F&O Trader: Balance Sheet , dividend and interest income

This query is : Resolved

Guest

Guest (Querist)

19 June 2023 Hi,

For a individual person doing F&O trading, do they need to include their Savings Bank, FD, Domestic/Foreign stock/bond investment in the business balance sheet in ITR?

Also should Savings Account Interest, FD Interest, Bond Interest, Stock Dividend be included in the business income or as personal income in their respective sections (e.g. Section OS, Section CG)?

Sources of income for the person: F&O loss, salary, savings/fd/gsec interest, liquidbees dividend.

Thanks

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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19 June 2023 For a individual person doing F&O trading, do they need to include their Savings Bank, FD, Domestic/Foreign stock/bond investment in the business balance sheet in ITR?

NO.

Also should Savings Account Interest, FD Interest, Bond Interest, Stock Dividend be included in the business income or as personal income in their respective sections (e.g. Section OS, Section CG)?

Yes. It is "Income from other sources", if not treated under "Capital Gain"

Guest

Guest (Querist)

20 June 2023 What should be included in the balance sheet? Just the advance/balance in the broker account used for f&o?

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 June 2023 Yes, including bank balance, any assets bought for the business, loans if any, stock in trade etc.

Guest

Guest (Querist)

20 June 2023 So suppose I have an account with Zerodha. I buy bonds in Zerodha and pledge them for margin for F&O activity.

Any asset in Zerodha will be part of balance sheet, and anything else would not be?

To be included in balance sheet:
Bank balance of all savings bank accounts
Cash balance in Zerodha
Bonds bought in Zerodha
Stocks bought in Zerodha

If the above are included in the balance sheet for the business, does it not mean that any income arising from the above should also be part of business income?
i.e. interest on bank accounts, interest on bonds in Zerodha, dividend received from stocks in Zerodha, capital gains on stocks/bonds in Zerodha

And anything else (not related to Zerodha) should be part of non-business income? e.g. interest from FD in banks, stocks bought with foreign broker (i.e. not Zerodha), capital gains in foreign broker (i.e. not Zerodha), interest in foreign broker account (i.e. not Zerodha)

Guest

Guest (Querist)

20 June 2023 i.e. its confusing of what asset to include in Balance Sheet, and what income to include in Business Income vs Personal Income.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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20 June 2023 BS is outcome of net assets held against any liabilities. It is not prepared but is the result of the final accounts balances as on particular date.
Preparing BS on ad hoc bases can be such confusing, so better prepare accounts from the beginning, that would be much easier and accurate.
You need not include your personal assets or bank account to your business assets.