SHARE TRADING LOSS

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This discussion clarifies the tax treatment of share and derivative trading losses for a business with a turnover of ₹12 crore. It addresses whether tax audit is applicable, distinguishes between speculative and non-speculative losses (intraday derivatives are considered speculative), and advises on reporting these transactions in ITR-3 along with the audit report.

JYOTI GOEL

JYOTI GOEL (Querist)

18 October 2020 ASSESSEE HAS NORMAL BUSINESS HAVING TURNOVER OF RS. 12 CRORE. HIS BOOKS ARE SUBJECT TO AUDIT. SALE OF SHARES 97 LAC AND 1.00 CRORE PURCHASE OF SHARES. TRADING IN DERIVATIVE INTRADAY 58 CRORE. SUM TOTAL OF PROFIT AND LOSS IS RS. 20 LAC AND ACTUAL LOSS FROM SHARES AND DERIVATIVE IS RS. 3.00 LAC. STT HAS BEEN PAID ON THESE TRANSACTIONS AND TRANSACTIONS ARE CARRIED OUT FROM RECOGNISED STOCK EXCHANGE.
QUERY- 1. WHETHER TAX AUDIT APPLICABLE FOR SHARE TRADING AND DERIVATIVE TRADING BUSINESS? 2. LOSS FROM DERIVATIVE AND SHARE TRADING ARE SPECULATIVE LOSS OR NON SPECULATIVE ? 3. HOW TO SHOW ABOVE TRANSACTIONS IN ITR. SHARE AND DERIVATIVE ARE NOT GOODS OR SERVICES AS PER INCOME TAX ACT. HOW TO REPORT IT IN PROFIT AND LOSS ACCOUNT.

JYOTI GOEL

JYOTI GOEL (Querist)

19 October 2020 PLEASE GIVE YOUR EXPERT OPINION ON THE ABOVE MATTER.