Dear All I had some doubt in regards to tax deducted on severance pay & if relief I can get under 89 A for Year ended 31 Mar 19. I also had some losses from options and whether I can show them as losses to recover tax paid Best Regards Shekar
Dear sir
in case of loss from the option it can be set-off against any other income of that year (except salary income).
In case u r unable to set-off this loss, the loss can be carried forward for up to eight financial years and set-off against business income only.
regarding ur doubt in 89A u can take phone consultation & I can assist u in solving ur doubt & filling ur ITR
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Dear Sir,
Hope you are doing well !!
Trading in futures & options must be reported as a business unless you have only a few trades (say if only 2-3 trades) in the financial year.
It (losses from future) can be adjusted from income from remaining heads such as rental income or interest income (cannot be adjusted from salary income). Any unadjusted loss can be carried forward for eight years. However, in the future, they can only be adjusted from non-speculative income. F&O trading loss is considered a non-speculative loss. Intra-day stock trading is considered as a speculative loss. And it can only be adjusted against speculative income. Unadjusted speculative losses can be carried forward to four years.
Otherwise(say if only 2-3 trades in the financial year) it can be reported as capital loss and set off against only capital gain. Any unadjusted loss can be carried forward for eight years.
Severance pay is a capital receipt. It is not taxable. You can claim 80C deductions even if they are not shown in form 16 provided you have valid investment proof.
It is advisable to take a phone consultation for detailed discussion.
No severance pay is taxed u/s 56(2)(xi). You can read the following post: https://www.taxontips.com/tax-on-severance-pay-in-india/
There is no relief under 89A, I think you are talking about section 89 for salary in advance or arrears but in case of severance pay same won't fall under this as it is for termination of contract.
You can show it as losses but if your turnover is above Rs. 1 crore you might even have to get your accounts audited so do keep that point in mind and you can reduce it from severance pay as same would be taxed as income from other sources and not income from salary.
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Thank you.
Hello,
TDS would be deducted on the severance pay. Relief under Section 89 would be available subject to Rule 21A(1)(c)
Regarding losses from options, you can claim such losses but you should consider whether tax audit might be applicable in such cases.
I hope this answer satisfies your requirements. For further understanding, you can contact us directly at or take a phone consultation.
Regards,
CA Hunny Badlani
- If it is received from employer then it would be taxable as profits in lieu of salary under the head Salaries otherwise under the income from other sources.
- Losses from options is a non-speculative business income irrespective of volume and frequency of the transactions.Business losses can not be set-off with the salary income. If you have any other income then you can set -off in the first year of the loss.
- If you are a regular trader, it is better to carry forward the loss for next eight assessment years and set-off with the profits of the business. For applicability of the audit, I need complete details of your income and investment. Might be you will be out of the cope of Audit.
- Don't skip to declare option loss, the other alternative is to pay tax on 6% of the turnover of the option trading.
- Please take phone consultation for detailed discussion.
Hi Shekar,
After the recent amendment by FA 2018, severance pay gets taxed as income from other sources. Its no longer be treated as capital receipt. No relief is available against severance pay.
You can certainly show the losses. However, these losses cannot be set-off against salary income. However, since severance pay is income from other sources, losses can be set off against severance pay and you can save taxes.
