Intraday trading losses

Treatment of intra-day losses as business loss or capital loss depends on the frequency and volume of the transactions carried by you during the relevant previous year. Calculation of turnover in Intra-day dealing is different from the normal dealing of shares. Aggregate turnover is calculated after total of Profit and losses earned by you. If such turnover is more than Rs. 1 Cr then you need to go for Tax Audit.

Losses from Intra-day transactions is treated as speculative loss. You need to check the nature of existing capital gain with you. If such is speculative capital gain then you can go for set-off otherwise not and you need to pay tax on capital gain along with salary income.

To avoid litigation from the department we would suggest you to prepare profit and loss account for intra-day transactions.

Thanks

Hi,

I am assuming that the annual turnover is 2.2 cr and not 2.2 lakhs that you mentioned. Since the total turnover is more than 1Cr, it is advisable that you get the tax audit done. Also suggest to keep proper records and prepare profit and loss account for intra-day transactions so that there are no issues later.

Hope this clarifies.

Regards,

Nikhil

HI,

Since you have trading losses, it is mandatory for you to go ahead with tax audit. Without the same you would not be able to carry forward your losses as per the tax laws.

However, you may go ahead reporting everything in ITR-2 but the risk of scrutiny assessment would remain from the tax authorities anytime in the future.

Hence, its better to carry forward losses post having the tax audit.

Thanks

Damini

Hi,

The first three pointers with respect to the understanding of different ITR forms is absolutely correct.

Now, all the options suggested by you are leading to misrepresentation of facts with respect to income. In such case, its better to go ahead with the first one where you don't carry forward any loss. In case query comes from the tax officer at a later stage, you may justify at least this saying that you were having losses and you were not intending to have them carry forward so you just ignored the same.

Still if he persists then, you may have your return revised.

The query from the tax officer would be there because they receive the AIR report from various departments of which one of them share reports over trading on a particular PAN. That's why it is suggested to report as per the tax laws. However, if you wanna take a chance, go ahead and Use ITR 2, Report STCG and Salary income, Ignore Intraday trading losses.

Thanks

Damini

Hi,

Is your total turnover 2.2 lakhs or 2.2 cr?

Hi,

The options you are suggesting may not be fully compliant with tax laws. However, if you really want to follow them, you may file ITR2 and ignore the trading losses since you do not want to carry forward the loss. However, be prepared to answer the IT department queries in case if they come in future

regards,

Nikhil.

Use ITR-2 and show salary income, STCG and interest income. STCG is taxable @15% if from securities or normal if from other capital assets subject to notice from the department.

It is advisable to go for Tax Audit ,to avoid future litigations from department.

Hi

In my opinion, option 3 is the best option. Others does not satisfy the requirements of law.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com