Balance Sheet and P&L statement

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This discussion clarifies how salaried individuals involved in options trading should prepare their Balance Sheet (BS) and Profit & Loss (P&L) statements. For F&O transactions, turnover is calculated differently and generally not included directly in the BS or P&L for salaried individuals. Assets include bank balances and investments (MF, stocks, SGBs), and liabilities are primarily your capital, which should equal your total assets. The P&L statement should reflect the net loss or profit from trading, with the net loss being the key figure for ITR filing, rather than a detailed breakdown of buy/sell prices.

Shubham Mantr!

Shubham Mantr! (Querist)
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07 January 2022 Hi,

I am salaried individual who deal in Options trading. Turnover is below 50lac and losses of 1lac Pls let me know how to prepare BS and P&L statement.

Where to include turnover in BS? How to calculate TO in Options as sale price+premium is turnover. What needs to be mentioned in asset?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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07 January 2022 The turnover in case of F&O transaction to be computed as below: (i) The total of favourable and unfavourable differences (Profit/Loss) shall be taken as turnover. (ii) Premium received on sale of options is also to be included in turnover.
Asset mention your bank balance and investment.

Shubham Mantr!

Shubham Mantr! (Querist)
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07 January 2022 Where to mention turnover in Balance sheet, P&L statement ? What sum to be mentioned in proprietor's capital ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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07 January 2022 No need to give turnover in p and l report only loss in p and l.
Capital enter bank balance when you enter bank balance under assets side.

Shubham Mantr!

Shubham Mantr! (Querist)
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07 January 2022 While preparing BS, What should be considered as asset for salaried person? I am also invested in MF,Stock,SGB, so will that be considered as asset ? How to tally Asset and Liability? Where to mention Options turnover?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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07 January 2022 Yes, consider all such items as assets. Don't consider option turnover. Bank balance and all the investment will be your capital.

Shubham Mantr!

Shubham Mantr! (Querist)
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07 January 2022 What is to be mentioned in liability, so that both assets and liabilities make a tally ? Pls share your detail, where can I connect with you.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 January 2022 Liability side for you is capital equal to all assets.
I am now in UK.

Shubham Mantr!

Shubham Mantr! (Querist)
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08 January 2022 What all to be included in P&L statement? Buy value along with expenses for Options to be included on loss side and sell value for Options in Profit side? How to tally them?
Can we connect over social media channel?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 January 2022 In p and l give only the net loss.
Obtain my number from CA club and talk to me through whatsapp.
I am not allowed to share my number here.

Shubham Mantr!

Shubham Mantr! (Querist)
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08 January 2022 Check your DM. The turnover which we mention while filing ITR3, needs to be mentioned where either in BS or P&L.?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 January 2022 No need to mention turnover in balance sheet or in p and l in case of F and O.

Shubham Mantr!

Shubham Mantr! (Querist)
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09 January 2022 Selling price need to be mentioned as sales in profit side and buying price need to be mentioned in loss? Also expenses need to be mentioned in loss side and In case of losses, net loss to be written in loss or profit side, to match the tally?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 January 2022 That's for normal business and not for F and O trading.

Shubham Mantr!

Shubham Mantr! (Querist)
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09 January 2022 What needs to be mentioned for F&O in loss and profit tabs in case of losses?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 January 2022 Give loss with negative figure.

Shubham Mantr!

Shubham Mantr! (Querist)
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09 January 2022 What to be filled in profit tab to tally with losses?