Derivative Losses and Salary Income

CA PARAS BAFNA (Practising CA ) (33423 Points)
Replied 31 May 2011

1) Which return form should I use to file my returns so that I can declare income from salary and also declare the options trading losses to be carried forwarded

Reply- ITR -4

2)I want to file the returns online. Of the returns form to be used (as per question 1), which section should I fill in the losses?

All the sections and schedules of the Return are to be filled up by you like Balance Sheet P&L , Computation etc.

3) For how many years can I carry forward the options trading losses?

Reply- Upto 8 Assessment Years

4) Can the income earned from savings accounts/fixed deposits interest be adjusted against the options trading losses?

Reply- Yes

Vivek Mehta (CA, DISA,CS, MBA) (I am in Practice and also giving understanding and guidance to the Students of CA Final and IPCC for various subjects esp for Direct Tax.) (1629 Points)
Replied 31 May 2011

Originally posted by : Paras Bafna
	1) Which return form should I use to file my returns so that I can declare income from salary and also declare the options trading losses to be carried forwarded Reply- ITR -4 2)I want to file the returns online. Of the returns form to be used (as per question 1), which section should I fill in the losses? All the sections and schedules of the Return are to be filled up by you like Balance Sheet P&L , Computation etc. 3) For how many years can I carry forward the options trading losses? Reply- Upto 8 Assessment Years 4) Can the income earned from savings accounts/fixed deposits interest be adjusted against the options trading losses? Reply- Yes

I agree with Bafana Ji, But I'll say that the losses of Derivative Trading cant be set off against the interest income of savings banks or of FD's. For to set off this you need to see that you declare it as business income or what...and if you declare it as a business income then you can carry forward the losses for 8 years and if you set off the losses by current year income of interest of FD and saving bank in Other Sources than you cant carry forward the losses

Seth (M) (148 Points)
Replied 01 June 2011

Dear Bafna Ji and Vivek Ji,

Thanks a lot for your responses.

Just before I saw your responses, I got a chance to speak to a CA yesterday - he mentioned that I can use ITR-2 as the only business income(loss) is from derivatives trading, and there is no need to fill ITR-4, balance sheet, P&L, etc. ITR-2 also has a section called "

Schedule CFL

Details of Losses to be carried forward to future years

Can you please let me know your thoughts on this - whether ITR-2 will be fine in my case or should I necessarily go with ITR-4?

Thanks again for your advice.

KIYOSH (TAX CONSULTANT) (332 Points)
Replied 01 June 2011

I think you should file your return in ITR 4 only as you have business Income

CA PARAS BAFNA (Practising CA ) (33423 Points)
Replied 01 June 2011

For carrying forward the loss , first you have to claim the loss. In the Schedule CFL, under which head the loss will be shown ?

It's a business loss.

Before claiming any loss to be c/fd set off against current year's income is required. As this is a business loss, it can be set off against IFOS (Interest...etc). In the succeeding year, you can set off the b/fd business loss against any business income,

but b/fd business loss can not be set off against the income of any other head .

It will make sure your claim of loss if you file ITR 4.

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