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

[jamit_05]

Auditing is compulsory only if your turnover is more then 1 crore.
The amount of profit or loss has no bearing on it.

To calculate F&O turnover, the value of the stocks is not considered, only the nett profit or loss.
For example in trade A you earned 10,000 and in Trade B you lost 5,000, your turnover will be 15,000/-
So you have to maintain a table for your entire trades based on FIFO and then calculate your turnover
Let me know if you need any clarification

Hi Shravan,

I was wondering if you could help me with a query on Indexation.

I hv learned that gains from Debt Funds in allowed Indexation. But, what about gains from direct purchase of Bonds?

Thanks.

 

[shravank30]

Hi Shravan,

I was wondering if you could help me with a query on Indexation.

I hv learned that gains from Debt Funds in allowed Indexation. But, what about gains from direct purchase of Bonds?

Thanks.

No idea whatsoever
Sorry

 

[a1b1trader]

Auditing is compulsory only if your turnover is more then 1 crore.
The amount of profit or loss has no bearing on it.

To calculate F&O turnover, the value of the stocks is not considered, only the nett profit or loss.
For example in trade A you earned 10,000 and in Trade B you lost 5,000, your turnover will be 15,000/-
So you have to maintain a table for your entire trades based on FIFO and then calculate your turnover
Let me know if you need any clarification

Thanks

But how to tabulate it, as per rules.
So, can you please explain it with an example of a day trading, using say 5-10 trades each of Index Future, Index Options using text format or XL format (whatever is easier to you)

Thanks

 

[shravank30]

Its very simple..not a rocket science
Just square up the earliest bought first and then the 2nd and so on.
The timestamp on each trade will determine which was bought first.

If you trade a lot in various scripts, it is better to make separate excel sheets for each script so that you do not mix up any trade.

Let me know if you need any more clarification

Send me a day trade sheet with time stamp and i will match the trades and send it to you

 

[vinay21verma]

Auditing is compulsory only if your turnover is more then 1 crore.
The amount of profit or loss has no bearing on it.

To calculate F&O turnover, the value of the stocks is not considered, only the nett profit or loss.
For example in trade A you earned 10,000 and in Trade B you lost 5,000, your turnover will be 15,000/-
So you have to maintain a table for your entire trades based on FIFO and then calculate your turnover
Let me know if you need any clarification

Thanks, even I was under the same impression, as this was followed till lately. However it seems many people were returned notices for Section 139(9). This was possibly because of amendment of Section 44AD which says that in case the turnover is lesser than Rs 1 crore and the profits are lesser than 8%, an audit by a CA is mandatory. So the cases where losses were made, even that falls under category of profit less than 8 %, which seems to make the audit compulsory for those traders who incurred losses. I understand that trading stocks/commodities/currencies fall under this, not sure if derivatives too fall in it.

I followed Zerodha ZConnect taxation page where it says that from 8th June 2013 onwards this amendment is applicable that whoever uses ITR4 would need to have their accounts audited. Hence the confusion.

 

[shravank30]

Thanks, even I was under the same impression, as this was followed till lately. However it seems many people were returned notices for Section 139(9). This was possibly because of amendment of Section 44AD which says that in case the turnover is lesser than Rs 1 crore and the profits are lesser than 8%, an audit by a CA is mandatory. So the cases where losses were made, even that falls under category of profit less than 8 %, which seems to make the audit compulsory for those traders who incurred losses. I understand that trading stocks/commodities/currencies fall under this, not sure if derivatives too fall in it.

I followed Zerodha ZConnect taxation page where it says that from 8th June 2013 onwards this amendment is applicable that whoever uses ITR4 would need to have their accounts audited. Hence the confusion.

Section 44AD is applicable only for those who do not wish to maintain account books.
If you will file return under the provisions of section 44AD (Presumptive Profits) and show profits less then 8% of the turnover, then you are bound to get a notice under section 139 (9) as this section is not applicable on you.

Other members may like to comment

 

[a1b1trader]

Its very simple..not a rocket science

Hi

It is very simple that why I have asked you
If it would have been a rocket science, then I would have asked it to someone else but not you.

Can you make a cup of tea or a full meal by yourself or can you stitch a button on your shirt (that your illiterate maid or servant can do). There are many so called intelligent people like doctors and scientists (I know a few), who can not prepare a cup of tea for themselves. For them it is rocket science. Everything you do not know or can not do, is rocket science.

My dear friend, you are suppose to take the help of a friend or teacher for the first time.

It seems you know every thing and all fields/subjects besides your actual field and never looked for any help from others.

We are here to share our difficulties and to get their solution, and not to spread the words of wisdom.

Thanks for your solution, which was of no use/help

 

[vinay21verma]

Section 44AD is applicable only for those who do not wish to maintain account books.
If you will file return under the provisions of section 44AD (Presumptive Profits) and show profits less then 8% of the turnover, then you are bound to get a notice under section 139 (9) as this section is not applicable on you.

Other members may like to comment

That's useful to know. So then I would like to know whether section 44AD is applicable for someone who is trading in FnO (only FnO, no equities). Trading in FnO is considered speculative and hence is listed as business profit or loss, if I am not wrong here. Hence would like to know if someone who traded only in FnO would fall under section 44AD and get his accounts audited, or can he himself file ITR4 and submit without auditing. The FnO daily trade records are available.

 

[shravank30]

That's useful to know. So then I would like to know whether section 44AD is applicable for someone who is trading in FnO (only FnO, no equities). Trading in FnO is considered speculative and hence is listed as business profit or loss, if I am not wrong here. Hence would like to know if someone who traded only in FnO would fall under section 44AD and get his accounts audited, or can he himself file ITR4 and submit without auditing. The FnO daily trade records are available.

Trading in FnO is not speculative.
Its business Income, even if the trades are squared up on the same day
Speculative is buying and selling equities on the same day without taking or giving delivery

There are 3 types of incomes from the stock market
1, FnO -Business Income
2. Equity trading where delivery is given or taken -STCG/LTCG
3. Speculation - Day trading in Equities without giving or taking delivery

None of the 3 types of incomes or losses can be set off against each other except 1 & 2 (You have to show that Equity trading is your business and not claim lower taxation under STCG/LTCG)

 

[jamit_05]

Trading in FnO is not speculative.
Its business Income, even if the trades are squared up on the same day
Speculative is buying and selling equities on the same day without taking or giving delivery

There are 3 types of incomes from the stock market
1, FnO -Business Income
2. Equity trading where delivery is given or taken -STCG/LTCG
3. Speculation - Day trading in Equities without giving or taking delivery

None of the 3 types of incomes or losses can be set off against each other except 1 & 2 (You have to show that Equity trading is your business and not claim lower taxation under STCG/LTCG)

Can one demat account show both:

FnO -Business Income

and

LTCG from Holding Equity for 1 plus years.