F&o loss - do not want to claim in future

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Querist : Anonymous

Querist : Anonymous (Querist)

29 June 2015 I am a salaried employee with taxable income. I incurred loss of 26000 in F&O trading in two months. Since then I had stopped trading. I do not want to show loss in my return and also not to claim it against any profit in future. What is the way out.

I have LTCG of Rs.35000 in mutual funds

I have STCG of Rs.8000 in shares.

Please advise which ITR form to fill. Thanks

Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 June 2015 if you dont want to claim any loss, then file late return. but that has nothing to do with which return you need to file.

legally, ITR-4 shall still apply and applicability of tax audit shall also be there.

The only alternative I can think of, which I dont suggest to my client though, is to be show it under STCG in ITR-2 itself. You may do so only because of small quantum of loss and chances of non-recurrence in future.

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CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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29 June 2015 Why don't you want to adjust the F&O loss of Rs.26,000 against the STCG of Rs.8,000 and balance against LTCG and save tax in current year itself?

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 June 2015 LTCG mutual funds (assuming from equity schemes) is exempt! so wont be eligible for adjustment

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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29 June 2015 Of course, if LTCG is from equity oriented scheme then only STCG can be used for adjusting loss.

Question of tax audit does not arise at all.

ITR-2 will apply in this case. ITR-2 applies to persons having the following income:
(1) Income from salaries
(2) Income from house property
(3) Capital gain
(4) Income from house property

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Querist : Anonymous

Querist : Anonymous (Querist)

03 July 2015 Thanks for your response. So from the discussion I got that

1. I should file ITR 2
2. I should mention LTCG (from mutual fund and shares)
3. I should mention STCG from equity/shares

But I need further clarification on the point made by Mr. Sunil Gokhale as to who to adjust loss in F&O can be adjusted against STCG in ITR 2. Thanks

CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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03 July 2015 You can adjust F&O loss against STCG. In case you don't want to show it at all just ignore it. This is not suppression of income. You are just not taking the benefit of set-off. You do not need to file late return for that. If your LTCG is from equity fund or equity oriented mutual fund then it will be exempt from tax hence question of set-off does not arise.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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03 July 2015 Dear Gokhale Ji.

Have you considered the impact of section 44AD in this case. The person has income above basic exemption limit. You gave your opinion without worrying about F&O turnover. Lets assume the person has just 200000 turnover. Then if you dont maintain accounts, you are required to offer 8% as profit. As per your opinion, you advised ITR-2 filing (i also did that...but only as an alternative, which I don't advise to clients in any case). Legally it is nothing but suppression of income...

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CA. Sunil Gokhale

CA. Sunil Gokhale (Expert)
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03 July 2015 In my opinion his F&O loss of Rs.26,000 is an investment loss and not business loss as he is not a regular trader so section 44AD will not apply. Not disclosing loss does not amount to suppression of income. It is a set-off benefit he is not claiming.

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