Fire your tax related queries and i would get it solved!!!

[turbo]

Hi Diosys,
Excellent thread and very informative for the common man who doesnt have much info about taxes, unfortunately its not explained in a practical way in schools or colleges, where u spend a lot of time studying useless things in maths, science and languages which doesnt help u later on in life.

I have a few questions for you,
1. I am an NRI, trading in futures through my wifes account.She doesnt have any other taxabe income in India.
2. My monthly turnover exceeds 10cr and on an average I make 200k to 300 k monthly. How much tax I would have to pay, Do I need a tax audit, What are the deductions I can get, Can I deduct STCG losses made in 2006/07.
3. In 2006/07 I made loss of about 250k from Margin Trading, I have not filed Tax returns, Till when can I do this.

Please do reply,

 

[Asia Etrader]

The gains are your wife's not yours if the account is infact in her name. What account was the loss in? That person can carry the loss forward assuming India allows that.

 

[torontoguy]

Dear Sir, I have read your last 4-5 posts and will read all the thread.

As I have read the tax slab posted by you so I have a question in my mind relating to that.
so whenever you have time please reply that.

Q1) as you have posted that for women 1-145000 - tax nil

in this case If Women Has deposited 50,000 /- in the trading account and have no other income.

and suppose she has earned 1lac through options. Then will she be liable to pay any tax.?
because income is below 1,45000/-



Q2) and the same for a Men who have no income and is totally dependent on the share marketand doing intraday trade and trade in FNO also and earning below 1 lac then will he be liable to
pay any tax?


Thanks in Advance

Hi Jaya...

The tax slab are as listed below...Effective FY 2007-08

Men
1-110000 - Tax Nil
110000-150000 - Tax 10% on Difference between income and 1.5Lac
150000-250000 - Rs. 4000 + Tax on 20% of Diff between income and 2.5
250000 and above - Rs. 24000+ Tax on 30% of diff between income and 2.5

Senior Citizen
1-195000 - Tax Nil
195000-250000 - Tax on 20% of Diff between income and 2.5
250000 and above - Rs. 11000+ Tax on 30% of diff between income and 2.5

Women
1-145000 - Tax Nil
145000-150000 - Tax on 10% of Diff between income and 1.5
150000-250000 - Rs. 500 + Tax on 20% of Diff between income and 2.5
250000 and above - Rs. 20500+ Tax on 30% of diff between income and 2.5

The above caluclated tax would be increased by 3 % education cess in all the cases....

The Capital gain on short term capital gain from equities is 10% and on LTCg is Nil.....

 

[torontoguy]

I am very much confused about the turnover? I think you might have replied on this matter
but I did not find that so that's why again posting.....

Suppose I have bought the 1 Lot of Nifty Call at rs 150 then my total spent money is rs.7500/-

and Sold 1 Lot at 190 and got profit rs 40*50 in one lot that is 2000/- ( Brokerage is not debited yet )

then what would be my turnover Rs 7500? or 17000/- or 15000/-

or ( if call is of rs 5500 ) 5500+150=5650*50=282500?


I am confused about turnover please reply. and if this not the proper way to make you understand
then please let me know in your simple language.

Again saying thanks for helpling us

Dear Sri....

Tax audit is to be done when one's turnover is above 40 Lacs...For those in other industry it is the basic sale achieved....But in the case of transactions of F&O there is a difference...

For the purpose of F&O transactions the limit of 40 Lacs is the profit or loss in absolute terms...Let me explain with an example....

Suppose you bought one lot of 150 shares of Financial Technology at Rs. 3000...Then you sold it at 3100....Therefore your profit is 100*150=15000...

Now you bought one lot of 1400 shares of HCC at 100 and then sold it for 110...so your profit if 10*1400=15000...

Third, you bought one lot of 8000 shares of IFCI at 60 and then sold it for 50...so you incur a loss of Rs. 10*8000=80000...

therefore for the purpose of determining the total turnover you achieved would be 15000(FTIL profit) + 14000(HCC profit) + 80000(IFCI loss) = 1,19,000....

it would not be the total transaction values but the absolute profit or loss incurred in the transactions...

I hope it is now clear .....

 

[torontoguy]

Sir, As you have mentioned in derivatives if someone cross Rs. 40,00,000 turnover is liable to get the books audited by a charted accountent but in case if he is in loss then also he has to get the books
audited by a charterd accountent?


And what happen if individual is having this type of turnover and transactions.??


Actually I am a individual and I am in marketting line and having income below 1 Lac and in second side I am also dealing in Derivatives and Cash maket for short term gains but I am still in loss more than 65% of my Deposited amount with my broker but my turnover is more than Rs. 40,00,000 and many times I did very heavy trades ( like taking nifty's 20 lot buy sell in a day itself ) but after doing these trades I am still in loss so now please tell me in my case am I liable to get my books audited by a charterd account? and am I liable to pay any tax??

and second I haven't shown this in my ITR because I had thought that I am still in loss so no need to show it?

Thanks

Please also note that if you are dealing in derivatives and your total tournover (as mentioned by you is correct way of determining that) is in excess of Rs. 40,00,000 then you are liable to get your books audited by a Chartered Accountant otherwise there is a huge penalty of Rs. 1,00,000....Please be careful here

 

[diosys]

Dear Sir, I have read your last 4-5 posts and will read all the thread.

As I have read the tax slab posted by you so I have a question in my mind relating to that.
so whenever you have time please reply that.

Q1) as you have posted that for women 1-145000 - tax nil

in this case If Women Has deposited 50,000 /- in the trading account and have no other income.

and suppose she has earned 1lac through options. Then will she be liable to pay any tax.?
because income is below 1,45000/-



Q2) and the same for a Men who have no income and is totally dependent on the share marketand doing intraday trade and trade in FNO also and earning below 1 lac then will he be liable to
pay any tax?


Thanks in Advance

HI boarders....

I am extremely sorry to have vanished without a trace...Actually i am too busy with my work these days and would be so till 31st October....Would reply to all your queries after the said date.....And i also wish to thank the boarders who were concerned when i was not available....

In the meanwhile Torontoguy is really in need of help hence i am replying to his queries...Rest i would take up post 31st October, 2007.

1st Query of Toronto....

There would be no tax liability till you cross the minimum threshold limit as applicable to the gender you are looking for....So no tax relating to your above query...

 

[diosys]

I am very much confused about the turnover? I think you might have replied on this matter
but I did not find that so that's why again posting.....

Suppose I have bought the 1 Lot of Nifty Call at rs 150 then my total spent money is rs.7500/-

and Sold 1 Lot at 190 and got profit rs 40*50 in one lot that is 2000/- ( Brokerage is not debited yet )

then what would be my turnover Rs 7500? or 17000/- or 15000/-

or ( if call is of rs 5500 ) 5500+150=5650*50=282500?


I am confused about turnover please reply. and if this not the proper way to make you understand
then please let me know in your simple language.

Again saying thanks for helpling us

The turnover in the instant case would be 7,500 (your profit...)...

Please note that Profit or loss both have to be added to determine the total turnover....

 

[diosys]

Sir, As you have mentioned in derivatives if someone cross Rs. 40,00,000 turnover is liable to get the books audited by a charted accountent but in case if he is in loss then also he has to get the books
audited by a charterd accountent?


And what happen if individual is having this type of turnover and transactions.??


Actually I am a individual and I am in marketting line and having income below 1 Lac and in second side I am also dealing in Derivatives and Cash maket for short term gains but I am still in loss more than 65% of my Deposited amount with my broker but my turnover is more than Rs. 40,00,000 and many times I did very heavy trades ( like taking nifty's 20 lot buy sell in a day itself ) but after doing these trades I am still in loss so now please tell me in my case am I liable to get my books audited by a charterd account? and am I liable to pay any tax??

and second I haven't shown this in my ITR because I had thought that I am still in loss so no need to show it?

Thanks

Loss or profit does not matter....If your turnover crosses 40 Lacs (turnover as explained in the previous post) then you are liable to maintain books of accounts and get them audited too....

lastly i cannot comment on your personal tax liability untill and unless i have the complete details of the income and losses from all the sources....Your income would be salary income less the loss in share market....

 

[diosys]

Hi all:

I notice that Diosys is not to be seen here in the last few weeks. Let's hope everything is fine with him and he will start responding soon.

Meantime, shall be obliged if anyone can guide me on my above queries.

Thanks & regards

RAJ

Dear Raj thank you very much for your concern...

Yes FIFO is to be followed....But that would include the date from your original holding and not from the dematerlised date....So don't worry...

 

[torontoguy]

Loss or profit does not matter....If your turnover crosses 40 Lacs (turnover as explained in the previous post) then you are liable to maintain books of accounts and get them audited too....

lastly i cannot comment on your personal tax liability untill and unless i have the complete details of the income and losses from all the sources....Your income would be salary income less the loss in share market....

Sir, Thanks for very Quick reply,

Well as you said loss or profit does not matter for the audited condition.

So in this case Suppose I have a Turnover of Rs 50 Lac and got 50000/- loss
in other side I am doing job and drawing 1,20,000 Salary PA

so my Annual income would be rs 1,20,000(Salary) - 50,000 ( Loss ) = 70,000/- Total Income?

After crossing the 40 Lac turnover will I come in individual or business man catagory?
and in case of Business man Can I debit the charges of Electricity/ Internet / Phones from this total income? including Share Market + Salary ?

or From share market only I can Debit the charges of Elec./ Internet / Phones

I think I am again giving you trouble, when you will get free time please reply,

Again saying thanks for the information you have provided.

Pal