Code for the future and option business

This query is : Resolved

gautam chauhan (Querist)
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03 July 2012 hi friends,

i am confused for the code for the nature of business (which we have to specify in the income tax return).

client(an individual) has been carrying on business of future and option and also dealing in shares.

what will be the business code for the business.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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04 July 2012 The code will be "0809 - Others"

gautam chauhan

gautam chauhan (Querist)
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04 July 2012 client is in dealing (purchase and sale) of future and option transactions and shares transaction on daily basis.

can i specify code as 204 "trading other"?

as client is not a service provider is it feasible to categorise under 809?
please mention reason for the same.

please reply.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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19 July 2024 For an individual who is engaged in the business of trading in futures and options (F&O) and shares on a daily basis, the appropriate business code to specify in the income tax return (ITR) depends on the nature of the transactions and the primary business activity. Here’s a breakdown of the options:

### Business Code Options:

1. **204 - Trading Other**:
- This code generally applies to businesses involved in trading activities that are not specifically covered by other codes. Since your client is actively trading in F&O and shares, which are forms of financial trading, this code could be suitable.

2. **809 - Others**:
- Code 809 is generally used for activities that do not fall under any specific category. However, considering that your client’s primary activity involves trading in financial instruments (F&O and shares), it might not accurately reflect the nature of the business.

### Recommendation:

Given that your client is actively engaged in the trading of futures and options as well as shares on a daily basis, **Code 204 - Trading Other** seems to be more appropriate. Here’s why:

- **Specificity**: Code 204 specifically mentions trading activities, which aligns with your client's business of trading in F&O and shares.

- **Accuracy**: It accurately reflects the nature of the business as involving trading activities in financial instruments.

- **ITR Relevance**: The income tax return requires accurate categorization of the nature of business to ensure proper tax treatment and compliance. Code 204 provides a clear indication of the business activity being carried out.

### Steps to Specify in ITR:

- In the ITR form, look for the section where you need to specify the nature of business or profession.

- Choose the appropriate code (in this case, 204 - Trading Other) and enter it along with other required details about the business activities.

- Ensure that the description provided matches the actual activities conducted by your client (trading in F&O and shares).

### Final Consideration:

Always verify the latest guidelines or consult with a tax advisor if there are specific concerns regarding the categorization of business activities in the income tax return. Accuracy in reporting ensures compliance and minimizes the risk of discrepancies during tax assessments.