account, calculate actual business income and file ITR4? I also have pension income and bank FD interest. For ITR4-S SUGAM how does one calculate Gross Receipts? I will have to take a further opinion on this. The best option would be to calculate actual business income and file ITR4.

Also add your other income and get benefit of respective deductions. Hence turnover is 20k … am I right? I guess your query on option turnover is for knowing whether you will have to audit the books or not. If your option expires at 0, then you have made a loss of Rs and this would be considered as turnover. For the same query, if we had sold the option in first place, then covered it by buying, what would be the turnover, because in one earlier reply you said that sale premium received plus difference between sale and buy.

Now this is really confusing, to my same question in another reply you have mentioned turnover asjust an hour ago Now here you are replying as Which one is true Had replied back to the earlier post also saying it is Rs and was answered wrong earlier search for ethan hunt, it is in the thread to his query. ITR 1 is for income and interest earning people. I have regular income from job and interest and i m active trader in equity and options.

Which form will i fill? Is saving bank interest taxable? Saving bank interest is taxable but you get the benefit of deduction of upto Rs on Saving bank interest under section 80TTA. So technically you would have to pay taxes only if your SB interest is above I was trying to fill ITR 4 excel sheet for online application. It is very confusing. Is it possible for you to provide me sample excel sheet for a salaried person who is active trader in equity and options and has investments held trading divergent forex y more than a year?

Thanks I found the details for filling up ITR4 form for futures and options trade on a website and have posted the same. Can zerodha confirm if it is the right way of filling up the form, where books of accounts have been maintained. Here the gross receipts mean the net profit. My gross receipts absolute value of total profit plus total loss was about 2,50, only and so audit is not required. This will be a great help to small part time occasional traders like me.

Thanks Sir and hope to get some positive response. Let me see what can be done about this, it is pretty tricky though to put this up. We will try what can be done on this and post on Zconnect in the next couple of days. I am trying to get more clarity on it from my CA friends, but the reason why the automated notice received seems like because of section 44AD. So this would mean that if you have a loss than you will have to compulsorily have your books audited.

My advise would be to consult your CA on this and I will try to find out from officials at CBDT if we can get any clarity on this. Thank you for writing a very informative artcile on taxation for stock market transactions. Please share your views on this thought as it would help many people get their confusion clarified. I contacted CA guys. They have absolutely no clue why this notice is for!!! I called to cutomer care of Income tax office CVC Bengaluru.

Even they were clueless. They too have no answer for the reason of the notice. They do not offer any solution and just told me to revised the return in 15days. Dear Nitin- Please try to get some answer from IT official and a way out for this…I think there must be many persons who would have received these notices…. Thanks in advance for your effort… Dear Zerodha Team. Thank you for checking on checking on applicability of section 44AD for small traders.

Could you please comment on my observation above so that many small traders having both salary and trading income can avoid an unnecessary audit? These sections except 80U are for export promotion business and 80U is for physically handicapped people. So I would say that this will be not applicable for individuals like me and you, but you could consult a CA to double check this.

I read the latest update regarding section 44AD. I am an engineer and have no accounting knowledge. As per your post I understand books of accounts include contract notes, bank statements and DP statements. Are only these 3 things enough I assume these are electronically generated and I can get this through back office. Also could you specify more precisely what all DP statements are required is it only PL statement and ledger or are any other statements required.

Also as per 44D calculating turnover has basically become mandatory for everyone. So with respect to turnover calculation, do I have to painstakingly calculate by hand the gross profits and gross losses? If that is the case it is a nightmare because I may have averaged or added to positions and exited them in 2 or 3 parts and traded the same share many times a day… but the average price and quantity of buy and sell for the day are only given which does not constitute turnover.

So how do I go about calculating my turnover in such daytrading of a single share? Thanks for this support on taxation. This article and thread is the best resource available online for taxation on trading yet! Would it become invalid and losses carried forward over the previous years lost because of this audit issue? And finally, would you like to provide any opinion on error 32 mentioned above? The notice that you have received right now is for defective return and yes you can file a revised return.

Yes the audit report date will be a present date which will mean a delayed penalty of 0. But this way you will atleast be able to carry forward your loss and also not worry about any other penalty from the Income tax department. About the last trading divergent forex y points, they seem to be errors made while filling up the ITR4 forms.

I trade in Options and as on 31st MarchI have open positions of Sell on Nifty options. This means that I have premium present in my account for selling that option. Going per that logic, based on the short nifty option being in profit or loss you can deduct the premium. If it is in loss then deduct as per the purchase trading divergent forex y and if in profit then as per present price. Considering the entire rent of the house as your business expense, especially if you are living in the same place is not really playing by the books.

You could firstly put part of this rent, which you consider is what you are using up for your business of trading as a business expense. Yes even though the rental agreement is not in your name, you could show this as an expense when you are paying it. On wrongful advice of my CA, I filed the returns using ITR-1 and showed the loss as short-term capital loss and also offset it against other short-term gains.

After reading this blog, it seems I should file a revised return using ITR For financial yearyou will have time till 31st March to file revised returns. You need to choose revised return under section 5. Presently there is no guide as such online, but you can ask us any queries and will be able to help you out. For declaring loss, i would need consolidated statement of FY But I have one area of concern: the ambiguity and mixing about the idea of investment and trading. As in my personal case.

I have bought and held shares for more than three years. I sold them last month and got a capital gain of 6 lacs. But I opened zerodha recently and traded for couple of months heavily. In that process I have netted 50, loss. Now, Ideally I should be treated as investor for the 6 lacs profit I got from the shares, right? I have been holding that for much longer than a year If that is the case, then the tax will be zero for that share sale.

Long term capital gain But because, I traded recently, why should I file ITR4 and show the 6 lacs from sale of shares as profit in business? Is there any solution for this? This will be the second best. This is very disadvantageous. If your delivery based is not active and is just like an investment like in your caseyou can have 2 portfolios at a same time, one as a trader and one as an investor. So in your case, you can show your investment from before as long term holding of equity, hence long term capital gain and claim complete exemption.

The short term trading loss can be shown as a business loss in ITR4 and if you have any other business gain you can set it off against it either this year or in the future anytime in the next 8 years. But do make sure to not forget anything, the times are changing, the IT department is going online and getting more teeth. Yes firstly your net profit for the year is Rs as per your calculation. You can add all of these expenses and reduce it from the net profit and pay tax only on that.

Do read this blog and you could probably get your CA to read it as well. There has been a change made to Section 44AD and you will see a few people who have received notices because of this also in the same blog. I traded in equities, FNO and commodities in last FY, incurred losses. How do I declare all the three segments in ITR 4? I do trading full time from home. Can I add my house rent, electricity expenses, broadband charges, advisory charges etc to my loss while filing the returns?

Also, I work from home and is it possible to take the full value of electricity charges and rent for adding the loss or I have to work out some pro rata value for it? About your expenses, as long as you can justify that it was used for business it should be alright. Turnover of 1 crore is to be taken only for FNO segment or will it be applicable to all segments? Should the turnover be calculated on all segments like the FNO segment example given above, club them all together to arrive at actual turnover for all segments put together?

Since I have made only losses in all segments last year, is it really necessary to show the loss in the returns? I have accounts with more than 5 brokers for various segments and most of them do not even have the basic financial reports in their back office, I will have to compile everything from the contract notes which will take a lot of time.

Read this blog for more. An added benefit is that if you declare this loss, which will add up if you are considering the expenses that you have incurred, it will be a sizable amount that you can carry forward for the next 8 years and net off against any future business profit not just trading and avoid paying taxes then. Can you give sample ITR-4 form? In such a case, the books has to be audited by a CA. For No account case I have to fill these details: 1.

Amount of total sundry debtors. Amount of total sundry creditors. Amount of total stock- in-trade. Amount of the cash balance Scenario Suppose I have 90K in my trading account as on 31st march And I have 1 lakh cash in my saving account as on 31st march I have no open position in FNO as on 31st march I have sold an option contract on 29th March and collected a premium of 5k. This position is still open as on 31 march I use my computer for trading purpose. Its hard disk got crashed and I had to replace the hard disk and reinstalled all the software again.

Yes you could, as long as you can justify that the computer is being used for your business of trading. I am a salaried person and regularly filling my income tax through SARAL form. I have two demat account and one is not operated since it is opened. You are requested to guide me, how to show these losses. You cannot go back and file for all the years from before now, it is too late. But what you can do is to ensure that you start following it from now.

The reason you need to show is 1. IT department is going online and they can track all your activities linked to your PAN very easily. Their powers are increasing. Not showing a particular activity could lead to penalty. If trading divergent forex y declare you trading losses, you can set it off to any business profit you make in the next 8 years and eventually save taxes because of that.

Most of your queries are probably answered on this blog, if there is something which is not, ask me for it. I have 1 query:. When filing long term loss as a trader, can I net it off for the next 8 years? If you are showing yourself as an investor and claim long term gain exemption, in that case your long term loss cannot be net off against anything else.

Please provide me a sample filled ITR4 form. I want to learn from it. This is first time of filing. I am a full time trader. Is the AY is ? Yes this would be Financial year or AY First of all I would like to thank you people for providing such trading platform and also this blog relating to taxation. I have opened trading account in my wife name and trading behalf of her she is a house wife and no source of income So, I transfer the fund to her account and start trading.

Your wife can show her trading activity as a business. In a business whatever is the related expense that you incur for trading can be shown as an expense like your internet cost, system depreciation and etc. If you have made profits, the expenses would reduce your profitability and hence the taxes, if you have made a loss the losses get increased because of the buy facebook put options jelly roll. This initiative is to educate our clients and we are providing only online support.

You can ask us any question here and we will answer it for you. Both would ideally have to be considered as a business. It is also best to be ready with a bank book explaining if any expense on your bank account trading divergent forex y for the business of trading. If you find any mistake, comment. If the words are not clear, right click and open the image in a new tab. It is all correct, small addition is that as a trader in the current year the loss can be adjusted against any income other than salary.

However the losses brought forward from the previous year can be net off only against business income. So tomorrow you might get a notice and then you can clarify saying section 44AB as you have mentioned above. What I mean to say is it is much better to take the 4 to 5k audit today rather than risk the notice which can cause you potentially a lot more in terms of time and money. I have a follow-up question to my last query.

Please let me know which ITR form is applicable to be filled. ITR IV doesnt have provision to show salary income. You can also show all your business expense and hence reduce your net tax outgo. Since I incurred only losses, I have not filed for any of the year, which I am planning to do now. Can you suggest any CA in Bangalore or Hosur to assist in filing the returns. You could use any CA, we have practically covered everything in this blog.

I am a housewife and my husband is a government salaried employee. I am using his fund for trading in future and option, equity, commodity and get loss 1. Income tax is charged on his salary. Another question is this, if i get benifit 2 lakh on my trading and his savings are 1. Firstly, if you make a loss trading, this cannot be used to set off against salary income of your husband. But to do this in the future, you need to declare your trading losses while filing your returns this year Secondly, if tomorrow you make profit of 2lks after showing all expenses that you incurred for trading and if your husbands taxable income is 1.

Obviously, that all your expenses should also be proportioned in the same ratio. I contacted another CA who told me that last date for filing revised returns for FY was and it is late for any corrections. I got the ZERODHA FNO Profit loss report from zerodha support team. Is this report correct one to find out the turnover or any other facility available zerodha?

Net Receivable : x. Net Payable : y. Turnover Charges : b. Securities Transactions Tax : c. Stamp Charges : d. Service Tax : e. And, I bought few FNO contracts in earlier financial year before 1st april and sold in the april I sold some contracts in this year before march 31, and bought back in the april And, I have deleted some of the contract notes got through mail.

Is there any place to download these contract notes in the zerodha. And also, i have a confusion, at one point. My turnover is less than 1 crore. So, Still Do i need to get my books audited by CA for returns??? For the open positions coming into a financial year, consider the opening price as on 1st April as the opening price of the contract for calculating taxes for this year. Similarly if you have not closed a position, consider the closing price of 31st march as the closing position.

Can you advise me where can i find opening price of the contracts for the old contracts. I searched in the zerodha but did not found any where. Srinivas You will not find it on Zerodha, You could look at the closing price as on that particular day by visiting NSE website and looking at the bhav copy there. You will get the price of that contract as on that day. Turnover would be your total net receivable and total net payable. Exact figure is 7. SEBI Charges : f Trading divergent forex y is best to keep all related questions in one query, I have deleted your separate post and made it part of this thread.

When I consult some CA, they are saying their professional charges for auditing is 10k. Can you tell me tentative auditing cost for the traders? But the thing is, you would have declared wrong information and there are chances of this coming back to you, very little but definitely a small chance which is best avoided.

If you have not filed for last year, you can still file it now, but you will not get the benefit of the losses being carry forwarded. I have another question, regarding my personal Difference between shorting and put options 888. Which ITR form should i use to file such thngs. In the online filing of ITR1 there is a trading divergent forex y Income from house property, can i put my Rental income-Interest as loss?

Thanks in advance I met 2 CA guys to get my tax filing done. ITR4-S forex trading rates india express be used for the people whose books need not be audited i. If you feel the ITR4-S is not applicable, can you please give some CA people contacts? Both ITR 4 and ITR 4S can be used, but it will be easier to use ITR 4s if there is no tax audit since lesser options to worry about while filling the ITR form. In that PNL report that you are looking at, the bottom of the page you will see net payable or net receivable, sum it up and that will be your net turnover for the year.

Q1 The above article says:. A person trading derivatives is automatically considered as a person who is an active trader or trading as a business. Any profit would be a business profit and you would have to pay taxes after adding it to your other income and according to the slabs mentioned on the table above. Q2 The article also states. From AYthis was made to include all businesses including the business of trading. In the above case, only futures trading with a loss of 2 lakhs would have required an audit by CA.

Basically when you get your books audited, you cannot keep trading and other income as separate. Everything gets combined and you need to have this audited. Could you explain, based on which report from zerodha total turnover will be computed? In Profit Loss report, each contract profit loss is listed monthly. Can you please guide me in filling 51a, 51b and 51c i. Gross receipts, gross profit and expense? Understand that 51b doesnt take negative values, and 51c would include brokerages.

Coming to your query, Do read this blog first, there has been a change in section 44AD which has brought a lot of businesses under its umbrella including trading the markets. In your case since it is a loss you fall under this category. You can show your losses and carry forward this loss to set off against any business profit in the future. Commodity trading be it intraday or carry forward similar to equity futures is considered as a business income. So you need to add profits to your other business income or debit losses from other business income.

You can also debit all expenses incurred towards commodity trading, after all of this you have to pay tax according to the slab you are in as mentioned on the blog. And this is what you said should be used to calculate the Turnover i. But I checked with my CA and he told me that the net profit or net loss is to be calculated per round trade basis on FIFO basis.

How do we treat this in our returns. For these cases where you were holding contract before APR, you can use the opening price of the contract on April 1st to be your purchase price. I have trade in equities where I have mad intraday loss so I have to show it and what is the last date to file itr with showing it, and also having query for cash transaction, as I have did this loss for my friend, he was played in my account and incurred loss for that he gives cash which i deposit in bank and transfer to company.

Last date is 31th July for those without audits and 30th Sept for with audits. In your case since you have done active equity trading and also made a loss, according to section 44AD you will have to get your books audited, so you will get time until Sep 30th. Also I dont have any other source of income, is it mandatory to e-file and if I dont what is going to happen. What is consequence if I get notice from the IT department.

I am a student and dont have income over 2lk. What is going to happen if I neglect the notice in case I receive the notice, is any thing serious. Can you see the last query on the blog just put up, gb Guess he has just received notice for not declaring. IT department in India is going online and all transactions are linked to your PAN and to your bank accounts. Advise would be to file your returns.

What I meant to say was that the consequence could be anything, you might get a notice or may not get notice tomorrow. Chan Aug 5am. But this is not something which is advisable. I do have the following sources of income. Interest income from Fixed Deposits. Q2 : I have filed my return through a tax consultant. You need to use ITR 4 or ITR4S for this. Since it is a business loss, you can set off the loss from any gain other than your salary. I went back and asked my tax consultant to file for a revised return show it as business loss to get a refund.

Is there anything that you can help me with the details. Section 43 5 of Income tax act. I have received a letter from IT department. I have not filled the IT return from onwards. They give me 10 days time to proceed with the details for FY, This is the message that we are trying trading divergent forex y tell fellow traders trading divergent forex y, IT department is going online and these kind of notices will only go up in the future. As far as your notice goes, meet a CA and firstly ask for extension in time, because 10 days may not be enough time for you to get 3 years details.

Your CA can file for your 3 years as delayed returns. If you have taxable trading divergent forex y during this period, then there could be a penalty in terms of interest on taxes you are due. How much it will cost for consecutive 3 audits. You would anyways need help of a CA because you are filing delayed returns. Around 10k should be a decent price per audit, but since you have 3 years, you might be able to push for a better price. Yes Girish, you can use the ITR4 and since you have made a loss, you will need the books to be audited by a CA as well, in which case the last date is 30th Sept.

Assuming that she has no income and the margin requirement for the transactions are with money given to her by her son and her husband and she has only overall loss in each year whether she it is still mandatory to file the return? If no return is filed for the earlier years whether can it be done now? What are the legal implications involved? What is the last date for filing the return for the assessment year ?

Firstly the biggest mistake people do is to assume that no profits means no need of filing your income tax returns. It is mandatory to file your returns even if you are making losses year on year. You get a notice tomorrow asking you for the returns based on the turnover you have done on the exchange. We will be moving the blog into a completely new format very soon, zconnect was initially setup to train people within Zerodha and had not anticipated the popularity.

And Sold 5 in But I get the point you are mentioning, if you are holding shares from before. In such a case you would have to manually do this, atleast for now. Let me speak to the CA and find out if there is anyway to provide more than 1 years in one statement, I doubt it though. For example with opening price as purchase price I may have 0 profit whereas with original purchase price I may have Rs. Since we need to know what thumb rule income tax department is following and we need to adhere trading divergent forex y the same else there could be a trading divergent forex y default.

But I have initiated the process to find out if it is allowed to do so, if we you are holding an open position. Bhavesh, this can be done both the ways, considering original purchase price or you can take the value of all your holdings as per 31st March and then for the present year see your profitability based on that of 31st March. The reason we have mentioned this way is because it is the easiest way to file. Both the methods are alright, remember there is no guidelines from CBDT on all of this, we have to use a method which we find it easy and be consistent to it.

Thank you Zerodha, this blog is invaluable and has been of immense help to us, really appreciate this effort!! I think professionals are exempted from newly introduced Sec 44AD. The thing trading divergent forex y notice again is that it is not a guarantee, last year apparently 10lk notices were sent and this year it should be higher.

So you getting or not getting a notice is again a chance. I had very tough time in e-filing tax this year so I herewith request you guys to give step by step procedure in e-filing that helps in filing independently for those who have turnover less than 1crore and also dont need CA Audit Please post in perspective of whose income is less than 2lakhs. During the course of this year, we intend to introduce a tool to help benefit all of you in terms of filing returns.

Also cari kerja freelance sabtu minggu have 2 lacs equity derivatives loss this year so can i adjust it against commission income this year? Also to let you know that i bought another property for 35 lacs agreement in joint with my wife with half of proceedings coming from her account, so can i buy another property against sale of the 1st property? As long as you sell the property after 3 years from purchase it will be considered as a long term asset.

Out of this 1. I AM A STOCK BROKER. Intraday equity trading loss is considered as speculative loss and can be set off against only speculative gains intraday trading. So this loss you can carry forward by declaring and set it off in the future years whenever you make a profit. Since last June I started delivery trading from some other broker Religare and since 17 th July I started Intraday trading. I started trading from Zerodha. In june I sold shares of Suzlon Rs.

These share were purchased 2 years back Rs Now suppose I want sell ITC shares purchased in year at face value. So please let me know how the loss in case of Suzlon and the profit in case of ITC times of face value before indexing will be treated for income tax purpose. Trading divergent forex y reading your blog I trading divergent forex y I should stop trading as a trader to get the benefit of long term capital gains.

This could be still kept separate, just make sure to clearly mention what is your long term portfolio and what are your short term and keep all contract notes etc handy to prove this if required in the future. If you are actively trading, you can keep a short term trading portfolio, so this loss on suzlon can be showed as a loss on your short term portfolio and net if off against any gain you make which is short term.

A lot of traders keep separate trading accounts one for long term investments and one for short term trades to keep both the accounts separate. This is a very tricky subject and since there are no hard and fast rules given by the IT department, tough to explain. I already have two seperate accounts. Dear i am intraday trader in stock market. From i am Senior Citizen. URGENT Intraday trading is considered as speculative business and comes under the head of business and profession only.

If you are doing this as a regular activity, you need to get your books audited. By not declaring loss, you have forego the benefit of carry forwarding the loss and netting it off against future profits. File the returns now and whether penalty or not will be dependent on the Income tax officer, but as long as you have not tried to hide anything in terms of profits, you should not have a penalty.

File all the returns from previous years from right now and since there is a loss you will not have any tax as such to pay. Thanks in advance Each person is an individual assessee and he can get benefit of upto the extend of investment. Is there different criterion for audit and mandatory keeping of books like cash book and ledger? I mean when is keeping of books mandatory? Is my understanding correct For turnover calculations long term delivery buys which will not be sold which will be kept for more than one year is not considered?

We have to take the rate as on closing of 31 Mar to calculate the profit and loss? If that is the case how can we claim benefit of 0 tax under Long term cap gains? The turnover calculation comes into play only for deciding if your books need to be audited or not. Since there is no clear rule on how to calculate turnover, my advise would be to keep your books and have it audited to avoid getting blanket notices that IT department has started sending from this year, especially if you are an active trader.

Yes you can keep your long term buys in a separate ledger and not consider that for turnover calculations for your active trading portfolio. So you need to clearly demarcate between the trading and investment portfolio. Yes speculative losses can be carried for 4 years. Suppose I trade in Oct nifty futures contract, say I have traded 4 times in it on different dates. Thank you for the prompt reply. This amount paid by cash. A What will be the capital gain tax on this amount 10, Whether it will be short term or long term capital gain tax?

How is it calculated? Please give the breakup. Please note both wife senior citizen and son annual income is 1,50, each. B Will wife and son have to share the tax equally, as both are now joint holders of the land. C Can they save the tax by constructing a new house on the vacant area of existing plot of land. If yes, during construction where should the money be kept I mean any special account or just normal savings account?

What documents are to be kept as a proof of construction of house? What is the time limit for construction of the house? In your case the Property is purchased after On the death of original buyer its inherited to his legal heirs In that case though the asset remains long term the indexation will be from financial year only. You can apportion the total cost to cost of land sold, The amount received is sale consideration for the purpose of capital Gain.

What will be the capital gain tax on this amount 10, It will be long term gain … For Trading divergent forex y do visit Some Trading divergent forex y who can help you with the same. Will wife and son have to share the tax equally, as both are now joint holders of the land. As per Income and slab, taxes will have to be calculated. Can they save the tax by constructing a new house on the vacant area of existing plot of land. There are various capital gain Schemes, one of them is opening a Capital gain Special account and is not your normal saving account.

The Time limit is 3 years to Construct. You would have to presently manually show which is intraday and which is delivery. While trading deliverythe credit and debit adds upto turnover and not the settlement profit and loss and hence the equity report shows that as turnover. As mentioned above, in case of equity delivery based trades the money gets debited from your trading account and then gets credited, so you need to consider this as turnover.

So net tax will be around trading divergent forex y. Case 2: Since your profit of 20lks is on shares held for more than 1 year, it becomes long term capital gain, this is exempt from taxes. You will have to pay tax only on your 4lks salary, which based on the calculator will be around 20k. Short term capital gain is basically the profit you make from short term trading in equities. By short term in India means equity position you take and sell anytime before 1 year even intraday tradingif you hold it for more than 1 year it is called long term capital gain for which there are no taxes.

I have bought Ibreal in futures about 10lots and got profit of 6lakhs in carrying forward the position for 3 months and in the same year I have bought equity share and kept it hold for 4 months and got profit of 4 lakhs. What is my tax liability? Should I show myself as trader or an investor for two different trades….

Over all I have profit of 10 lakhs for which tax slab my case fall Short term capital gain or business income. So this profit of 10lks should be added to your all other income, since you have no other income, your total gross profits is 10lks. In this 10lks you can reduce all the expenses you have incurred trading divergent forex y trading, internet, brokerage, phone, computer depreication, or anything else assume this is 1lk.

This could be planned much better, so do speak to a CA. From above reading i inferred that i belong to trader category and not an investor. Am i supposed to file ITR-4 form? Once you start trading actively, you are like a businessman no matter what your age or what you do. Since you have just started trading, the returns for has to be file by next year september, you have to file them only once the closing of financial year which is 31st march Until then there is nothing you have to do, but make sure to keep a tab on all expenses you incur towards the business of trading, it can be shown as a business expense and would bring down your taxable income.

I have started trading this year in June and this will be the first time I will have to take the help of a Chartered Accountant to file returns I have been filing myself so far. I am not sure which Chartered Accountant to go to. I live in Chennai. I understand that I will engage their services at my risk and responsibility, but I trading divergent forex y some contact. I have understood all these matters which u have considered in your blog …. I am also a CA student ….

Most of the traders I know use the codebecause it is for trading generally and easier to categorize trading the markets in this code. The tricky thing about calculating turnover is that there is no said guideline from the IT department especially while trading the markets. In case of equity delivery based trading, calculating turnover is simpler, basically trading divergent forex y of all debits or credits because of your purchases and sales of shares. To come to your actual profits, you could take the PNL report from the broker and then substract all the expenses to get to your actual profit, the simplest way to do so.

Yes, you can depreciation of car as long as you think it is being used for the business of trading the markets. The idea is to be consistent with your expenses year on year and not to randomly add or remove expenses. Hi i trade only in mcx commodities i have incurred losses for last 4 years. I have been filing returns thru CA every year. I want to know for mcx how many years i can fle losses 4 years or 8 years.?

Trading on derivatives on either of the exchanges can be considered as a business income, so you can ideally carry forward these losses for upto 8 years. Filing the capital gains every year is a big head-ache. If you could add a software integrated with back office for capital gains, then u will be having a great product at hand and it will differentiate u from the crowd.

Makes sense Francis, we are working on our new backoffice, and we will have a full fledged capital gain report for you on that. I wanna book a LTCL from sales of stocks. I understand from your article that this can only be done if the stocks are sold in an off market transaction. In this context could you please clarify the following: 1. May I sell to my spouse and book the capital loss? May I sell to my son and book the capital loss?

What must be shown as the purpose of the sale? Are there any specifics which I must be careful about so that the loss is not disallowed? It is best to have this transaction at around the market price of the stock, to avoid any issues in the future. Yes all you have to do is use the DL slip and transfer it to the other account, and get the cheque for the amount in return.

Make sure to document all these transactions properly. Purpose of the sale could be the need of capital for whatever purpose you have. You could speak to your CA about this. As long as you document this entire transaction properly, there should not be any issue. It is best to double check with your CA on this. I am a real estate broker and wanted to know how much Tax I would be required to pay if I earn a Brokerage between 1 to 2 Cr. Please do reply Hi Ashvin. But if you look at the post above, the tax slabs are mentioned, you will have to pay taxes according to those slabs.

Have been advising everyone, that they need to consult their CA before taking any decision on this. Multiple people I have spoken to have different views on this. Last year many traders received notice for defective returns, and it was mainly because of the applicability of Section 44AD. That is when we ran another postsaying that if you have received a notice, it could be the reason. The reason for us to take the view was because, trading is not really mentioned as a profession anywhere.

As per 44A profession defined are legal, medical, engineering, or architectural profession or profession of accountancy or technical consultancy or interior design or any other as is notified. The case study you are referring to I guess is relevant to a stock broker, and not a trader. But as I said, it is our view, and as a trader when we already live in a stressful environment, it is always better to be safe than be hassled later.

This however does not lend sanctity and is not legally tenable. I repeat that there can trading divergent forex y only 1 truth and not multiple versions of the same truth. I am not faulting your advise that everyone consult their own CAs but when you post for Zerodha you need to stand by your advise. Now trading divergent forex y raise a question on whether trading is a profession.

I urge you and I have done the same and I am also a trader to read the guidance note prepared by the CA institute on 44AB and I urge you to ponder a bit on the exclusions in Sec 44AA I have given page nos in my prior post and its clear that trading is as much a profession as is architecture or accountancy or painting or technical consultancy.

Now I come to the actionable — yes consult your own ca is a good advise but in that case there is no need at all to give prior pointers. I think what you may wish to do is to look up the ca institute note on sec 44ab google it and u will find this and make a professional decision. Else get the view of one respected ca firm from the top 10 and let them give it to you in writing and you can publish it with their name and view.

So thoughtful of u to post on one of the confusing topics. Keep up the impressive work. Somy capital,profits,losses,turnover, everything is less than 2lacs. I buy equities only and hold some stocks for more than a year…while some stocks i sell off within a year…. Now, case1:I am an investor. So My total income is less than 2lacs…so i am exempted from taxes. There is no thumb rule as such when trading equity, but if you are trading futures and options, currency or commodity, you have to declare it as trader.

But if your activity is the way you have described, you definitely look like an investor to me. If you declare the same as a trader, you need to add any income from trading with any other income of yours including salary, and pay tax according to the slab you fall in as per IT department. But yes, if trading is your only income and if it is below Rs 2lks, there will be no taxes. Thanks for the superb explanation.

I am happy and greatful. I have 5 lakhs of Gross Profit and 2. Your gross profit, show under Sales and Gross loss as purchases. Brokerage, taxes, and other charges has to be shown separately on the ITR. Logically what you are saying makes sense but technically speaking, there is no actual purchase or sale. Hi Nithin thanks for the reply. In fact I would request that the moderators or anyone having a personal link with a senior IITO, to ask them for clarifications on the same to settle the issue once and for all.

I had approached the helpdesk in ITO office at Bangalore, but they were unable to give me the reply as I had approached them as an individual. I had discussed CA whom I knew personally, and all 3 gave 3 different views ranging from what you suggested to showing it as other income to showing just the profit as the sales when I filed my returns last year I trade actively on stock market,both in intraday and short term.

I am also a salaried individual and as part of income tax filing my company has asked me to submit form c before mid feb ,which will have details of all investments made for last year. They would need this to deduct appropriate tax from my salary for month of feb and march. In this regards, I had the following questions:. Or i will have to declare this while filing of Tax returns? Please advise which ITR form I should use?

I have not yet approached a CA for this and want to understand if Zerodha provides assistance in tax filing? If yes please let me know where i can get additional details. Form C I am presuming is details of your investments under Section 80C so that they can give you the rebate to the extent of your investment from your taxable salary income. Your share market transactions details need not be given to your employer. You can calculate the profit and pay taxes accordingly when filing the return.

As i am beginneri tried everything i. My loss from sharekhan trading account is around 50, Being a PSU employee my tax is already start deducting by my employer for FY Now my question is. Should I have to show this loss to my employerif no then when and how I have to fill Income tax. Can loss and profit of two Demat account will be clubbed?

If yes how and through whom can i done audit. What will be the procedure of Book audit. Which IT from is right for me as i m a PSU employee and salary is the only source of my income. If you get the books audited, the cost might be much higher. Is it true about the section 44ad that account needs to be audited if turnover is less than 1 crore and if there is only losses…. It looks sumthing wrong with the system. Do check this blog and a bunch of queries posted with people who have received notice for this.

Ya…i read the blog completely…. I think there is sumthng wrong in the taxation system…. Is it normal people who hav received it who does not trade with turnover of mr than 1 crore…. There is something seriously wrong, and we have already represented this to the IT department. Is the notice received to people who only are in share market?

Or are they working proffesional too who do part time in stock market… Everyone, notices are going to all kinds of people, I guess all these are auto generated notices. I am share trader from I invest in market rs. My total turnover is 1crore in and I am private tuition teacher my income is rs per month so not file itr for and and Firstly you need to check if your turnover is actually above 1 crore.

The blog explains how to calculate the turnover, do that first to check what your turnover is for those years, and let me know. The cardinal error he has done is not filing returns at all even when he has done stock market transactions during all these years. Firstly make sure that you trading divergent forex y filing from this year on time, about your previous years can you tell me your approximate yearly turnover.

Yes brokerage, software fees, tips, etc etc, all can be shown as an expense… could u pls tell me what to do if turnover is less than 1cr. Kumar, you can even now file delayed returns for year and if your turnover was less than 1crore audit not required case. As I have mentioned above make sure you are calculating turnover the correct way, trading volume is not turnover.

If your turnover is more than 1 crore for these 2 years audit required casethe only way you will be able to file now would be if in case you receive a notice from the IT department. Kumar, Turnover is not the contract turnover, it is the settlement turnover, you need to calculate it the way it is explained on the blog. I have sold few stocks this year worth I might sell few stocks holding from long term in the coming years also.

This year I just tried trading in derivatives. I bought 2 lots of dr reddys and made a profit of 25k. Please tell me how the taxation be. This is the first time I am trading in futures, I normally dont trade in futures. I have gone through the blog above and got a fair idea on the same. But I want to have a concrete idea on taxation part for the case that I will sell the long term holdings in the coming years and want to frequently trade in the futures segment … How should I file the returns.

For example say I sold 10 lc worth shares long term holdings with profit of 9. Dil Mohan Mohan, you can actually consider yourself as an investor cum trader, investor because you are holding long term investments. Show 2 portfolios, 1 as long term and one as trading. This way you can claim all the benefits of exemption on all your long term gain, and still do futures trading. Hope this clarifies, do consult your CA about this.

I have started trading only from May in futures segment and little in cash segment intraday. So I understand that I come under trading business. My turnover is more than one crore definitely, but I do not have a record of what I did all this while. How do I determine my taxable income? If you have started trading from Maythe financial year end is March 31styou have to file all your returns only after Mar 31st.

Turnover is not your contract turnover, it is settlement turnover, so ensure that you understand that correctly. The only need of turnover is to determine if you need an audit or not. Most of what you need to do is already explained in the blog above, and yes you have time till Sep in case your books have to be audited turnover more than 1 cr. Can you help me understand the meaning of audit? You have mentioned that if turnover is greater than Rs.

What exactly does it mean? Vishal, Business expenses are as good as losses, and if filed on time can be carry forwarded for 8 years. The assessee will be liable for penal interest under section A. A penalty of Rs 5, may be imposed under section F if belated return is submitted after the end of the assessment year. If the return of loss is how did you learn forex xe after the due date, a few losses cannot be carried forward.

If the return is submitted belated, deductions allowable under certain sections will not be available. I do on and off trades in futures buying stock and sells them when they are in profit or sometimes loss and or carry forwarding them also and simultaneously in same account I keep the delivery of equity of stock for months …. Should Gains of stock future fall in general tax slab?

And gains from equity stock which I keep for months fall in short term capital gain slab? Equity short term, if you are an active trader you have to show it as a business and hence it will also fall in the general tax slab. But if your short term trading is small, you can maintain a separate portfolio, and pay according short term capital gain. Make sure to show all your trading expenses as well. Thanks sir for your immediate reply. Please make it more clear. In future stocks I have earned 3lakhs and in delivery I have earned 8 lakhs.

So have revealed every trade above. Please tell me should I file returns and show myself as trader for all trades and fall in normal tax slab or I have file different for delivery based trades whose delivery time was months. So add this to other income, reduce all the expenses incurred for trading, and pay tax as per normal slab.

Can u calculate for me please and clear the stcg clubbing issue also. If you are choosing to show equity trading also as your trading business, then you will need to add 90 lks to 30lks, so 1. But the good thing here is that you can claim on all your expenses. Whatever stance you take, it is best to stick to it for long term and not keep changing it based on your convenience. Hi, Regarding the expenditures to be offset against business gains, how can we determine and declare the depreciation of laptop?

Which document is required? You can have a private limited trade the markets stocks, futures, options, commodities, currencybut you need to include a line in your MOA and AOA saying that you intend to do so while forming the company, and if you have already have a company, your CA can include this onto the MOA and AOA Hi.

Thanks for your earlier reply. I need to file my income tax return for AY I engaged in cash, 3 instance of FnO and commodity trading no-agricultural and had losses of around 28K 10k for Cash, for FnO and 18k for Commodity in FY My net transaction in derivatives section from the ledger is around 2. I believe my turnover is much less than 5 lacs. So in this case do I need to go for tax audit? Some tax consultants have told me that doing tax audit now and submission will attract penalty.

Are these reasonable rates? Thanks Yes the time has passed to have filed your returns to get the benefit of carry forwarding your losses. So if 5lks is your turnover, show that you made 40k profit in The prices you have mentioned are pretty reasonable, do bounce the idea that I suggested with your CA. Hi, A quick question, if I do not show it as a profit and my turnoevr is much less than the required limit 1 crore I believe after which the audit is required, can a simple ITR trading divergent forex y submission with no loss carry-over help me?

Needless to say all the necessary books of documents will be prepared along with it. Until a couple of years back, audit was required only if turnover was more than 1crore, but there was a small change in section 44ADbecause of which many people have been receiving notices. Does we need audit for those expenses As long as expense is something that you are incurring towards trading, there is no limit on how much expense.

But the issue is if you show 10lk expense and tomorrow for any reason Income tax officer rejects it, it can be an issue then. So it is best to not over inflate any expense, and best to keep a proof of any such expense and document the reason behind it, this is good enough, your CA will also need only this while filing your returns. Today most of the notices are automated, which means a centralized computer sends out notices from the Income tax department, they might have set rules which determine whom to send notices.

But once someone gets a notice, after that all interaction would be with the local Income tax officer. My question is if we show the excess profit, how do we adjust the same in the balance sheet? Section 44AD is presumptive taxation, so if you declare using this there is no audit required. As I have mentioned earlier, this is just my suggestion, and do consult your CA on this. Back with few querries on this topic again. Is there any way to save tax from the profits we make?

My wife is a homemaker, trading is the only source where she has been earning. At the moment, for 1st 2lakh income only we are not paying tax. For employees, we can get tax benefits for. House rent or hosing loan etc. Income from trading is just like any other income, you can get all the benefits and also you can reduce all expenses that you have incurred towards trading.

My CA told me 8k. My mtm ledger shows profit of 10lakhs and my CA told me we can settle this profit under 44ad. Is this genuine or he is misleading? So my CA is correct? If 44ad says this then please guide there is short time to file returns X is carrying on small business. The Turnover is Rs. The profit as per his books or calculation is Rs. The proceeds of business are deposited in a bank account.

The language of section of section 44AD 1 requires claims to have been made by an assessee for returning higher income. ITO will have no problem if you have paid more taxes, but if you have paid less it can always cause some trouble in the future. Is the same formula valid for return filed under Section 44AD also? The problem is that there is no such circular, it is a common practice being followed.

Hence it is always best to consult a CA, Section 44AD is presumptive taxation and turnover will still be calculated the same way. If i Have invested 1lac and after 1 financial year i make 1 lac profit. Can i show this for tax benefit along with the internet bill, depriciation of Laptop etc?

How To Trade Divergences With The RSI Indicator

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