Income tax on f&o trading
This query is : Resolved
11 January 2014
Hi,
I got profit and losses in F&O section. In total, I have around 20k Loss with turnover of about 6 Lakhs. Do I still need to get my books audited? I mean I do not have any profit. Is it still required to pay income tax (on loss). Is it mandatory to show the losses in ITR form? If I do not show, will I get the notice?
Now, u told that, if u get a income tax notice, you have to pay 8% of turnover. Now, I do not understand that I did not make profit I F&O, but still I need to pay 8% of 6 lakhs which is 48000. This much is penalty or what? Why one has to pay this even if he is in loss?
Please reply sir.
Thanks
Nikhil
I got profit and losses in F&O section. In total, I have around 20k Loss with turnover of about 6 Lakhs. Do I still need to get my books audited? I mean I do not have any profit. Is it still required to pay income tax (on loss). Is it mandatory to show the losses in ITR form? If I do not show, will I get the notice?
Now, u told that, if u get a income tax notice, you have to pay 8% of turnover. Now, I do not understand that I did not make profit I F&O, but still I need to pay 8% of 6 lakhs which is 48000. This much is penalty or what? Why one has to pay this even if he is in loss?
Please reply sir.
Thanks
Nikhil
11 January 2014
this is the beauty of section 44AD. once you are covered within the definition of eligible assessee and your activities also fall within the definition of eligible business, 44AD is triggered. So if you file ITR-4 instead of ITR-4s, they will send you 139(9) notice (defective return) asking for filing the audit report and the accounts!!!
So, in case you have income more than the exemption limit, you to need to maintain accounts and get them audited.
Third thing, you are confusing with the 8% figure. it is not your tax liability. it is your deemed income. So on 6 lakhs, your deemed income is Rs 48000/-. Now given that it is less than Rs 2 lakhs, you are not required to maintain any books or get any audit done. for any tax liability to arise under 44AD your gross receipts should be atleast 25 lakhs.
So, in case you have income more than the exemption limit, you to need to maintain accounts and get them audited.
Third thing, you are confusing with the 8% figure. it is not your tax liability. it is your deemed income. So on 6 lakhs, your deemed income is Rs 48000/-. Now given that it is less than Rs 2 lakhs, you are not required to maintain any books or get any audit done. for any tax liability to arise under 44AD your gross receipts should be atleast 25 lakhs.
Message likes :
3 times
11 January 2014
Sooperb explanation. One confusion Nikhil.. actually, in first point u told that i will be triggered by 44AD. But in third point u r telling that i need not to maintain records.. A bit confusing. Should i maintain records?? Or to be more clear.. do i need to show my loss in income tax return?if not, will i get the notice??
Thanks a lot!!
Thanks a lot!!
11 January 2014
Sooperb explanation. One confusion Nikhil.. actually, in first point u told that i will be triggered by 44AD. But in third point u r telling that i need not to maintain records.. A bit confusing. Should i maintain records?? Or to be more clear.. do i need to show my loss in income tax return?if not, will i get the notice??
Thanks a lot!!
Thanks a lot!!
11 January 2014
the first two points were in generality...when you discuss your case, what I said is that given that you only have a turnover of Rs 6 lakhs, there is no tax liability in any case.
better show Rs 48000 as income...still there is no tax liability..no need to maintain books...no audit is required...no notice...in case you face problems, hire someone to make the first return for you..
If you prefer to claim loss, you will have to maintain books and get them audited.
better show Rs 48000 as income...still there is no tax liability..no need to maintain books...no audit is required...no notice...in case you face problems, hire someone to make the first return for you..
If you prefer to claim loss, you will have to maintain books and get them audited.
Message likes :
1 times
11 January 2014
ohhk... but I am a salaried guy. My annual salary in 4.04 lakhs. If I show 48000, will not it be added to 4.04 lakhs?? And yes, u r telling to show this income .. But I did not earned anything... It seems like I have to show this income with my salary, then my tax will increase.. right??? But this extra income,, I did not made any profit.. so why this is counted in tax???
Serious doubt sir! Thanks.. all NIKHILs are helpful! :)
Serious doubt sir! Thanks.. all NIKHILs are helpful! :)
11 January 2014
In your earlier messages you didn't mention your salary...so my answer was based on the basis of the facts available.
well if your income is above 2 lakhs, then you have two options:
1. show it as 48000 income and pay tax on it.
or
2. show the actual loss and get the accounts audited.
A normal CA would anyways charge you anywhere between 3-4 thousand for doing the audit. The additional tax on 48000 is around 4800 at your current slab rates. You need to pick and choose what you want to do...
well if your income is above 2 lakhs, then you have two options:
1. show it as 48000 income and pay tax on it.
or
2. show the actual loss and get the accounts audited.
A normal CA would anyways charge you anywhere between 3-4 thousand for doing the audit. The additional tax on 48000 is around 4800 at your current slab rates. You need to pick and choose what you want to do...
Message likes :
1 times
11 January 2014
Hi,
its pretty weird that I have to show this extra 48000 in my salary and pay tax on it even though I did not made any profit on this? is this 8 % fixed ? Why is it that one has to pay tax on turnover even if there's a loss??
nd if m not wrong.. i'll get income tax notice, if I do not mention this extra 48000 in my salary nor in my losses.. correct?? and after getting notice, do I need to pay 48000 to income tax department or 10% of it??
Thanks
its pretty weird that I have to show this extra 48000 in my salary and pay tax on it even though I did not made any profit on this? is this 8 % fixed ? Why is it that one has to pay tax on turnover even if there's a loss??
nd if m not wrong.. i'll get income tax notice, if I do not mention this extra 48000 in my salary nor in my losses.. correct?? and after getting notice, do I need to pay 48000 to income tax department or 10% of it??
Thanks
11 January 2014
no one is asking you to show it is as income...you can show the loss...but for that you need to maintain books and get them audited...
you may get a notice if you show loss but dont submit the audit report...so if you want to claim loss, get the accounts audited..
what you need to pay if show deemed income has already been explained in earlier messaged.
you may get a notice if you show loss but dont submit the audit report...so if you want to claim loss, get the accounts audited..
what you need to pay if show deemed income has already been explained in earlier messaged.
11 January 2014
ok sir.. thanks a lot! I will try to get the account audited and claim the losses rather than just paying tax on 48000 which I have not made any profit on.. thanku!
11 January 2014
and yeah one last doubt?? If I get a notice.. some extra penalty would be leveid ?? is it some percentage?? or I just need to pay 10% of 48000??
11 January 2014
if you get the accounts audited, then you are not required to pay anything etc.
in case you decide not to get the accounts audited, you would get a notice for submission for audit report for which you will have fifteen days...
the maximum penalty for non-audit in your case is 0.5% of the turnover ie Rs 3000/-
See please understand without getting into what is weird and what is not...
income tax act says, if you are covered under 44AD, either you pay tax on a deemed income of 8% or claim lower income or loss by maintaining accounts and getting them audited (where total income exceeds the basic exemption limit).
So, if you get the accounts audited, you have done your part of the job.
in case you decide not to get the accounts audited, you would get a notice for submission for audit report for which you will have fifteen days...
the maximum penalty for non-audit in your case is 0.5% of the turnover ie Rs 3000/-
See please understand without getting into what is weird and what is not...
income tax act says, if you are covered under 44AD, either you pay tax on a deemed income of 8% or claim lower income or loss by maintaining accounts and getting them audited (where total income exceeds the basic exemption limit).
So, if you get the accounts audited, you have done your part of the job.
11 January 2014
Okk now I got that..
So by "getting your account audited" means having a softcopy of all the details of the trades what I have done?? right??.. surely, i'll need a CA for this.. nd if m not wrong if I get my account audited, then next year if I get some profit.. I can adjust the loss over there.. right??
Thanks
So by "getting your account audited" means having a softcopy of all the details of the trades what I have done?? right??.. surely, i'll need a CA for this.. nd if m not wrong if I get my account audited, then next year if I get some profit.. I can adjust the loss over there.. right??
Thanks
11 January 2014
yes friend..now you got it right!!
Message likes :
1 times
11 January 2014
Hi.. thanku sir!!.
One more thing.. how do I calculate turnover in f&o section??
I mean suppose I bought nifty 1 lot(50 shares) at premium 100 and sold at premium 150. what is the turnover?? and same if I sell it in 50, then what would be the turnover??
Thanks
One more thing.. how do I calculate turnover in f&o section??
I mean suppose I bought nifty 1 lot(50 shares) at premium 100 and sold at premium 150. what is the turnover?? and same if I sell it in 50, then what would be the turnover??
Thanks
11 January 2014
please refer this discussion to compute your turnover https://www.caclubindia.com/experts/details.asp?mod_id=1581314#766948
11 January 2014
Okay.. I got that.. but what is the funda of -1??
In my example.. if I have profit by selling at 150 it means 2500 profit and if I sell at 50, it means 2500 loss. so total turnover is 5k.. right??
I thought it is something like... I bought at 100 so total amount is 5000 and sold at 150 so total amount is 7500. so turnover would be 12500.. this is not true right????
If the first part is true then my turnover comes to be around 70k only.. with second part it is 6 lakhs..
can you also file income tax as a CA for others on a fee??
thanks nikhil
In my example.. if I have profit by selling at 150 it means 2500 profit and if I sell at 50, it means 2500 loss. so total turnover is 5k.. right??
I thought it is something like... I bought at 100 so total amount is 5000 and sold at 150 so total amount is 7500. so turnover would be 12500.. this is not true right????
If the first part is true then my turnover comes to be around 70k only.. with second part it is 6 lakhs..
can you also file income tax as a CA for others on a fee??
thanks nikhil
11 January 2014
Yes. Well turnover will will be calculated as explained therein. Yes i can file your returns. You can contact me at 9699814106 or ca.nikhilkaushik@gmail.com
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Advantages and disadvantages new income tax act 2025 question
- Query regarding applicability of UDIN on MCA forms signed using DSC by a Chartered Accountant
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Spice form, ? mark comes in address
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
