Query on ITR selection for an Individual (FY 2022-23)

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This discussion clarifies the correct Income Tax Return (ITR) form for an individual with salary, savings interest, and short-term capital gains/losses from equity shares and speculative trading. Initially advised to use ITR 2, the consensus shifts towards ITR 3. The conversation also covers the calculation of turnover for intraday trading and the applicability of tax audits based on turnover and profit margins, particularly when total income exceeds the basic exemption limit.

Bhai

Bhai (Querist)
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20 July 2023 Dear Sirs,

Query on ITR selection for an Individual (FY 2022-23)

Salary Income Rs.3,35,900/-
Savings Interest Income Rs.17,628/-
Short Term Capital Gain – (Rs.40,079/-) loss – from equity shares

Speculative (Same Day Squareoff):
Total Sell Value Rs.19,59,767/-
Total Buy Value Rs.19,40,668/-
Gain Rs.19,099/-

Kindly clarify which ITR to be selected.
I was advised to file ITR 2 and asked to club STCG loss & speculative gain, totaling a loss of Rs.20,980/- and report in Schedule CG under Short Term capital Gain (111A).

Is this the right way to report.

Thanks.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 July 2023 No. File ITR 3.

Bhai

Bhai (Querist)
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20 July 2023 Sir,

Being an individual, whether we have to fill Balance Sheet, Trading A/c & Profit & Loss account.

Kindly guide me sir.

Thanks

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 July 2023 For Intraday equity transactions, the turnover is calculated as the absolute sum of settlement profits and losses per scrip. So, your turnover would be much less as mentioned above.
Based on the turn over you can file the business income under Sec. 44AD IT act, and there by no need to file BS or P&L acc. in ITR3.

Bhai

Bhai (Querist)
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20 July 2023
Sir,
Applicable of Tax Audit for Intraday Trading:
If your Intraday Trading Turnover is up to ₹2 Crore
-If you have made profits of at least 6% of Trading Turnover: Tax Audit shall not be applicable.
-If you have incurred a loss or your profit is lesser than 6% of Trading Turnover: Tax Audit is applicable if your total income is more than ₹2.5 lakhs (basic exemption limit).

Iam confused on this limit of Rs.2.50 lacs. In this case, If my salary income is more than Rs.2.50 lacs, is tax audit applicable.

Thanks.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 July 2023 That is what I have mentioned in earlier reply that your profit margin is not below 6%, as your turnover is not what you are assuming.

Bhai

Bhai (Querist)
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20 July 2023 Sir

So I can assume that tax audit not required in this case.

Thanks.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 July 2023 Yes, if the turnover as calculated above is less than or around 3 lakhs.

Bhai

Bhai (Querist)
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20 July 2023 Many many thanks sir.