F & O TRADING QUERY
This query is : Resolved
28 July 2023
MR.A (having non-speculative income) had made transaction with respect to call and put in future and option mentioned below:
1. buy:10000 sell: 12000 GP:2000
2. buy:10000 sell:7000 Gp:(3000)
as we know we need to take turnover of Rs. 5000 and need to file return in 44ad maintaining 6% of profit
but actual MR.A had lose money of Rs. (1000) but in 44ad we can not show profit less than 6% of turnover which is Rs.300 (against nature of reality)
please provide guidance and what if Mr. A don't wants to file return in 44AD then can we show 6% of turnover in direct p&l account ?
1. buy:10000 sell: 12000 GP:2000
2. buy:10000 sell:7000 Gp:(3000)
as we know we need to take turnover of Rs. 5000 and need to file return in 44ad maintaining 6% of profit
but actual MR.A had lose money of Rs. (1000) but in 44ad we can not show profit less than 6% of turnover which is Rs.300 (against nature of reality)
please provide guidance and what if Mr. A don't wants to file return in 44AD then can we show 6% of turnover in direct p&l account ?
28 July 2023
He can declare the business u/s. 44AD with Rs. 300/- as presumed profit or file ITR 3 under normal assessment and declare actual loss of Rs. 1000/- which can set off with any other income except salary.
28 July 2023
okay if want to file ITR-3 in normal assessment then how to show it in profit and loss account
1. p&l credit - F & O turnover
2. P&l debit - ?
3. p&l loss - (1000)
1. p&l credit - F & O turnover
2. P&l debit - ?
3. p&l loss - (1000)
28 July 2023
Declare it in trading account. It will get reflected in P&L acc & schedule BP.
28 July 2023
okay but what to debit in trading account ?
28 July 2023
Purchase of the F&O stocks..
28 July 2023
turnover - 5000 (as per guidance notes issued by ICAI)
purchase - 20000 how it work ?
purchase - 20000 how it work ?
28 July 2023
Go reverse way, when actual loss being Rs. 1000/- in trade; purchase must be Rs. 6,000/-
28 July 2023
okay thank you sirji , appreciating your fast reply but in case of income tax scrutiny how will we present this case to AO because actually F & O statement does no reflect any amount such as 6000.
28 July 2023
What have you provided is the actual loss as per transaction statements based on turnover calculation based on ICAI guidelines?
Have you hide any income?
Another option is to provide actual turnover and purchase value i.e Rs. 19.000/- & Rs. 20,000/- respectively.
Have you hide any income?
Another option is to provide actual turnover and purchase value i.e Rs. 19.000/- & Rs. 20,000/- respectively.
28 July 2023
Respected,
Rambhia sir
1. not understand - please if possible simply
2. not hide any income
3. reference of ICAI Guidance note : The total of favorable and unfavorable differences shall be
taken as turnover(sale - purchase option is not viable)
Rambhia sir
1. not understand - please if possible simply
2. not hide any income
3. reference of ICAI Guidance note : The total of favorable and unfavorable differences shall be
taken as turnover(sale - purchase option is not viable)
28 July 2023
Actually, there are two views for declaration of such transactions under normal assessment, though actual values are preferred.
Under both views, there is nothing against law when you are declaring actual gains/loss in the final stage. You can declare it in whatever way you like. Result should be no alteration in the gain/loss as per transaction statements. ITO can penalize you if there is any manipulation of income and there by tax liability.
Under both views, there is nothing against law when you are declaring actual gains/loss in the final stage. You can declare it in whatever way you like. Result should be no alteration in the gain/loss as per transaction statements. ITO can penalize you if there is any manipulation of income and there by tax liability.
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