44ad and f&o income

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KACHAM SHEKHAR (PROPRIETOR) (49 Points)
Replied 23 June 2016

Ms Jyotsna rightly said and the income from the F&O transactions is always business income and it is not subject to capital gains tax. Gross income from the futures & options is taken for the calculation of gross receipts/turnover for the purpose of Section 44AB/44AD not the entrire transactions of F&O. Therefore, when you calculate the gross receipts it should be sum of your income not the sum of your transactions. From your income you can deduct all your expenditure including depreciation if any asset is used for the purpose of this business.

CA. Kacham Shekhar

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Hiten (CA) (275 Points)
Replied 23 June 2016

Dear Kacham Shekhar

i absolutly agree with your answer but my query relates to audit in case when there is loss in F&O and income exceeds basic exemption limit .what i am getting is only general answers in yes audit is required.. however no section has been qoted in any of the above replies which talkes about mandatory audit in case of loss from F&O

Hiten (CA) (275 Points)
Replied 23 June 2016

Dear Harshit,

Even in case of investors income from share trading can be assessed under PGBP considering volume of trade, intention of the assessee, frequency of trade, holding period etc..

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 23 June 2016

esa khi likha hua nhi h kr hiten ji.
ki considering ur volume, intention etc
tax is not assessed on what ur intention.
pls understood and clarify ur self.
otherwise nothing to force.
thnks.

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 23 June 2016

holding period only says long term or short term CG, there is no releation of it to say it is business.

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Hiten (CA) (275 Points)
Replied 23 June 2016

yes jyotsna... in case you have still any doubt that F&O business doesnt fall under 44AD then i suggest you to read defination of eligible business as give in section 44AD

as per me now, any business other than business of transport are eligible for filing under secton 44AD

KACHAM SHEKHAR (PROPRIETOR) (49 Points)
Replied 23 June 2016

Obviously section 44AD Mr. Hiten.

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 23 June 2016

u should assess ur tax as per CAPITAL GAIN, there is nothing to show it as business income.As by ur trading total turnover is declared by Firm/branch of ur broker not by u.

KACHAM SHEKHAR (PROPRIETOR) (49 Points)
Replied 23 June 2016

Mr Harshit

First you should understand that the future & options are business transactions. Then how can you say it is capital asset and charged to capital gains tax?

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 23 June 2016

then say how u will calculate ur total turnover on which base u saying 8% of such turnover shall be ur income??

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Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 23 June 2016

it may be treated as Speculative business income, but can't declare it in 44ad.

KACHAM SHEKHAR (PROPRIETOR) (49 Points)
Replied 23 June 2016

Mr. Harshit, what you earn on these transaction will only be treated as your gross receipts/turnover on that only you have to calculate your income. I would like to inform you that it is not a speculative business.

Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 23 June 2016

u means u says on the turnover of suppose 1cr my 8% is 8lac, it is not possible always that u earn 8lac may be u in huge loss or may be u in profit of 5lac, then why to pay tax on 8lac..
as per my opinion it should be part of speculative business income only.

KACHAM SHEKHAR (PROPRIETOR) (49 Points)
Replied 23 June 2016

Mr. Harshit

You are not able to underst what is F&O. Don't stick to your opinion and understand and follow what all the professionals said in earlier answers. Again I am telling whatever you earn, it may be a loss/profit, that would be your gross receipts not the transactions amount. From the profit/loss you can claim your expenses and you can also show the loss too and carry forward the same to next year for setting off like any other business income and more over, you are not required to get your books of account audit if your total income, including the F&O income, is below taxable limits as per section 44AD. I hope your douts are clarified.

CA. Kacham Shekhar

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Harshit Kabra (INVESTOR) (Student CA final) (1113 Points)
Replied 23 June 2016

okay i appreciate ur opinion and suggestion.
but i still relay on my opinion that it should be treated as speculative income and can be carry forwarded and setoff against only such losses not with any other business income.
see, sir if u carry forward it and setoff its losses from ur other business income clearly says that u have also other business that means clearly u have not f&o business as ur primary business so if it is not ur primary business than why should adopt presumtive basis??
also, only n only losses from speculative business can be setoff against income from such business, and 100% im sure that it will be my speculative business income.
hope u understood what i want to say.
thnks