Proprietor/Proprietorship/small business/Stock Market Intraday Trading!

Hello CAs,

I am a senior citizen and an IT Professional with a proprietorship firm(GST Registered). I have been filing ITR4 with presumptive taxation under 44ADA so far. However, this AY , my business income from IT activities is NIL but I had started INTRADAY/short term trading(in my personal name) . Gross income for this AY is well below Rs.50Lacs 

Here is the case , 

a. TDS of Bank Interests on deposits

b. Income from Information Technology : 0

c. Turnover from Intraday Tarding: yes (loss) < 1.0 lac ---> activity under personal name

d.Short Term capital gain : yes (profit) < 5K ----> activity under personal name

I am a bit confused as to whether to file ITR4 or ITR3.

I prefer ITR4 as it is simple and without the requirement of maintaining books/audit etc and my case is well within the prescribed limits.

So I did some research and reading. 

Following is my understanding and would like someone to verify and correct me if I am wrong.

  1. I can still use ITR4(presumptive taxation, 44AD) to file my return as before and use business code 13010 and use 6% of my Turnover from Intraday as taxable income. I uderstand the pros and cons as follows.

          Pros : Easy , simple and straight forward as along as income is within prescribed limits 

          Cons: Cant carry forwad loss

          Question : How do I show the Short Term capital gain in this case ? Do I just add it to Intarday Turnover              /gross Income ? Is there a provision in ITR4 to declare Short Term Capital Gain ?

    2. For Income tax purposes , Proprietorship is just an extension of the Proprietor and the Proprietor is the              RESPONSIBLE and accountable person for filing Income Tax. Proprietorship Income can be shown along            with other personal incomes like bank interests etc..

    3. Is it mandatory that I have to file ITR3 instead of ITR4 ? (I am willing forgoe the intraday loss                             carry forward facility this AY, my intraday turnover is very small and well below taxable income).

    Is my understaning right ? I thought these questions and answers might be useful for someone else        also in a similar situation!

Thanx in advance.

Regards

SK

 

Replies (2)
Quick Summary
A proprietor with a GST-registered firm, previously filing ITR4 under presumptive taxation, is now unsure whether to use ITR4 or ITR3. Their IT business income is nil, but they have intraday trading losses and small short-term capital gains. They are seeking clarification on how to declare these incomes and if ITR4 is still a viable option, or if ITR3 is mandatory.

Hi, You need to file ITR 3 only as you need to show short-term capital gains also. In ITR 4, there is no option to show income from capital gains.

CA Aakarsh Jain
ca.ajaakarshjain16 @ gmail.com
Thank you for the response. Looks like ITR3.

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