Intraday trading under presumptive

Though there is no bar as per act [sec. 44AD(6) IT act], but most of professional differ to declar speculative income under presumptive assessment.

Can we claim interest paid to broker from intraday income since we can't claim the same under short term capital gain

Yes, if not declared under presumptive income.

Is it not required to bifurcate the interest paid to broker between short term capital gain and intraday profit?

Is it ok if claim entire interest against intraday profit? Pls suggest

It must be bifurcated, as only the part paid over intraday trading would be allowed.

But how to bifurcate as it not shown separately in the broker ledger?

Divide it based on turnover.     

No. Intraday trading income cannot be offered under presumptive taxation u/s 44AD at 6%. Intraday equity trading is a speculative business under section 43(5), and speculative businesses are expressly excluded from presumptive taxation. Therefore, you must declare actual profit or loss, not 6% of turnover.

Action Plan

1. Do not use Section 44AD for intraday income.

2. Prepare actual P&L for speculative business.

3. Claim interest paid to broker as business expense.

4. File ITR-3 (not ITR-4).

5. Carry forward STCL of ₹30 lakh correctly.

But there is no restriction u/s 44AD for not showing intraday trading under presumptive taxation.

This understanding has also confirmed above.

Applicable Law / Notification / Circular

1. Section 44AD, Income-tax Act, 1961 – Presumptive taxation for eligible businesses

   • Sub-section (1): Presumptive income @ 8% / 6% of turnover

   • Sub-section (6): Five-year lock-in applies only when lower income is declared after opting for 44AD
     👉 https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx

2. Section 43(5) – Definition of speculative transaction

   • Intraday trading (non-delivery based) in shares is treated as speculative business
     👉 https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx

3. CBDT Circular No. 8/2010 dated 13-08-2010 – Scope of presumptive taxation

   • Presumptive scheme applies to eligible business only, not mandatorily to all businesses
     👉 https://incometaxindia.gov.in/communications/circular/circular8_2010.pdf

Short Practical Answer

Your understanding is largely correct.
Section 44AD does not mandate that all business activities (including intraday trading) must be offered under presumptive taxation. An assessee can opt to offer intraday/speculative trading under normal provisions while declaring other eligible businesses under section 44AD.
However, important classification and loss-set-off implications apply.

Detailed Explanation

1️⃣ Nature of Intraday Trading

• Intraday equity trading (non-delivery) = speculative business u/s 43(5)

• Speculative business income/loss is distinct from non-speculative business

2️⃣ Applicability of Section 44AD

Section 44AD applies business-wise, not assessee-wise.

✔ Eligible business → can be declared under 44AD
✔ Speculative business → not compulsory to be under 44AD
✔ Law does not prohibit maintaining separate computation heads

There is no provision in section 44AD stating:

“If you opt for 44AD, all business income must be offered under it.”

3️⃣ Section 44AD(6) – Lock-in Restriction (Important Clarification)

The 5-year restriction applies only if:

• You opt out after declaring lower income than presumptive rate

It does NOT apply when:

• You never offered a particular business (e.g., intraday trading) under 44AD in the first place

Hence, not showing intraday trading under 44AD does not trigger 44AD(6).

4️⃣ Practical Computation Treatment

5️⃣ Loss & Set-off Caveat

• Speculative loss (intraday) can be set off only against speculative income

• Cannot be adjusted against 44AD presumptive income

• Carry forward allowed for 4 assessment years (ITR filing mandatory in time)

Caveats & When Human Review Is Needed

• If intraday turnover is substantial, AO may question bifurcation

• Books/audit implications if turnover crosses limits under normal provisions

• If loss is claimed → scrutiny risk increases

• Mixed business models with frequent switching between 44AD and normal provisions need careful planning

Action Plan

1. Classify each activity clearly: speculative vs non-speculative

2. Offer only eligible business under section 44AD

3. Report intraday trading under normal computation head

4. Ensure timely filing to preserve speculative loss carry-forward

5. Maintain contract notes, broker statements, and turnover workings

Templates / Forms / Checklist

• ITR-3 (mandatory if speculative business exists)

• Broker P&L + turnover calculation (absolute sum method)

• Separate working note justifying non-applicability of 44AD to intraday trades

References

• Income-tax Act, 1961 – Sections 44AD & 43(5)
  https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx

• CBDT Circular No. 8/2010 dated 13-08-2010
  https://incometaxindia.gov.in/communications/circular/circular8_2010.pdf

✅ Conclusion

Your statement is legally sustainable:

There is no restriction under section 44AD preventing an assessee from not offering intraday trading under presumptive taxation.

But correct classification, reporting, and loss treatment are critical.

Noted there is separate code "21009" for speculative profit in ITR form under presumptive taxation.

Does it indicate that speculative profit can be shown under presumptive head?