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Tax filing - salaried income + f&o

Raghu (Salaried) (13 Points)

14 July 2017

Dear All, I am salaried person and I have two Form-16, I changed jobs last year. I also trade whenever I get time in futures and options (day trading). I have an account with zerodha and they have given a good turnover, P&L statement.

I have incurred loss
Total turnover is 35 lakh
Is a tax audit required?
Can I show expenses related to trading (servers that I have purchsed for algo trades, laptop, mobile purchase, data feeds that I have purchased, advisory services, attending seminars) etc?
Also let me know if I can include any other expense here.

I want to carry forward the losses. Need help in filing taxes.

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10 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 14 July 2017

3. Yes...

4. Expenses related to the business can be claimed, including depreciation on business assets....

RAMA KRISHNAN (247 Points)
Replied 14 July 2017

dhiraj sir...why tax audit required? pls clarify

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 14 July 2017

Provision of Section 44AB

"Audit of accounts of certain persons carrying on business or profession”. 44AB. Every person, --

(a) carrying on Business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year; or

(b) carrying on Profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year; or

(c) carrying on the Business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or

(d) carrying on the Business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.

More refer: /experts/applicability-of-sec-44ab-1277744.asp

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neeraj gupta (1138 Points)
Replied 14 July 2017

Dear Dhiraj Sir, I would like to verify my interpretation on this

In this particular case one of the conditions is not being satisfied and that is:

"... and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year get his accounts of such previous year"

The above part requires that his income declared below 6%/8% should have been above 2.5L for audit to be applied to assessee.

And since the income is <0 (assessee has lossess) which means his income is less than 2.5L and hence absolving him from the audit.

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neeraj gupta (1138 Points)
Replied 14 July 2017

Dear Raghu and Dhiraj Sir, I think I have found the problem in my interpretation. However I would still like to have your views on it.

I think the difference is made in 44AD(d) where two types of incomes are being addressed. One is income from Business and Profession to be considered under 44AD and subsequently this income from B&P is referred to as 'such income'. However subsequently in the phrase "... and his income exceeds the maximum amount which is not chargeable to income-tax ..." the prefix 'such' has not been applied that means there is a big probability that legislators meant the taxable income of the assessee (which includes Salary, capital gains etc) and not just the income from B&P. Thats my take.

So Mr Raghu, if your income from other sources like Salary, Bank Interest etc is above 2.5L then I would suggest that you should go for audit.

The legislation could have been explicit but even in current form it tilts more in favour of 'Audit is required'

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 14 July 2017

"However subsequently in the phrase "... and his income exceeds the maximum amount which is not chargeable to income-tax ..." the prefix 'such' has not been applied that means there is a big probability that legislators meant the taxable income of the assessee (which includes Salary, capital gains etc) and not just the income from B&P. Thats my take............... "

That is the correct interpretation of the phrase....

"if your income from other sources like Salary, Bank Interest etc is above 2.5L then I would suggest that you should go for audit."

This is what I had presumed, before answering the part 1., based on experience of the share traders........... mostly having good salary/other income....... and trading in the market for additional resources.......... I mean, rarely anyone trading in market may have gross income below basic limit.

One more take............. the loss from trading is not adjustible under salary income, even in same year......

So, the salary income remains intact for taxability........

2 Like