Getting Started With Trading

8/17/2019 Getting Started With Trading

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Traderstodayhavesom uchofcom pellingoptionstotradein

thestockm arketvaryingfrom stocks,futures,oroptionsto

m anagetheircapitalm orewiselyandachievetheirtrading

objectives.Butontheotherside,theyareobligatedunder

incom etaxregulationstofiletheirreturnsinrightm anner

andpaytaxesontheirtradingprofits.So,itbecom es

im portantforanytradertounderstandthetaxation

treatm entoftradingbusinessinIndiasothattheycanplan

theirtradingactivityaccordinglyandachievetheirgoals.

Inanattem pttom akeyourtasksim pleandeasierwhilefiling

yourincom etax,wearewritingtheseseriesofpoststohelp

youunderstandhowwetradersareobligatedunderthelaw to

takecareoffillingofourtradingactivities.

Incom efrom tradingorinvestm entactivitycanbeclassified

intofourdifferentsets:-

LongTerm CapitalGain1.ShortTerm CapitalGain2.SpeculativeBusinessIncom e3.Non-SpeculativeBusinessIncom e4.

Em ail address:

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Stocks sold after holding for more than 365 days – Tax

Free

Investm entsform orethanoneyear(365Days)are

consideredtobelongterm andprofitsarisingoutfrom selling

astockafterholdingitfor12m onthswillbetreatedasalong

term capitalgain(LTCG)whichasperthesection10(38)oftheincom etaxactis exem pt from taxprovidedsucha

transactionisdonethrougharecognizedstockexchangefor

whichSecuritytransactiontax(STT)ispaid.Enjoy100% ofthe

profitsyoum adeoutofyourlongterm investm ents.

Stocks sold after holding for more than one but less than

365 days – 15% Tax

Anyprofitarisingoutfrom sellingastockafterholdingitfor

lessthan12m onthswillbetreatedasashortterm capitalgain

andwill be taxed at 15% providedyoutakethedeliveryof

sharesinyourdem ataccount(Exchangehasasettlem enttim e

ofT+2workingdays,soanystockthatyouboughtonM onday

com esinyourdm ataccountonlyonthe2 dayfrom dateofpurchasei.e.W ednesday).

Equity Intra-Day or Non-Delivery Trading – Taxed as

per Tax Slab

Anytransactionwhereyoubuyandsellthesharesonthe

sam edayisaDay Trade.Anyprofitsandlossesarisingfrom

anysuchtransactionwillbeconsideredasSpeculative

Activity.

Aspersection43(5)oftheIncom eTaxAct,1961,profits

earnedbytradingequityforintradayornon-deliveryis

categorizedasSpeculative Business Incom eandwillbe

addedtoyourotherincom eundertheheadincom efrom

business/professionandwillbetaxedaccordingtoyourtotalincom eslab.

LotSizeTradingPsychology

DoubleBottom IPOhdfcbankStocksBankN iftyFuturesDayTradingNifty

OptionsNRIGettingstartedTaxationInspirationInvestm entJesseLiverm oreGettingStartedW ithChartingBankBeesNiftyBeesRulesDayTrading

StockSplit ETFNiftyFuturesFuturesReversalBaryesbankW arrenBuffett

nd


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Futures & Options Trading – Taxed as per Tax Slab

Incom efrom tradingFutures&O ptions(F&O )onarecognized

exchanges(Equity,Com m odityorCurrency)willbeconsidered

asNon-Speculative Business Incom e.Theseincom em ust

beaddedtoyourtotalincom eandtaxedaccordingtoyour

newrespectivetaxslab.

Astheseincom esareconsideredasbusinessincom e,soyou

canoffsetitwithbusinessexpensesyouincurtoearnitlike

depreciation,internetbills,advisoryfees,softwarecharges,

andm ore.

Thefirstandforem ostdecisionthatanym arketparticipant

hastom akebeforestartingfillingIncom etaxistodeclare

whetherhe/sheisaninvestororatrader?Incom etax

regulationsinIndiatreatstheactivityofatraderandinvestor

indifferentwaysandhavein-turndifferenttaxationtreatm entandobligations.

Trading Activity as Investment

Aninvestorissom eonewhoparticipatesinEquitysegm ent

andbuysharesofcom paniesandsellitafterholdingitforsom eperiodoftim e.So,ifyoubuysharesandsellitafter

takingthedeliveryinyourdm ataccount,donottradeinF&O

segm ent,ordonottradestocksforintradayorBTSTthenyou

candeclare self as an Investorandenjoythebenefitsofan

investorasperincom etaxrules.So,taxationforinvestorlies

onlyforlongandshortterm tradinginstocksandifyoutrade

stocksintradayorBTSTortradeF&O,thenyoucannot

declareyourselfasanInvestor.Anim portantconsiderationhereisthatifyourshortterm

tradingism orefrequent(i.e.m anytim eswithinaweek)then

youhavetocallyoushortterm tradingasBusinessIncom e


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ratherShortTerm CapitalGain.

Anotherthingwhichisrequiredtobeconsideredhereisthat,

ifyouareafulltim etrader(i.e.tradingorinvestm entisyour

onlysourceofincom e)thenitisbettertoconsideryour

incom easincom efrom business.

All the taxation rules for an investor is illustrated and

detailed in Section – I.

TradingActivityasBusiness

Atraderissom eonewhoactivelytradesinthestocks,future

&options,currencyandcom m oditiesm arket.So,ifyoudaytradeorBTSTinstocks(withouttakingdeliveryinyourdm at),

ortradeinF&O segm ent(whetherpositionalorintraday),

thenyouhavetodeclareselfasatraderandyourtradingwill

beconsideredtobeasbusinessactivityandwillbetaxedas

perBusinessIncom e.

ReadTaxBenefits&Im plicationsofDeclaringTradingasa

BusinessActivity.

All the taxation rules for an investor is illustrated and

detailed in Section – II.

Apartfrom theabove,therearesom eotherconsiderations

requiredtobetakenintoaccountwhileclassifyingtheir

tradingactivityasBusinessorInvestm ent.

Therulesaboveareverym uchclearforthosewhotrades

activelyinFutures&O ptions(Non-SpeculaitveBusiness

Incom e)anddoIntradaytrading(SpeculativeTrading).So

thosetradershavetoconsidertheirtradingasabusiness

activity.Thetaxationrulesareclearforspeculativedaytradingand

non-speculativefuturestrading,asanyincom efrom thesetwo

sourceswillsurelyhastobedeclaredasbusinessincom e.Even


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forthesalaried,suchactivityhastobeconsideredasbusiness

andwillbetaxedastheBusinessIncom e.

Theabovecriteriaareverym uchapplicabletothosewhose

onlysourceofincom eistradingbusinessbutifyouare

salariedoryouhavesom eotherbusinessincom easyour

prim aryorcoreincom esourcethenitbecom eseasiertoshowyourequityprofitsascapitalgains.

Forlongterm investments,allthestocksthatyouhavesold

afterholdingform orethanoneyearcanbedeclaredaslong

term capitalgainandthusexem ptfrom taxwhileifyouare

tradingstocksfrequentlythenalltheseincom eshouldbe

declareasspeculativeratherthancapitalgain.

Butanotherviewonthislieswiththatifyouaretradingf&oanddoingfrequentshortterm equitythenyouhavetodeclare

selfasatraderbuteventhenyoucandeclareyourlongterm

profitsaslongterm capitalgainsandbeexem ptfrom taxes.

So,youcanbeatraderaswellasaninvestoratthesam etim e.

Therefore,itbecom esim portanttostayconsistentwithwhat

youaredeclaringselfwhiledoingtaxreturns.So,consultaCA

todeterm inewhattodeclareselfwhilefilingtaxreturnsto

achieveyourtradingobjectivesinfutures.

Incom efrom EquityTrading–BusinessIncom eorCapital

Gain?– om ing Soon


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Stock hold for more than 12 months – Long Term Capital

Tax

Investm entsform orethanoneyearareconsideredtobelong

term andattractnotaxonprofits.Profitsarisingoutfrom

sellingastockafterholdingitfor12m onthswillbetreatedas

alongterm capitalgain(LTCG)whichasperthesection10(38)oftheincom etaxactisexem ptfrom tax(providedsucha

transactionisdonethrougharecognizedstockexchangefor

whichSecuritytransactiontax(STT)ispaid).Enjoy100% of

theprofitsyoum adeoutofyourlongterm investm ents.

W hileontheotherhand,anylossarisingfrom sellingthestock

after12m onthswillnotbeadjustedagainstanyshortorlong

term capitalgainfrom anysource.

Suppose,M r.Shrinivasanhasbought1000sharesofTata

M otorsatRs.260onApril9th2013andhesolditatRs.500

onSept17 2014,thenthetotallongterm profitofRs.2.4

Lacsarisingfrom thisinvestm entwillbeexem ptfrom taxand

hecanenjoythe100%profitsanddon t̀havetopayany

incom etaxonit.

W hileontheotherhand,ifhehasbought1000sharesofDLF

atRs.230onApril9 2014andsolditatRs.167onSept17

2014,thenthetotalshortterm lossofRs.63,000arisingfromthisinvestm entwillnotbeadjustedagainsttheprofitm ade

from TataM otorsoranyothersource.

Iftheinvestm entandtheconsequentsaleweredoneviaan

off-m arkettransaction(transferringfrom oneDPtoanother

personsDP),thentheLongTerm CapitalGainTaxon:-

Listedstocksis10%Nonlistedstocksis20%

Short Note for Taxation for Long Term Investing

In India

#1.ProfitsorLossesfrom longterm investm entswillbe

treatedasLongTerm CapitalGainorLoss.

#2.Profitsfrom Longterm investm entswillbetaxfree

(Providedtheyaredonethroughanexchangeandsoldafter

th

th th


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holdingform orethanoneyear,i.e.365days)

#3.Lossesfrom Longterm investm entscannotbeadjusted

againstanyshortterm andlongterm profits.

#4.STTpaidtotheGovtcannotbeclaim edasexpensefor

Investing.

Stocks hold for less than 12 months – Short Term

Capital Tax

Anyprofitarisingoutfrom sellingastockafterholdingitforlessthan12m onthswillbetreatedasashortterm capitalgain

andwillbetaxedat15%providedyoutakethedeliveryof

sharesinyourdem ataccount(Exchangehasasettlem enttim e

ofT+2workingdays,soanystockthatyouboughtonM onday

com esinyourdm ataccountonlyonthe2 dayfrom dateof

purchasei.e.W ednesday).

W hileontheotherhand,anylossarisingoutoftheshortterm

tradingcanbecarryforwardedtoaperiodof8yearsagainst

anyshortterm capitalgainorlongterm capitalgain,ifthese

losesaredeclaredwhilefillingtheincom etaxreturns.

Suppose,M r.Shrinivasanhasbought1000sharesofTata

M otorsatRs.260onApril9 2013andsoldthem atRs.420

onM ar04 2014,thenhehastopayashortterm capitalgain

taxof15% (i.e.Rs.24,000)onhisprofitofRs.1.6Lacs.

W hileontheotherhand,ifhehasbought1000sharesofDLF

atRs.230onApril9 ,2013andsoldthem atRs.140onM ar04 2014,thenthetotallossofRs.90,000arisingfrom this

investm entcanbenettedagainsttheprofitsm adefrom Tata

M otorsoranycapitalgainarisingwithintheperiodof8years.

Short Note for Taxation for Short Term Investing

In India

#1.ProfitsorLossesfrom shortterm investm entswillbe

treatedasshortterm capitalgainorloss.

#2.Profitsfrom shortterm investm ents(withinoneyear)will

nd

th

th

th

th


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betreatedasshortterm capitalgainandtaxedat15%.

#3.Lossfrom shortterm investm entscanbecarryforwarded

toaperiodof8yearsagainstanyshortterm capitalgainor

longterm capitalgain,iftheselosesaredeclaredwhilefilling

theincom etaxreturnsinrespectiveyears.

Investorsshouldtakeagoodnoteofthetotalholdingperiodof

anystocktheyareplanningtosell,asanystocksoldafter

holdingitforeven364dayswillbeconsideredasshortTerm

andnotLongTerm .So,totakethebenefitofthelongterm

capitalgainkeepafairnoteontheholdingperiodofthestock.

Anotherim portantpointtoconsiderhereisthatifyouhave

boughtandsoldthesam esharesm anytim es,thenyouwill havetouseFIFO m ethodtocalculatetheholdingperiodand

in-turnyourCapitalGains.

Equity Delivery and F&O Trading – Taxed as per

Income Tax Slab

Ifyouaretradingfutures&optionsordaytradingstocksona

recognizedstockexchange,thenyouhavetodeclareyourself

asaTrader.So,equitytradingforshortterm orlongterm will

beconsideredasBusinessTradingandwillbetaxedjust

sim ilartotaxationof‘Futures&Options’.

Profitsarisingoutfrom sellingastockafterholdingitfor12

m onthsorlessthan12m onths(excludingequitydaytradeor


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BTST)orfrom tradingderivativeswillbetreatedasa

BusinessIncom eandaddedtoyourtotalincom eandtaxed

accordingtoyournewrespectivetaxslab.

Astheseincom esareconsideredasbusinessincom e,soyou

canoffsetitwithbusinessexpensesyouincurtoearnitlike

depreciation,internetbills,advisoryfees,softwarecharges,

andm ore.

W hileontheotherhand,anylossarisingfrom trading

derivativeswillbeconsideredasNonSpeculativeBusiness

Lossandcanbeoffsetagainstanyotherbusinessincom e

includingspeculativebusinessincom e(Incom efrom Day

Trading)exceptsalaryinthesam eyear.Soyoucanset-off

againstbankinterestincom e,rentalincom e,capitalgains,but

onlyinthe sam e year.

Thebalance,ifany,canbecarriedforwardandsetoffonly

againstnon-speculativebusinessincom ewithineight

assessm entyearsim m ediatelysucceedingtheassessm ent

yearinwhichthelosswasfirstcom puted.

ForExam ple,Intheyear2013-14,M r.Shrinivasanhasa

annualsalaryofRs.6lacsandhehasincurredatotallossfrom

derivativesofRs.1lacandhisincom efrom daytradingisRs.

25000andotherbusinessincom e(apartfrom salary)isRs.1.5lacsthenhislossfrom derivatives(1Lacs)canoffsetfrom day

tradingincom e(25000)andothersources(75,000).

Therefore,histaxableincom ewillbeRs.6lacs+[25000+1.5

lacs–1lac]isRs.6.75Lacsandwillbetaxedaccordingtohis

taxslabof20% .

Theabovecriteriaareverym uchapplicabletothosewhose

onlysourceofincom eistradingbusinessbutifyouare

salariedoryouhavesom eotherbusinessincom easyour

prim aryorcoreincom esourcethenitbecom eseasiertoshow

yourequityprofitsascapitalgains.

IfyouaretradingF&O anddoingfrequentshortterm equity

thenyouhavetodeclareselfasatraderbuteventhenyoucan

declareyourlongterm profitsaslongterm capitalgainsand

beexem ptfrom taxes.So,youcanbeatraderaswellasan

investoratthesam etim e.

So,taxationrulesareclearforspeculativedaytradingand



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sourceswillsurelyhastobedeclaredasbusinessincom e.

Butforlongterm investments,allthestocksthatyouhave

soldafterholdingform orethanoneyearcanbedeclaredas

longterm capitalgainandthusexem ptfrom taxwhileifyou

aretradingstocksfrequentlythenalltheseincom eshouldbe

declareasspeculativeratherthancapitalgain.

Therefore,itbecom esim portanttostayconsistentwithwhat

youaredeclaringselfwhiledoingtaxreturns.So,consultaCA

todeterm inewhattodeclareselfwhilefilingtaxreturnsto

achieveyourtradingobjectivesinfutures.

Short Note:

#1.SpeculativeTradinginStocksorF&Otradingrequiresyou

todeclareyourselfasaTrader.

#2.ProfitsorLossesfrom equitytradingforlongterm orshort

term andderivativestradingwillbetaxedasIncom efrom

Business/Profession,iftradingisyouronlysourceofIncom e.

#3.Profitswillbeaddedtoyourtotalincom eandtaxed

accordingtoyourrespectivetaxslabs.

#4.Lossesfrom derivativestradingcannotbedeductedfromsalaryincom ebutcanbeoffsetagainstanyotherincom e

(includingdaytradingincom e)insam eyear.

#5.Lossescanbecarriedforwardandsetoffonlyagainst

non-speculativebusinessincom ewithineightassessm ent

yearsim m ediatelysucceedingtheassessm entyearinwhich

thelosswasfirstcom puted.

#6.Businessexpensesincludingdepreciation,internetbills,

advisoryfees,softwarecharges,andm ore.canbeoffset

againstyourprofitsincom e.

#7.ITR4shouldbeusedwhilefillingtaxationforindividuals

tradingderivatives.

#8. Theonlythingthatyou’llhavetoknowiswhethertoget

yourbooksauditedornot.So,Ifyouturnoverforthefinancial

yearis>1croreandyourprofitsarelessthan8%ofthe

turnover,youhavetocom pulsorilygetyourbooksaudited.

Butifyoutotalincom eisbelowthetaxablelim it,thenthereis

noneedtoundergotaxaudit.

#9.Taxationrulesareclearforspeculativedaytradingand



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sourceswillsurelyhastobedeclaredasbusinessincom e.If

youaretradingF&O anddoingfrequentshortterm equity

thenyouhavetodeclareselfasatraderbuteventhenyoucan

declareyourlongterm profitsaslongterm capitalgainsand

beexem ptfrom taxes.So,youcanbeatraderaswellasan

investoratthesam etim e.

Equity Day Trading (Intraday Trading) or Non-DeliveryTrading – Taxed as per Income Tax Slab

Anytransactionwhereyoubuyandsellthesharesonthe

sam edayisaDayTrade.Any pro ts and losses arising from

any such transaction w ill be considered as speculative

and will be added or netted of against your incom e from

business/profession.

So,anyprofitfrom daytrading(equities)willbeconsideredas

aspeculativeincom eandwillbeaddedtoyourotherincom eundertheheadincom efrom business/professionandwillbe

taxedaccordingtoyourtotalincom eslab.

Suppose,M r.Srinivasan s̀totalsalaryincom eisRs.6lacsand

hisdaytradingprofitsfortheyearis1.5lacs,thenhistotal

incom ewillbe7.5lacsandwillbetaxedasper20% slab.

W hileontheotherhand,anylossfrom thedaytradingwillbe

consideredasaspeculativelossandcanbecarriedforward

againstonlyspeculativeprofitwithintheperiodofnext4

yearsandnotagainstlongterm orshortterm capitalgainsor

nonspeculativeincom e(F&OIncom e)asperSection73(1)of

theIncom eTaxAct,1961.

Suppose,M r.Srinivasanhadincurredadaytradinglossof1lac

andbookedashortterm profitof2lacsduringthesam eyear,

thenthe1laclosscannotbenettedoffagainst2lacsprofit.

So,hehastopayshortterm taxon2lacsprofitand1lacloss

canoffsetagainstanyspeculativeprofitswithinnextfouryears.

Short Note:


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#1.ProfitsorLossesfrom daytradingequitywillbe

consideredasSpeculativeProfitorLoss.

#2.Profitsfrom daytradingequitieswillbeconsideredas

speculativeincom eandwillbeaddedtootherincom eand

taxedasperyourtaxslab.

#3.Anylossfrom speculative(daytradingequities)cannotbe

adjustedagainstshortorlongterm profitsornonspeculative

incom e(F&O Incom e)butcanbeoffsetagainstspeculative

profitswithinthenextfouryears.

Tocarryforwardthelossesinthesubsequentyears,theperquisiteisthattheyshouldbefiledinthesam eyearthe

losseswereincurred,elseyoucannotcarryforwardthem in

thesubsequentyears.

Speculative business losses (Equity Intraday Trading

Losses)canbecarryforwardforaperiodof4yearsandcan

beset-offonlyagainstanyspeculativegainsandnotagainst

non-speculative(F&O )gains,

N on-Speculative Business Losses (F&O Trading Losses)

canbeset-offagainstanyotherbusinessincom e(bank

interestincom e,rentalincom e,capitalgains)exceptsalary

incom einthe sam e yearandbalanceifanycanbecarry

forwardforthenext8yearsandcanset-offonlyagainstany

non-speculativegainsm adeinthatperiod.

Anytraderwillhavetoundergotheauditofaccountsifthe

TurnoverforthefinancialyearisgreaterthanRs.1crore

(providedhisannualincom eism orethan2.5lacs).So,ifyourtotalincom e(trading+Salaryorotherbusiness)islesserthan

Rs2.5lacs,youdon’tneedanauditeveniftheturnoverforthe

yearisgreaterthan1crore.


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Turnoverisbeingcalculatedtodeterm ineifyouneedatax

auditornot?

ForIntradayequity— absolutesum ofsettlem entprofitsandlossesperscripForDeliveryequity— sellsidevalueofthestockForF&O (Equity,Currency,Com m odity)— absolutesum ofsettlem entprofits&lossesforF&O)perscripandthesellsidevalueofoptioncontracts

Suppose,youbought1lot(25units)BankNiftyfuturesatRs.

17700andsolditat17800,thenyoum adeaprofitofRs.

2500andsayonsom eotherday,youhadalossofRs.1500,

thenthetotalturnoverwillbesum m edupas2500+1500=

Rs.4000.So,allsuchsettlem entprofits&lossesadded

together(absolute)sum m edtogetherform supasturnover.

In case of O ptions,

SupposeyouboughtBankNifty19,000CA@ 100andsoldit@

300,thenturnoverwillbe25x(300-100)=5000.

Inanothercase,supposeyouboughtBankNifty19,000CA@

100andsoldit@ 50,thentotalturnoverwillbe25x(100-50)

=1250.

Lastly.supposeyouboughtBankNifty19,000CA@ 100andit

expiresworthless,thenthetotalturnoverwillbe25x(100-0)

=2500.

Tounderstandthedifferencebetweenthetradingand

settlem entturnovercalculationforaudit,Refertothe

illustration.

Suppose,M r.Srinivasanbought100sharesofTataM otorsat

400andsold100sharesat380thenhistradingvolum ewillbe

Rs78000buthissettlem entturnoverwillbejustRs100×20=Rs.2000.So,Allsuchsettlem entprofitsandlossessum m edup

togetherifexceedsRs1crore,onlythenistheauditrequired.


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Ifyouareasalariedperson,thenprofitsfrom derivativeswill

beaddedtoyoursalaryincom eandwillbetaxedaccordingto

yourtaxslabs.W hileontheotherhand,lossesfrom

derivativestradingcannotbeoffsetagainstthesalaryincom e

butcanbeoffsetagainstanybusinessincom einnext8years.

#1.Profit&LossStatem ent

#2.ContractNotes

#3.DepositoryStatem ents

#4.BankStatem ents

Anyindividualtradercarryingouttradingactivitybeitlong,shortordayterm areobligatedundertheincom etaxlawto

filetheirreturnsbeforeJuly31(This year the date is

extended to Septem ber 7, 2015)anditisSeptem ber30th

forcom panies.

IncaseyourturnoverexceedsRs.1croreinafinancialyear,

thenthebookofaccountsneedstobeauditedandthedue

dateforfillingreturnsisSeptem ber30.Undersection271B,

failuretosubm itthetaxauditintim ehasapenaltyof0.5%of

turnoverorRs1.5lakhs,whicheverislesser.


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BusinessexpensesincludingBrokerageCharges,Internet

Charges,AdvisoryFees,ResearchReports,Com puter&electronicsDepreciation,ElectricityBill,Telephone,Software

&DataFeedCharges,Newspaper,Books,STTandrent,etc

canbeusedtoreducethetaxableincom efrom

Speculative/BusinessIncom e.Youcanm entionanyother

expensesthatisincurredforundertakingyourtradingactivity

underthesection“O therExpenses”.So,foranyexpensesyou

m entionm aintainthesupportingdocum entsforanyfuture

reference.

STT, or Securities Transaction Tax,isataxleviedon

securitiestrades(excludingcom m oditiesorcurrencytrades).

DifferentSTTratesareapplicableforEquity(cash)and

FuturesandOptions(F&O)transactions.STTisleviedon

tradesontheNationalStockExchange(NSE),Bom bayStock

Exchange(BSE),andotherrecognizedstockexchanges.For

com m odities,CTT(Com m oditiesTransactionTax)islevied.

Ifthetradeisaequitydeliverytrade,thanataxof0.1%ontheturnoverisleviedonboththebuysideandsellsidesofeach

trade.However,ifthetradeissquaredoff(closed)withinthe

sam etradingday,m eaningitisaintra-daytransaction,then

theSTTrateapplicableis0.025% onthesell-sidetrade(s)only.

For Investors

ITR1–Individualshavingincom efrom SalaryandInterest

ITR2–Individualshavingincom efrom salary,Interestand

Rental

For Traders

ITR4orITR4(S)–IndividualsandHUF’shavingincom efrom a

proprietorbusinessorprofession


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For Com panies

ITR6

For

M en/W om en

below 60 years

of age

For Senior

Citizens (Age 60

years or m ore

but less than 80

years)

For Senior

Citizens (Age 80

years or m ore)

Incom e

Level

Tax

Rate

Income

Level

Tax

Rate

Income

Level

Tax

Rate

Rs.2,50,000

Nil UptoRs.3,00,000

Nil UptoRs.5,00,000

Nil

Rs.2,50,001–Rs.500,000

10% Rs.3,00,001–Rs.500,000

10% Rs.5,00,001–Rs.10,00,000

20%

Rs.

500,001–Rs.10,00,000

20% Rs.

500,001–Rs.10,00,000

20% AboveRs.

10,00,000

30%

AboveRs.10,00,000

30% AboveRs.10,00,000

30%

In case of com panies, incom e tax is a flat 30% and no tax

slabs exist.

# Is there any loss w e can net off against salary?

No,wecannotoffsetanytradinglossesagainstsalaryincom e.

# Can we deduct long term capital loss from stocks with

business incom e for com puting incom e tax?


f 24 19/Sep/2015 17:32


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No,wecannotnetoffthelongterm lossesagainstanyincom e

orgains.

# Can w e carry forw ard the losses if not led in the

nancial year?

Togetthebenefitofcarryforwardingthelosses,ithastobe

filedinyourincom etaxbeforetheduedatesforthefinancialyeartogetanybenefit.Otherwise,youcannotclaim the

benefit.

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BiggestW inners&DraggersoftheBankNiftyIndexin2013-14BullRun→

Reply

Thisveryneatandthanksfortheinfo.Im ostlytakedeliveryandhavedonesom e10tim esIntraday

m adeaboutnotm orethanRs.2000.CanIdeclare

m yselfInvestor.

DearSudhakar

Incom etaxregulationshadwideaspectsto

classifyyourtradingactivityasBusinessor

Investm ent.

Intradaytrading(i.e.non–deliverytrading)isconsideredasSpeculativeBusinessactivitywhich

requiresyoutodeclareselfasatrader.Soany

incom efrom equitydaytradingisspeculative

businessincom eneedstoshownunderthehead

incom efrom business/professionandwillbe

addedtoyourotherincom eandtaxedasperyour

TaxSlab.

Thereareothercriterià stoclassifyselfasatraderorinvestorlikeifyouarebuyingandselling

stocksfrequentlywithinweeksforshortterm or

SudhakarJ

August6,2015at3:33PM

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Reply

engagedinequitydaytradingorfuturestrading

oryourprim arysourceofincom eis

trading/investm entoryouaredeclaringselfasa

Traderinprevioustaxreturnsthenyouhaveto

declareyourtradingactivityasBusiness.

Hi,

M ym ainsourceofincom eisFDsandIntraday+

BTST+shortterm .Incom ebelowtaxablelim it.StillI

receivednoticesaskingwhyIhavenotsubm itted

returnsforpast2years.Theyarereferringtom y

abovetradesunderSTT-01,STT-02andSTT-03.

SoIhavedecidedtofilethisyearsreturnandIknow

IneedtofileITR4.Pleasehelpinprovidingsom e

ITR4specim enforstockm arkettraders…..

Supposeasperportfoliopositionfrom backofficeI

have:

Deliverypurchases=500000

Deliverysales=492000

Speculationpurchases=6200000

Speculationsales=6215000

Totalofpositiveandnegativevaluesofspeculation

entries=50000

CostpriceofStockswithm eon1Apr2014=56000

(Calculatedm ybefrom lastyearreportsandnot

availabledirectly)

CostpriceofStockswithm eon31M ar2015=

110000(Calculatedm ybefrom thisyearreports

andnotavailabledirectly)

M arketvalueofstocks(availablefrom backoffice)heldon1Apr2014andsam edayvalue=67000.I

dontnowwhyitisrequired.SoIthinkthisistobe

ignoredand56000istobetakenasopeningstock.

Gaurav


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f 24 19/Sep/2015 17:32


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Reply

M arketvalueofstocks(availablefrom backoffice)

heldon31M ar2015andsam edayvalue=95000.I

dontnowwhyitisrequired.SoIthinkthisistobe

ignoredand110000istobetakenasclosingstock.

M arginm oneyintradingaccounton1Apr2014=

9000M arginm oneyintradingaccounton31M ar2015=

10000

Pleasehelpm ewithsam pleITR4forthisdata.

Assum ingthatFD+abovedataislessthantaxable

lim itandm yprofitislessthan8percent,am I

requiredtogetm yselfaudited?

Thanks

DearGaurav

Thefirstthingweneedtoevaluateistheprofitor

lossyouhadonyourtradingactivityseparately

forlongterm ,shortterm andspeculative.So,

considerallthedeliverystocksthatyousoldthis

financialyear(astherem ustbesom estocksthat

youpurchasedlastyearandsoldthisFYorsom e

youboughtthisFYbutnotsoldoff)forcalculating

theprofitorlossandyourspeculativeprofit&

lossalso.

Asyourturnoverislessthan1croresandyour

totalincom eisbelowthetaxablelim itofRs.2.5

lacs,youarenotrequiredtoundergothetax

audit.

Alltheintradayprofitsshouldbeshownunder

speculativebusinessincom ewhileallshortterm

equitydeliveryprofitsundercapitalgainshead.

JustTrading


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f 24 19/Sep/2015 17:32


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Reply

Reply

AsforITR4,youarerequiredtoprepareyour

balancesheetdeclaringyourassets(Cashinhand,

depositswithBank,investm ents,Property,

Autom obilesandOtherassetsandliabilities

(loans,creditcardbalances,m ortgageloansetc)

andprofit&lossstatem entsum m arizingyour

incom eandexpensesjustlikeabusiness.

So,itisadvisabletofilethesam ewiththehelpof

aCAsothatyourem ainconsistentwithyour

futuretaxreturns.

Sir,M ym ainsourceofincom eisfarm er+fd+btst

andintradaytrading.M yincom ebelowtaxablelim it.

StillIreceivednoticeaskingwhyIhavenot

subm ittedreturnspast3years.Becausem yincom e

laserthanonelackallsources.M yincom esource…

farm er40000/-peryear

Fdinterest10000/-

O ther10000/-

AndsharetradingIam loss20000/-som ething.

M yportfolioabout2lakh70thousand.

Ihavelossin20y4-15indaytradingabout20000.

M ydayvolum ebuyandselltotalis50lack.M yincom enotm orethanonelacksoIam notfile

incom etaxpastyear’s.Canifileincom etaxthis

year?Pleasegivem eadvice.

Thanks.

Jitendra


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August23,2015at2:28PMPerm alink


f 24 19/Sep/2015 17:32


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Reply

Reply

Dearjitendra

Incom etaxcom plianceisgettingverystrictthese

days.

Soallthetradersorinvestorsparticipatinginthe

m arketarerequiredtofiletheirtaxreturnseven

ifthetotalincom eisbelowtaxlim it.

M anytradersaregettingnoticesfrom IT

departm entfornonfillingorwrongfillingof

returnsspeciallythosedaytrading,shortterm

tradingand,tradingf&oasallthetraderstrading

them arketshavetoconsidertheirprofitsor

lossesasbusinessincom eorlosses,sotheyare

requiredtofileITR4or4S.

Asperlaw,Electronicfilingofincom etaxreturnis

m andatoryforthetaxpayerifthetotalincom eis

m orethanRs.5lakhorifthereisaclaim of

refundexceptforsuperseniorcitizen(Ageabove

80years)orifITRs3,4,5,6or7havetobefiled

(Rule12(3)oftheIncom eTaxRules,1962as

am ended)

Evenm anyofthetradersweareconnected

witharegettingnoticesfornon-fillingof

incom etaxreturns.

ITdepartm entarefilteringouttheaccounts

whoareparticipatinginthecapitalm arketbut

notfillingtheirtaxreturnsunderSTT-01,

STT-02,STT-03,STT-04,STT-05andasking

them tosubm ittheirresponseelectronically

underCom plaincem odule.

JustTrading


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