I am trading only in F&O and made the losses for the last 2 years. Last year the tax consultant filed my return in ITR2 and this year another tax consultant filed by using ITR4. I would like to know few points related to Tax filling,
1. Should we need to consider the loss from F&O transactions will be considered as “Loss from business other than loss from speculative business” or Loss from speculative business”
2. I heard Business losses can be carried forward for 8 years and speculation loss can be carried forward for a period of 4 years only.
3. For the F&O transactions, which ITR (2 or 4) form we need use and how many years we can carry forward the losses.
4. Some people are telling F&O losses are needs to be treated as “short term capital loss”, hence ITR 2 has to be used. Some other people are telling anything Derivative transactions, it comes under “Loss from business”, hence ITR 4 has to be used.
5. Last year total loss is 8 lacs and should I need to submit my books of accounts to auditor to audit the same.
Request you to clarify me asap also if possible please give me your email id for further communications.
07 August 2011
As per proviso (d) to secion 43(5) trading in F & O carried out through a recognized stock exchange is not a speculative transaction. Therefore, loss from F & O should be considered as 'normal business loss' for which ITR-4 has to be filed in the asessment year 2011-12. The said loss can be carried forward for eight years provided the return showing the loss has been filed on or before the due date for filing the return.
07 August 2011
As u know audit is based on turnover. In F & O , turn over means the absolute value of profit and loss of the tranactions done in an year. So determine the turnover as i said ( 8 lacs loss alone can't determine) and decide upon audit u/s 44AB of the IT Act,1961.
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