Shivani
Quick Summary
An individual salaried person with small share market transactions filed wrong ITR and skipped reporting capital gains/losses for which his case was picked up for scrutiny. Case Study: Incorrect ITR Filing for Stock Market Loss An individual's salary was Rs 386,400 and has a stock market income wh
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FAQ :
The individual filed the wrong Income Tax Return (ITR) form, using ITR 1 instead of ITR 2, which is not appropriate for reporting capital gains or losses from stock market transactions.
The individual incurred a short-term loss of Rs 2,765 from selling shares.
The case was selected because the stock market sales and purchases were not properly reported in ITR 1, leading the Income Tax Officer to treat the transactions as unverified.
A 60% tax under Section 115BBE was imposed on the full sale value, and a 10% penalty was added on the purchase value, without allowing for the deduction of the cost of shares.
Filing the wrong ITR form or overlooking small losses can lead to significant tax demands and penalties, causing considerable stress and harassment.
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