Whether assesse's choice of sec 44ad or not
This query is : Resolved
13 October 2013
DEAR SIRS,
If an assesse is trading in equity and f&o both intraday and short term and his turnover is below Rs 60 lakh(1 cr now) and he has incurred a big loss only does he have a choice as per rules to opt between filing u/s 44AD and regular filing.
Please reply soon
Thanks in advance
If an assesse is trading in equity and f&o both intraday and short term and his turnover is below Rs 60 lakh(1 cr now) and he has incurred a big loss only does he have a choice as per rules to opt between filing u/s 44AD and regular filing.
Please reply soon
Thanks in advance
13 October 2013
Yes, you have a choice of not offering income under 44AD. Since you are earning losses, you can simply file a tax return claiming losses. No requirement for tax audit.
13 October 2013
Nihkhil Sir,
Thanks a lot for your response. Please enlighten me as to under which section or rule of income tax filing u/s 44ad is not mandatory but a choice for all the eligible businesses. Am asking this because when I read section 44AD(5) it seemed to me as if all businesses except the excluded business or persons thereunder whose turnover does not exceed Rs 1 Crore AND whose total income exceeds the exempt income limit are mandatorily required to take the 44AD route.
Please reply soon
THANKS!
Thanks a lot for your response. Please enlighten me as to under which section or rule of income tax filing u/s 44ad is not mandatory but a choice for all the eligible businesses. Am asking this because when I read section 44AD(5) it seemed to me as if all businesses except the excluded business or persons thereunder whose turnover does not exceed Rs 1 Crore AND whose total income exceeds the exempt income limit are mandatorily required to take the 44AD route.
Please reply soon
THANKS!
13 October 2013
You are reading 44AD(5) wrong.
what it says that in case you want to offer tax at % lower than 8%, you need to maintain accounts under 44AA and get the audit done under 44AB to claim lower profit!!
But with a caveat that 44AA and 44AB applies only if your income exceeds taxable limit.
Given that you have incurred loss, 44AA and 44BB wont apply.
I hope you are enlightened!!
what it says that in case you want to offer tax at % lower than 8%, you need to maintain accounts under 44AA and get the audit done under 44AB to claim lower profit!!
But with a caveat that 44AA and 44AB applies only if your income exceeds taxable limit.
Given that you have incurred loss, 44AA and 44BB wont apply.
I hope you are enlightened!!
13 October 2013
Dear Nikhil Sir,
Hope u will have some patience with me. An F & O or equity trading Loss is technically a negative profit/gain so it can be argued that showing losses is another form of showing below 8% profit and thus books of account and audit is mandatory in case of eligible businesses .I have heard there has been some amendment in june 2013.
Also kindly refer to some rule, circular etc of IT Dept. which expressly states that eligible businesses can opt for either regular filing or presumptive filing.
Kindly reply soon
Thanks in advance
Hope u will have some patience with me. An F & O or equity trading Loss is technically a negative profit/gain so it can be argued that showing losses is another form of showing below 8% profit and thus books of account and audit is mandatory in case of eligible businesses .I have heard there has been some amendment in june 2013.
Also kindly refer to some rule, circular etc of IT Dept. which expressly states that eligible businesses can opt for either regular filing or presumptive filing.
Kindly reply soon
Thanks in advance
13 October 2013
Well, I have stated my view on the above, as long as your income is below the exempted limit and your turnover is less than 1 cr, 44AB and 44AD won't apply.
I am not aware of any other amendment on this. Other experts may express their views if in contradiction to mine.
I am not aware of any other amendment on this. Other experts may express their views if in contradiction to mine.
13 October 2013
Dear Nikhil Sir.
Actually I would personally go with your initial views on my query that traders have a choice but many articles and taxation forums on the web seem to suggest that w.e.f AY 2012-13 F&O Traders and equity traders have to compulsorily file presumptive returns even if they have only business/trading losses to show if the sum total of their other income eg professional income/salary,rent, interest,capital gain etc exceeds the exemption limit. Is this interpretation correct? And I Suppose in your last response you too seem to be suggesting the same thing.
Thanks
Actually I would personally go with your initial views on my query that traders have a choice but many articles and taxation forums on the web seem to suggest that w.e.f AY 2012-13 F&O Traders and equity traders have to compulsorily file presumptive returns even if they have only business/trading losses to show if the sum total of their other income eg professional income/salary,rent, interest,capital gain etc exceeds the exemption limit. Is this interpretation correct? And I Suppose in your last response you too seem to be suggesting the same thing.
Thanks
13 October 2013
My view is simple if u have income less than exempted limit then u can file normal Itr4 without any requirement for tax audit. It doesnt matter if u r a stock trader. In case your total income exceeds taxable limit, then u can claim lower income/loss by maintaining proper books under 44aa and tax audit under 44ab
13 October 2013
It is not mandatory for u to offer 8% income to tax if u have earned less
14 October 2013
Dear Nikhil Sir,
One last question
Sec 44AD(5)-" Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB."
One thing is very clear to me that if an assesse claims deductions mentioned in sec 44AD, he will not be eligible to file his returns u/s 44AD.
Sir what does "whose total income" mean?Does it mean gross business income or does it mean sum total of incomes under all heads?
If this point becomes clear then to a large extent matter will be clear to me.
Please do reply sir
One last question
Sec 44AD(5)-" Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB."
One thing is very clear to me that if an assesse claims deductions mentioned in sec 44AD, he will not be eligible to file his returns u/s 44AD.
Sir what does "whose total income" mean?Does it mean gross business income or does it mean sum total of incomes under all heads?
If this point becomes clear then to a large extent matter will be clear to me.
Please do reply sir
14 October 2013
I didn't understand your first questiOn. For second, refer to section 5(1) of the act. For simplification. It means income under all the heads of income.
15 October 2013
Nikhil Sir,
I had asked only one question which has been answered by you. After writing one last question I had quoted section 44AD(5) for your ready reference.
Thanks for your patience and your answers.
I think now I got the point.
Thanks a lot.
I had asked only one question which has been answered by you. After writing one last question I had quoted section 44AD(5) for your ready reference.
Thanks for your patience and your answers.
I think now I got the point.
Thanks a lot.
15 October 2013
any time Anant :)
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