ITR3 - Balance Sheet

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This discussion addresses how to report options trading profits and closing balances on an Income Tax Return (ITR) when relocating. The user earned a £200,000 profit from options trading in FY23-24 but moved their funds to London during the year. They are seeking guidance on what to declare in the Balance Sheet section of their ITR, particularly concerning the discrepancy between last year's reported balance and the reduced balance after transferring funds abroad. The advice provided suggests reporting the profit in the 'Trading Account' and using the final broker/bank balance as of the business closure date (end of July) for the Balance Sheet, which is £100,000 in this case, and that this is acceptable and can be substantiated with account statements.

Priya

Priya (Querist)
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11 June 2024 I made 2L profit in Options trading in FY23-24, but stopped trading since I moved from Bangalore to London.

In last year's ITR I had put 20L in Balance Sheet (broker balance + bank balance).

I am wondering what to put in this year's balance sheet, since I have stopped trading and moved money to London.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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11 June 2024 You need to file return for the profits earned in option trading.
If you have closed the broker account with nil balance, no need to report the broker's account.

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Priya

Priya (Querist)
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11 June 2024 Thank you for responding.

Yes, I'm planning to put 2L as "Other operating revenues" in "Schedule Trading Account", to show as profit.

How about the Balance Sheet section of ITR?
It says "balance sheet as on 31st day of march, 2024 or as on the date of closure of business as applicable of the proprietory business or profession"

My broker + bank balance by end of:
- March 2023: 20L (20L is what I used in ITR for FY 22-23)
- May 2023: 17L (moved 5L to London)
- June 2023: 10L (moved 7L to London)
- July 2023 onwards: 1L (moved 9L to London)

I've been slowly moving my money from broker to London.
If I consider end of July as business closure, then does it mean I put in 1L in balance sheet section?

Wont it be confusing since I put 20L in balance sheet last year ITR, and have 2L of profit for this year ITR, but only 1L in balance sheet in this year's ITR?

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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11 June 2024 No. it will not be confusing. Moreover you can get your account statement from the broker, which will substantiate the balance of 1 lakh to your credit.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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31 August 2024 Good luck.

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