How to shift from ITR 3 to ITR 2 in future?

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This discussion clarifies how to transition from filing ITR-3 to ITR-2 in future tax years. If you've incurred intraday trading losses this year (requiring ITR-3) but plan to only report capital gains next year, you can indeed file ITR-2. However, any carried-forward intraday losses can only be set off against speculative business income within four years; otherwise, they will lapse. You'll need to file ITR-3 in a future year if you wish to claim these carried-forward losses.

Sap_452

Sap_452 (Querist)
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12 June 2023 This year I have made around 1.8k short term gains and one intraday trade with a loss of Rs 7.95.Suppose this year I file ITR-3 with the intraday loss under Business Income head and Short Term gains under Capital gains head. Since I have intraday loss, I might have to do audit as well. But now suppose in the next year, I dont do any Intraday transaction and stick to short term/ long term gains, then I dont have any business income since I wont have any intraday trading and I will be reporting short term/ long term gains under Capital gains head.Then can I file ITR 2 in the next year since I wont have business income?Or will I have to stick to ITR 3?Basically what do I need to do now so that I can shift to ITR 2 in future?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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12 June 2023 1. No need to stick to ITR3 (or even ITR4), if you do not have any income u/h. PGBP (in your case intraday)
2. You can easily select ITR 2 for all the incomes declaration, except income u/h. PGBP.; without any hassle.

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Sap_452

Sap_452 (Querist)
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12 June 2023 Thank you. The only doubt I have is since this year I will be filing ITR 3 and declaring my intraday loss, it will get carried over to the next year. Then if I file ITR 2 next year, how will this carried over loss be reflected in it?

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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12 June 2023 It will not reflect in next year's ITR2 (if no business income), but whenever you have business profit and have to adjust the loss (within next 4 years), you can file ITR 3 and claim the loss with the details of ITR filed relevant to the said year.

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Sap_452

Sap_452 (Querist)
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12 June 2023 Thanks again. So if I continue filing ITR 2 in subsequent years, that loss will not get adjusted. What will happen if even after 4 years the loss doesnt get adjusted considering the fact that I wont be earning any business income so I will be filing ITR 2 from next year onwards?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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12 June 2023 1. Intraday losses/ Speculative Loss can be carried forward for 4 years. It can be set-off against Speculative Business Income only.
2. If you cannot adjust the loss against any speculative gains within next 4 years, it will lapse.

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