Suppose, Mr. A is 55 years old person who trades in shares and income from share trading is only his income. He normally buys and sells on the same day without taking delivery or takes delivery and sells the shares afterwards but before 1 year.
1) What will the nature of income from this two types of transactions? Whether the income from day trading without trading will be treated as speculation gains or business income?
2) How can we show the same for the tax purpose?
3) Are these incomes chargeable at different income tax rates? at what rate of tax?
4) Which ITR form to be used? What could be the nature of business?
5) Is he eligible for any deductions from Section 80C of Income tax Act?
6) If there are losses under these two types of transactions, whether the same can be carried forward?
Suppose, Mr. A is 55 years old person who trades in shares and income from share trading is only his income. He normally buys and sells on the same day without taking delivery or takes delivery and sells the shares afterwards but before 1 year.
1) What will the nature of income from this two types of transactions? Whether the income from day trading without trading will be treated as speculation gains or business income?
2) How can we show the same for the tax purpose?
3) Are these incomes chargeable at different income tax rates? at what rate of tax?
4) Which ITR form to be used? What could be the nature of business?
5) Is he eligible for any deductions from Section 80C of Income tax Act?
6) If there are losses under these two types of transactions, whether the same can be carried forward?
Kindly revert.
1) shares hold more then 365 days in demat then sell , it would come under LTCG, exempted if stt paid on sales.
2) intraday is speculation, and such income is directly added to taxable income, such loss can not be adjusted with any other head except speculation
3) F&O trades are business income / loss.
4) he can avail 80C fron all his turnover except LTCG
If Mr. A has, suppose, some other income of Rs. 350000 & speculation gain on shares is of Rs. 200000 and also Short term capital gain tax of Rs. 500000 then, STGL will be carried forward for next 8 years can be set off in future against any STCG.
In case of speculation income, Rs. 2 lacs will be added to Rs. 3.50 lacs and thus on total of Rs. 5.50 lacs, income tax as per tax slab rate will be calculated.
Am I right??
Is this speculation income is not chargeable @ 30% special tax rate??
It is not a business of Mr. A but he just trades on day to day to get some income from this. Still he has to file ITR4??
I think there is provision for Nature of Business in ITR4. Which option I need to select?
Sir, please reply.
Thanks.
Suppose, Mr. A is 55 years old person who trades in shares and income from share trading is only his income. He normally buys and sells on the same day without taking delivery or takes delivery and sells the shares afterwards but before 1 year.
1) What will the nature of income from this two types of transactions? Whether the income from day trading without trading will be treated as speculation gains or business income?
2) How can we show the same for the tax purpose?
3) Are these incomes chargeable at different income tax rates? at what rate of tax?
4) Which ITR form to be used? What could be the nature of business?
5) Is he eligible for any deductions from Section 80C of Income tax Act?
6) If there are losses under these two types of transactions, whether the same can be carried forward?
Kindly revert.
1) shares hold more then 365 days in demat then sell , it would come under LTCG, exempted if stt paid on sales.
2) intraday is speculation, and such income is directly added to taxable income, such loss can not be adjusted with any other head except speculation
3) F&O trades are business income / loss.
4) he can avail 80C fron all his turnover except LTCG
If Mr. A has, suppose, some other income of Rs. 350000 & speculation gain on shares is of Rs. 200000 and also Short term capital gain tax of Rs. 500000 then, STGL will be carried forward for next 8 years can be set off in future against any STCG.
3.5+2.0 = 5.5 normal income
5.0 income at spl rate @ 15% ( STCG u/s 111A)
In case of speculation income, Rs. 2 lacs will be added to Rs. 3.50 lacs and thus on total of Rs. 5.50 lacs, income tax as per tax slab rate will be calculated.
There are two types of speculation - cash delivery based and F&O based -
any loss from cash delivery based under intraday is speculation and not available for carry forward, it can not be adjusted with any other income except speculation
any loss from F&O based is business loss and available for carry forward upto 8 years max.
Am I right??
Is this speculation income is not chargeable @ 30% special tax rate??
No, speculation income is added to taxable income, and taxed as per slab.
It is not a business of Mr. A but he just trades on day to day to get some income from this. Still he has to file ITR4??
if he has to carry forward the losses for adjustment in subsequent years, then he has to show this as business ( Except LTCG), as carry forward of losses is allowed under business loss only.
I think there is provision for Nature of Business in ITR4. Which option I need to select?
speculation of both catagory comes under business
if he does not want to file ITR 4 then speculation income would go as "income from other sources" and carry forward of losses is not possible.
without taking notice of his 3.5L other income, he is free to select the ITR to filed. but ITR 4 preferred as there is lots of clarity regarding to transactions.
If Mr. A has, suppose, some other income of Rs. 350000 & speculation gain on shares is of Rs. 200000 and also Short term capital gain tax of Rs. 500000 then, STGL will be carried forward for next 8 years can be set off in future against any STCG.
3.5+2.0 = 5.5 normal income
5.0 income at spl rate @ 15% ( STCG u/s 111A)
In case of speculation income, Rs. 2 lacs will be added to Rs. 3.50 lacs and thus on total of Rs. 5.50 lacs, income tax as per tax slab rate will be calculated.
There are two types of speculation - cash delivery based and F&O based -
any loss from cash delivery based under intraday is speculation and not available for carry forward, it can not be adjusted with any other income except speculation
any loss from F&O based is business loss and available for carry forward upto 8 years max.
Am I right??
Is this speculation income is not chargeable @ 30% special tax rate??
No, speculation income is added to taxable income, and taxed as per slab.
It is not a business of Mr. A but he just trades on day to day to get some income from this. Still he has to file ITR4??
if he has to carry forward the losses for adjustment in subsequent years, then he has to show this as business ( Except LTCG), as carry forward of losses is allowed under business loss only.
I think there is provision for Nature of Business in ITR4. Which option I need to select?
speculation of both catagory comes under business
if he does not want to file ITR 4 then speculation income would go as "income from other sources" and carry forward of losses is not possible.
without taking notice of his 3.5L other income, he is free to select the ITR to filed. but ITR 4 preferred as there is lots of clarity regarding to transactions.
Sir, much clarity has come after your reply. Thanks.
Points which are cleared, are as follows:
1) If shares are traded on the same day, without delivery, then its a speculation trascation. Income from this transactions will be added to the normal income and taxed as per tax slab rate.
If there is speculation loss, then the same can be carried forward for 4 years and can be adjusted against future speculation gain from shares only.
2) Gains other than 1 above, will either be short term or long term. Short term cap gain will be taxed @ 15% separately. Short term loss if any can be carried forward for next 8 years and adjusted against short term gains in future.
3) If the loss from Speculation transaction needs to be claimed in future, one has to file ITR4.
Points not cleared:-
I have gone through ITR4. It seems to be more tedious to show any income or loss from share trading activity in the same. Also, Nature of Business sheet, I am not clear as to which code to select.
How do I show short term capital loss of Rs. 6.5 lacs and Speculation gain of Rs. 1.65 lacs?
1) If shares are traded on the same day, without delivery, then its a speculation trascation. Income from this transactions will be added to the normal income and taxed as per tax slab rate.
If there is speculation loss, then the same can be carried forward for 4 years and can be adjusted against future speculation gain from shares only.
- for speculation the loss can be carried forward only when its named as "speculation business"
2) Gains other than 1 above, will either be short term or long term. Short term cap gain will be taxed @ 15% separately. Short term loss if any can be carried forward for next 8 years and adjusted against short term gains in future.
- short term gain after adjusting short term loss of the year or any previous year would be subject to spl rate of tax @ 15%, if loss is unabsorbed then it would be carried forward.
3) If the loss from Speculation transaction needs to be claimed in future, one has to file ITR4.
Points not cleared:-
I have gone through ITR4. It seems to be more tedious to show any income or loss from share trading activity in the same. Also, Nature of Business sheet, I am not clear as to which code to select.
to claim LTCG you have to make balance sheet and have the shares in asset in previous year, to get some sweet results we have to work a little bit.
How do I show short term capital loss of Rs. 6.5 lacs and Speculation gain of Rs. 1.65 lacs?
Please guide Sir.
under ITR, CFL is there to forward the losses
you need to use form ITR4, if
1) you are claiming LTCG
2) you are claiming carry forward of losses other than capital loss.
1) If shares are traded on the same day, without delivery, then its a speculation trascation. Income from this transactions will be added to the normal income and taxed as per tax slab rate.
If there is speculation loss, then the same can be carried forward for 4 years and can be adjusted against future speculation gain from shares only.
- for speculation the loss can be carried forward only when its named as "speculation business"
2) Gains other than 1 above, will either be short term or long term. Short term cap gain will be taxed @ 15% separately. Short term loss if any can be carried forward for next 8 years and adjusted against short term gains in future.
- short term gain after adjusting short term loss of the year or any previous year would be subject to spl rate of tax @ 15%, if loss is unabsorbed then it would be carried forward.
3) If the loss from Speculation transaction needs to be claimed in future, one has to file ITR4.
Points not cleared:-
I have gone through ITR4. It seems to be more tedious to show any income or loss from share trading activity in the same. Also, Nature of Business sheet, I am not clear as to which code to select.
to claim LTCG you have to make balance sheet and have the shares in asset in previous year, to get some sweet results we have to work a little bit.
How do I show short term capital loss of Rs. 6.5 lacs and Speculation gain of Rs. 1.65 lacs?
Please guide Sir.
under ITR, CFL is there to forward the losses
you need to use form ITR4, if
1) you are claiming LTCG
2) you are claiming carry forward of losses other than capital loss.
Dear Sir,
I refer to yellow highlighted point above. As per earlier discussions, the speculation profit is to be added to normal income & taxed as per slab rate.
I just came to know that such profits should be taxed @ 30% plus edu &HEcess.
