P&l and balance sheet for intraday activity
This query is : Resolved
26 October 2015
Hi,
I only have 75000 turnover and 8000 profilt in Intraday as business activity. How do I prepare balance sheet and P&L for this. I received notice 139(9)
I only have 75000 turnover and 8000 profilt in Intraday as business activity. How do I prepare balance sheet and P&L for this. I received notice 139(9)
26 October 2015
You should have opted for 44AD for which no balance sheet and P&l required. File return in form 4S in reply to notice.
26 October 2015
I do have salary income and STCG. I was talking about only business activity
09 August 2024
When preparing financial statements for intraday trading as a business activity, you need to follow a structured approach to reflect the trading activity accurately in your Profit & Loss (P&L) statement and Balance Sheet. Here's how you can prepare these financial statements:
### 1. **Profit & Loss Statement**
**Income:**
- **Turnover**: ₹75,000 (from intraday trading activity)
**Expenses:**
- **Brokerage and Transaction Costs**: Deduct the brokerage fees and other transaction costs related to intraday trading.
- **Interest Expenses**: If you borrowed funds for trading, include interest expenses.
- **Other Expenses**: Any other expenses directly related to trading activity.
**Net Profit:**
- **Profit**: ₹8,000 (as mentioned)
Here’s a simplified format for the P&L Statement:
```
**Profit & Loss Statement for the Year**
Income:
- Turnover from Intraday Trading: ₹75,000
Expenses:
- Brokerage and Transaction Costs: ₹X (Include actual costs)
- Interest Expenses: ₹Y (Include actual costs)
- Other Expenses: ₹Z (Include actual costs)
Total Expenses: ₹X + ₹Y + ₹Z
Net Profit from Intraday Trading: ₹8,000
```
### 2. **Balance Sheet**
**Assets:**
- **Cash/Bank Balance**: Reflect the amount available in your bank account after trading activities.
- **Securities/Investments**: If you hold any securities or investments, they should be recorded at their fair value.
**Liabilities:**
- **Loans and Borrowings**: Any loans taken for trading should be listed here.
- **Other Liabilities**: Include any other liabilities related to the trading activity.
**Capital:**
- **Owner’s Equity**: The balance of capital invested in the trading activity plus the net profit for the year.
Here’s a simplified format for the Balance Sheet:
```
**Balance Sheet as of [Date]**
**Assets:**
- Cash/Bank Balance: ₹A
- Securities/Investments: ₹B
Total Assets: ₹A + ₹B
**Liabilities:**
- Loans and Borrowings: ₹C
- Other Liabilities: ₹D
Total Liabilities: ₹C + ₹D
**Capital:**
- Opening Capital: ₹E
- Add: Net Profit: ₹8,000
- Less: Drawings (if any): ₹F
Closing Capital: ₹E + ₹8,000 - ₹F
Total Liabilities and Capital: ₹C + ₹D + Closing Capital
```
### Additional Points:
1. **Taxation:** Intraday trading is considered a business activity, so the profits from such trading will be taxed as business income. Ensure to account for any taxes payable on the profit.
2. **Compliance with Notice 139(9):** Notice under Section 139(9) of the Income Tax Act typically relates to the incorrect or incomplete filing of your return. Make sure that the P&L statement and balance sheet accurately reflect your intraday trading activity. Submit a revised return if needed.
3. **Maintain Records:** Keep all records of transactions, brokerage, and related expenses to substantiate the figures reported in your financial statements.
4. **Consult a Tax Professional:** If you are unsure about any aspect of preparing your financial statements or handling the notice, consider consulting a tax professional or accountant for assistance.
By ensuring accurate reporting and compliance, you can address any issues raised by the tax authorities and maintain proper financial documentation for your intraday trading activity.
### 1. **Profit & Loss Statement**
**Income:**
- **Turnover**: ₹75,000 (from intraday trading activity)
**Expenses:**
- **Brokerage and Transaction Costs**: Deduct the brokerage fees and other transaction costs related to intraday trading.
- **Interest Expenses**: If you borrowed funds for trading, include interest expenses.
- **Other Expenses**: Any other expenses directly related to trading activity.
**Net Profit:**
- **Profit**: ₹8,000 (as mentioned)
Here’s a simplified format for the P&L Statement:
```
**Profit & Loss Statement for the Year**
Income:
- Turnover from Intraday Trading: ₹75,000
Expenses:
- Brokerage and Transaction Costs: ₹X (Include actual costs)
- Interest Expenses: ₹Y (Include actual costs)
- Other Expenses: ₹Z (Include actual costs)
Total Expenses: ₹X + ₹Y + ₹Z
Net Profit from Intraday Trading: ₹8,000
```
### 2. **Balance Sheet**
**Assets:**
- **Cash/Bank Balance**: Reflect the amount available in your bank account after trading activities.
- **Securities/Investments**: If you hold any securities or investments, they should be recorded at their fair value.
**Liabilities:**
- **Loans and Borrowings**: Any loans taken for trading should be listed here.
- **Other Liabilities**: Include any other liabilities related to the trading activity.
**Capital:**
- **Owner’s Equity**: The balance of capital invested in the trading activity plus the net profit for the year.
Here’s a simplified format for the Balance Sheet:
```
**Balance Sheet as of [Date]**
**Assets:**
- Cash/Bank Balance: ₹A
- Securities/Investments: ₹B
Total Assets: ₹A + ₹B
**Liabilities:**
- Loans and Borrowings: ₹C
- Other Liabilities: ₹D
Total Liabilities: ₹C + ₹D
**Capital:**
- Opening Capital: ₹E
- Add: Net Profit: ₹8,000
- Less: Drawings (if any): ₹F
Closing Capital: ₹E + ₹8,000 - ₹F
Total Liabilities and Capital: ₹C + ₹D + Closing Capital
```
### Additional Points:
1. **Taxation:** Intraday trading is considered a business activity, so the profits from such trading will be taxed as business income. Ensure to account for any taxes payable on the profit.
2. **Compliance with Notice 139(9):** Notice under Section 139(9) of the Income Tax Act typically relates to the incorrect or incomplete filing of your return. Make sure that the P&L statement and balance sheet accurately reflect your intraday trading activity. Submit a revised return if needed.
3. **Maintain Records:** Keep all records of transactions, brokerage, and related expenses to substantiate the figures reported in your financial statements.
4. **Consult a Tax Professional:** If you are unsure about any aspect of preparing your financial statements or handling the notice, consider consulting a tax professional or accountant for assistance.
By ensuring accurate reporting and compliance, you can address any issues raised by the tax authorities and maintain proper financial documentation for your intraday trading activity.
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