Income tax audit
This query is : Resolved
29 April 2014
Hi,
Do the individual need to get audited under section 44AB in the following cases?
Case 1- An individual have invested more than 1 crore rupees in the share market through a broker.
Case 2- Net sale value of this individual is more than 1 crore. (Net sale value=Sale Value - Purchase Value).
After doing some reading i have noticed that the above individual need to get audited only if this trading is in the nature of business otherwise gains from the sale can be taxed under the head Capital Gains.
Under what circumstances this trading of shares in share market through broker will be considered as business?
Do the individual need to get audited under section 44AB in the following cases?
Case 1- An individual have invested more than 1 crore rupees in the share market through a broker.
Case 2- Net sale value of this individual is more than 1 crore. (Net sale value=Sale Value - Purchase Value).
After doing some reading i have noticed that the above individual need to get audited only if this trading is in the nature of business otherwise gains from the sale can be taxed under the head Capital Gains.
Under what circumstances this trading of shares in share market through broker will be considered as business?
29 April 2014
the intention behind the purchase and sale of shares will be the determining factor.
if shares are being bought and sold to generate income from short term movement, if shares being sold without taking delivery (intra-day, obligation sale) it would be considered as trading.
if shares are being held for generating income in long term through capital appreciation and dividend income etc, it would be considered as investment.
if shares are being bought and sold to generate income from short term movement, if shares being sold without taking delivery (intra-day, obligation sale) it would be considered as trading.
if shares are being held for generating income in long term through capital appreciation and dividend income etc, it would be considered as investment.
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29 April 2014
Hi,
Thanks for the reply, but in case if its considered as trading does it need to be audited u/s 44AB?
And also can the assessee claim brokerage, securities transactions tax and other expenses to purchase and sell the shares while computing the profit?
I always thought that shares including intra-day shares bought through a broker can be taxed under STCG and since securities transaction tax is paid. The assessee can pay tax at 15% under section 111(a).
Thanks for the reply, but in case if its considered as trading does it need to be audited u/s 44AB?
And also can the assessee claim brokerage, securities transactions tax and other expenses to purchase and sell the shares while computing the profit?
I always thought that shares including intra-day shares bought through a broker can be taxed under STCG and since securities transaction tax is paid. The assessee can pay tax at 15% under section 111(a).
29 April 2014
And is there any way possible to show this purchase and sale of intra-day shares under the head Capital gains instead of business and profession?
29 April 2014
1. yes if it is a trading activity 44AB audit shall apply.
2. expenses incurred including STT, brokerage shall be allowed as expenses.
3. Intra-day trades are not charged with STCG. It is included in business income.
4. I would not advise on the last query. You need to show in business income..
2. expenses incurred including STT, brokerage shall be allowed as expenses.
3. Intra-day trades are not charged with STCG. It is included in business income.
4. I would not advise on the last query. You need to show in business income..
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