12 July 2018
One of my client has income from as under: Salary 280000 Speculation Gain (Intra Day Trading in Share): 38323 Business Loss (Short Term Loss in Share Trading): -105058
So please suggest which Income Tax Return Form is liable to file and where to show loss and gain from share trading in ITR form??
12 July 2018
Is it liable to Tax Audit ?? Loss can be directly shown in colum " Profit from share security for stt paid" in ITR 3 ?? Balance sheet is required in this case??
17 July 2018
Is it liable to Tax Audit ?? Loss can be directly shown in colum " Profit from share security for stt paid" in ITR 3 ?? Balance sheet is required in this case??
02 August 2024
Based on the provided details, here’s how you should approach the filing of the Income Tax Return (ITR) and the treatment of share trading gains and losses:
### **1. Appropriate ITR Form**
Given the nature of the income and loss:
- **Salary Income:** ₹280,000 - **Speculation Gain (Intra-Day Trading):** ₹38,323 - **Business Loss (Short Term Loss in Share Trading):** ₹-105,058
**ITR-3** is the appropriate form for filing in this case because: - You have income from **Salary**. - You have **speculation gains** from intra-day trading. - You have a **business loss** from short-term trading in shares.
**ITR-3** is used by individuals and HUFs who have income from a proprietary business or profession, including trading activities.
### **2. Reporting in ITR-3**
**Schedule for Reporting Income and Loss:**
1. **Salary Income:** - Report under **“Income from Salary”** section.
2. **Speculation Gain (Intra-Day Trading):** - Report under **“Income from Other Sources”** if it's treated as speculative business income. - **Speculative Gain** should be reported in **“Profit and Loss Account”** section under the **“Business Income”**.
3. **Business Loss (Short-Term Trading Loss):** - Report under **“Profit and Loss Account”** in **Schedule BP (Business or Profession)**. - Enter the short-term loss as part of the business income or loss.
### **3. Tax Audit Requirement**
- **Tax Audit:** If the total turnover from the speculative trading (intra-day trading) exceeds ₹1 crore, then a tax audit under Section 44AB is required. However, if your client's turnover from intra-day trading is below ₹1 crore and they have only this speculative income, then a tax audit is generally not required.
### **4. Balance Sheet Requirement**
- **Balance Sheet:** Since your client is dealing in share trading and has a business loss, a balance sheet is not strictly required unless the turnover crosses ₹1 crore or there are specific conditions that necessitate a detailed account of assets and liabilities.
### **Steps for Filling ITR-3:**
1. **Schedule BP (Business or Profession):** - **Profit and Loss Account:** - Report speculative gain under “Profit from Share Trading” or similar. - Report business loss (short-term loss) in the respective section.
2. **Other Sources (If Applicable):** - If speculative income needs to be classified separately or if there are any discrepancies, it should be clarified here. But for intra-day trading, it is generally included under business income.
3. **Carry Forward of Loss:** - Short-term capital losses from intra-day trading can be carried forward to offset future capital gains.
### **Summary:**
- **ITR Form:** **ITR-3** is suitable for your client. - **Reporting:** - Salary income under the Salary section. - Speculative gains and business losses in Schedule BP. - **Tax Audit:** Check if turnover exceeds ₹1 crore; otherwise, generally not required. - **Balance Sheet:** Not mandatory unless specific conditions apply.
Ensure all figures are accurately reported and supported with proper documentation. For complex cases or specific questions, consulting a tax professional is always advisable.
02 August 2024
Based on the provided details, here’s how you should approach the filing of the Income Tax Return (ITR) and the treatment of share trading gains and losses:
### **1. Appropriate ITR Form**
Given the nature of the income and loss:
- **Salary Income:** ₹280,000 - **Speculation Gain (Intra-Day Trading):** ₹38,323 - **Business Loss (Short Term Loss in Share Trading):** ₹-105,058
**ITR-3** is the appropriate form for filing in this case because: - You have income from **Salary**. - You have **speculation gains** from intra-day trading. - You have a **business loss** from short-term trading in shares.
**ITR-3** is used by individuals and HUFs who have income from a proprietary business or profession, including trading activities.
### **2. Reporting in ITR-3**
**Schedule for Reporting Income and Loss:**
1. **Salary Income:** - Report under **“Income from Salary”** section.
2. **Speculation Gain (Intra-Day Trading):** - Report under **“Income from Other Sources”** if it's treated as speculative business income. - **Speculative Gain** should be reported in **“Profit and Loss Account”** section under the **“Business Income”**.
3. **Business Loss (Short-Term Trading Loss):** - Report under **“Profit and Loss Account”** in **Schedule BP (Business or Profession)**. - Enter the short-term loss as part of the business income or loss.
### **3. Tax Audit Requirement**
- **Tax Audit:** If the total turnover from the speculative trading (intra-day trading) exceeds ₹1 crore, then a tax audit under Section 44AB is required. However, if your client's turnover from intra-day trading is below ₹1 crore and they have only this speculative income, then a tax audit is generally not required.
### **4. Balance Sheet Requirement**
- **Balance Sheet:** Since your client is dealing in share trading and has a business loss, a balance sheet is not strictly required unless the turnover crosses ₹1 crore or there are specific conditions that necessitate a detailed account of assets and liabilities.
### **Steps for Filling ITR-3:**
1. **Schedule BP (Business or Profession):** - **Profit and Loss Account:** - Report speculative gain under “Profit from Share Trading” or similar. - Report business loss (short-term loss) in the respective section.
2. **Other Sources (If Applicable):** - If speculative income needs to be classified separately or if there are any discrepancies, it should be clarified here. But for intra-day trading, it is generally included under business income.
3. **Carry Forward of Loss:** - Short-term capital losses from intra-day trading can be carried forward to offset future capital gains.
### **Summary:**
- **ITR Form:** **ITR-3** is suitable for your client. - **Reporting:** - Salary income under the Salary section. - Speculative gains and business losses in Schedule BP. - **Tax Audit:** Check if turnover exceeds ₹1 crore; otherwise, generally not required. - **Balance Sheet:** Not mandatory unless specific conditions apply.
Ensure all figures are accurately reported and supported with proper documentation. For complex cases or specific questions, consulting a tax professional is always advisable.
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