02 August 2024
Given your situation, where you have nominal intraday trading profits, Short-Term Capital Gains (STCG) profits, and a salaried income of less than ₹5 lakh, here's how you can approach filing your return:
### Filing ITR-2
**1. **Categorizing Income:**
- **Intraday Trading Profit:** - Intraday trading profit is typically considered business income, but since you mentioned that your intention was not to earn business income and the transactions are minimal, you can still opt to declare it as "Income from Other Sources" if you meet certain criteria.
- **Short-Term Capital Gains (STCG):** - STCG from equity shares or mutual funds (held for less than 12 months) is taxed at a rate of 15% under Section 111A. This gain should be reported under the appropriate section in ITR-2.
**2. **Using ITR-2:**
- **Intraday Trading Profit:** - **Declare as Income from Other Sources:** - You can declare the intraday trading profit of ₹400 under "Income from Other Sources" if you are not considered a trader. However, this approach may be less favorable, as it might invite scrutiny from the tax authorities if they classify the activity as business income based on their criteria. - **Schedule OS:** Enter ₹400 as income from other sources.
- **Short-Term Capital Gains (STCG):** - **Declare in Schedule CG:** - **Part A – STCG:** Report ₹1200 as Short-Term Capital Gain. This should be reported under the section for Short-Term Capital Gains in Schedule CG. - **Tax Rate:** STCG on equity shares and mutual funds is taxed at 15%, and this will be automatically calculated by the return utility based on the information provided.
**3. **Filing ITR-2:**
- **Income from Other Sources:** - Fill in Schedule OS with ₹400 from intraday trading profits.
- **Schedule CG:** - Report ₹1200 in the Short-Term Capital Gains section.
- **Salaried Income:** - Fill in the details of your salary under the appropriate section for salaried income.
### **Considerations for ITR-4:**
- **ITR-4:** - If your intraday trading is considered business income, ITR-4 would be more appropriate as it is specifically designed for individuals who have income from business or profession, including trading.
- **Filing ITR-4:** - Even though it may seem tedious, ITR-4 provides a more accurate representation of business income. If your intraday trading activity is frequent or considered business by the authorities, filing ITR-4 would be the correct approach.
### **Summary:**
- **ITR-2:** - **Intraday Trading:** You can declare ₹400 as income from other sources. However, this may not be the best approach if the activity is viewed as business trading. - **STCG:** Report ₹1200 as Short-Term Capital Gain.
- **ITR-4:** - **Preferred if:** Intraday trading is classified as business income. Although it’s more detailed, it aligns with your actual trading activity.
### **Recommendation:**
**If you have any doubts about classification or filing:** - **Consult a Tax Professional:** A tax advisor can provide guidance on whether intraday trading should be declared as business income or other sources, and the implications of each approach. They can also help with the filing process for ITR-4 if required.
Filing ITR-2 with the described approach is a valid option if your activity is not considered substantial enough to be classified as business income, but professional advice is recommended for accurate and compliant reporting.
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