Turnover in case of trading in shares & f & o

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This query is : Resolved

ram gurbani (Querist)

15 August 2011 Dear Sir,
one of my client is dealing in trading of shares and F & o transaction. for income tax purpose in turnover of purchases and sales. what is to be considered
1. only trading of delivery shares OR
2. Intra day trading of shares and F &o
3. trading of shares & F &O OR

Plz guide.

Regards,
CA Ram Gurbani.

CA Ayush Agarwal

CA Ayush Agarwal (Expert)

15 August 2011 Non Speculation Business - F&O Turnover Both Delievery & Intraday

Speculation - Intraday in Equity

I Prefer/Suggest You to Show Equity Transaction as Investment i.e LTCG/STCG.

CA Hardik Bunha

CA Hardik Bunha (Expert)

16 August 2011 hi,
Don't worry my friend.
you have to only disclosed TRADING IN SHARES.
you have to prepare TWO CHARTS for bifercation in the case of scrutiny.
(1) STCG (INCLUDES INTRADAY & F&O )
(2) LTCG

For income tax purpose you have to compute only SALES of share(not a purchase of share)beacause section 44ab does not deal with purchase.

FOR CALCULATION OF GAIN OR LOSS
(1) make total of intraday, F&o and short term share holding by assessee- PURCHASE.
(2) make total of intraday, F&o and short term share holding by assessee - SALES
ADD DELIVERY CHARGES,DOCUMENT CHARGES IN THE COST OF PURCHASE SO YOU CAN DECREASE GAIN.(BUT NOT ELEMENT OF TAX EXP. service tax, STT)

Here your client have one benefit that StCG activity computated as above should shown as business activity and LTCG as capital gain. so benefit of tax slab will be obtained.

CA Hardik Bunha

CA Hardik Bunha (Expert)

16 August 2011 Mr. Ayush Agrawal
jisne ye question puchha he na he is a chartered accountant.........aese andhere me hi firing mat karo. ap ko ek common sense hona chahiye ki ASSESSEE IS DEALING IN SHARES MEANS IT IS HIS BUSINESS ACTIVITY. TO USME INVESTMENT KAHA SE AYA. MERE KHAYAL SE TO USE STOCK IN TRADE ME DIKHANA CHAHIYE. SO AP PLEASE apka b.com ka award wapas university me de ke aa jaiye. THIS FIEALD REQUIRED PERFECTION.............

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

16 August 2011 For the purpose of calculating Turnover for Tax Audit purpose-you may consider the total of -
1. Sales of shares
.
2. Total of Profits and Losses in each item of derivative without adjusting +, -.
.
3. Total of Profits and Losses in each item of speculation transactions (Day Trading) without adjusting +, -.

Practically you can judge the turnover
from first two items only. However, even by adding 3rd Item also if turnover crosses 60.00 lacs it is advisable to Audit the accounts of the assessee.

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