intra day share profit or loss - treatment
This query is : Resolved
23 July 2009
hi
kindly help me how the intra day share profit (Speculation share profit) treated
and also loss
thank you
kindly help me how the intra day share profit (Speculation share profit) treated
and also loss
thank you
23 July 2009
It is to be treated as Business Income/Loss.
24 July 2009
is it irrespective of the quantum of activity?
taxable as speculation profit/loss under the head Business Income/loss
and also carry forward and set off as applicable to normal Business loss or as applicable to speculation loss?
please help
thank you
taxable as speculation profit/loss under the head Business Income/loss
and also carry forward and set off as applicable to normal Business loss or as applicable to speculation loss?
please help
thank you
24 July 2009
It will be treated as speculative loss
01 August 2024
Intraday trading profits and losses, commonly referred to as speculation profits or losses, are treated distinctly from other types of income, such as capital gains from delivery-based trading. Here’s how to handle them:
### **1. Treatment of Intraday Trading Profit or Loss**
**Intraday Trading Income**:
- **Category**: Income from intraday trading (also known as speculative trading) is considered **speculative business income**.
- **Taxation**: It is taxed under the head **"Income from Business or Profession"**. Speculative income is treated as part of your business income rather than capital gains.
- **Reporting**: You should report this under the appropriate section in your ITR form designed for business income, such as ITR 3 or ITR 4.
**Intraday Trading Loss**:
- **Category**: Similar to profits, losses from intraday trading are also classified as speculative business losses.
- **Set-Off and Carry Forward**:
- **Set-Off**: Speculative losses can only be set off against speculative profits and not against any other type of income (such as salary, or capital gains from delivery-based trading).
- **Carry Forward**: Speculative losses can be carried forward to the subsequent years and set off against speculative profits in those years. The loss can be carried forward for up to **4 years**.
### **2. Specific Sections of the Income Tax Act**
**Chapter IV-D (Business Income)**:
- **Applicable**: Intraday trading income and losses fall under Chapter IV-D, which deals with the taxation of business income. This is because speculative trading is considered a business activity.
**Chapter IV-E (Capital Gains)**:
- **Not Applicable**: Chapter IV-E pertains to the taxation of capital gains, including gains from delivery-based trading and long-term capital gains. Intraday trading is not classified under this chapter.
### **3. Reporting in ITR Forms**
**ITR 3**:
- **Suitable**: ITR 3 is designed for individuals and HUFs having income from a business or profession. It includes sections to report business income and losses, including speculative income.
**ITR 4**:
- **Suitable**: ITR 4 is also appropriate for individuals and HUFs having income from a business or profession, including speculative business income.
### **4. Filing Details**
- **Income**: Report speculative income in the "Income from Business or Profession" section.
- **Loss**: Report speculative losses in the same section. Ensure to mention that the losses are speculative and note down any speculative profits in the current year or previous years where you may wish to carry forward the losses.
### **Example Calculation:**
- **Profit**: If you make a profit of ₹10,000 from intraday trading, it should be reported as speculative business income.
- **Loss**: If you incur a loss of ₹5,000, it should be reported as speculative business loss. This loss can be carried forward to offset against any speculative income in future years.
### **Summary**
- **Intraday Trading**: Treated as speculative business income/loss.
- **Reporting**: Use ITR 3 or ITR 4.
- **Set-Off and Carry Forward**: Losses can be set off only against speculative profits and carried forward for up to 4 years.
If you have a complex situation or further questions about tax implications, it’s always a good idea to consult with a tax professional to ensure accurate reporting and compliance.
### **1. Treatment of Intraday Trading Profit or Loss**
**Intraday Trading Income**:
- **Category**: Income from intraday trading (also known as speculative trading) is considered **speculative business income**.
- **Taxation**: It is taxed under the head **"Income from Business or Profession"**. Speculative income is treated as part of your business income rather than capital gains.
- **Reporting**: You should report this under the appropriate section in your ITR form designed for business income, such as ITR 3 or ITR 4.
**Intraday Trading Loss**:
- **Category**: Similar to profits, losses from intraday trading are also classified as speculative business losses.
- **Set-Off and Carry Forward**:
- **Set-Off**: Speculative losses can only be set off against speculative profits and not against any other type of income (such as salary, or capital gains from delivery-based trading).
- **Carry Forward**: Speculative losses can be carried forward to the subsequent years and set off against speculative profits in those years. The loss can be carried forward for up to **4 years**.
### **2. Specific Sections of the Income Tax Act**
**Chapter IV-D (Business Income)**:
- **Applicable**: Intraday trading income and losses fall under Chapter IV-D, which deals with the taxation of business income. This is because speculative trading is considered a business activity.
**Chapter IV-E (Capital Gains)**:
- **Not Applicable**: Chapter IV-E pertains to the taxation of capital gains, including gains from delivery-based trading and long-term capital gains. Intraday trading is not classified under this chapter.
### **3. Reporting in ITR Forms**
**ITR 3**:
- **Suitable**: ITR 3 is designed for individuals and HUFs having income from a business or profession. It includes sections to report business income and losses, including speculative income.
**ITR 4**:
- **Suitable**: ITR 4 is also appropriate for individuals and HUFs having income from a business or profession, including speculative business income.
### **4. Filing Details**
- **Income**: Report speculative income in the "Income from Business or Profession" section.
- **Loss**: Report speculative losses in the same section. Ensure to mention that the losses are speculative and note down any speculative profits in the current year or previous years where you may wish to carry forward the losses.
### **Example Calculation:**
- **Profit**: If you make a profit of ₹10,000 from intraday trading, it should be reported as speculative business income.
- **Loss**: If you incur a loss of ₹5,000, it should be reported as speculative business loss. This loss can be carried forward to offset against any speculative income in future years.
### **Summary**
- **Intraday Trading**: Treated as speculative business income/loss.
- **Reporting**: Use ITR 3 or ITR 4.
- **Set-Off and Carry Forward**: Losses can be set off only against speculative profits and carried forward for up to 4 years.
If you have a complex situation or further questions about tax implications, it’s always a good idea to consult with a tax professional to ensure accurate reporting and compliance.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- GST on export of services and Input Credit
- ITC temporary reversal and reclaim
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- Confusion around Form 26QB fields
- RCM INVOICING FROM NOV-2024
- Sale of property furniture sale
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- Regarding Waiver of Interest levied u/s 50 of PGST/CGST Act
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
Trending Online Classes
CAclubindia
