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Help with Schedule BP in ITR 3

Ranjan Ladani (Software Engineer) (54 Points)

21 March 2018

I am filing Speculative business profit ( Equity Day trading , No F&O ) using ITR 3 although I have made speculative losses. I have already filled BS and P&L in ‘No Account Case’ but when it comes to BP, I feel i have following two options -

Case 1 -

Case 2 -

Please let me know the appropriate way to fill ‘Schedule BP’ in my case.

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11 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (171213 Points)
Replied 21 March 2018

" I am filing Speculative business profit ( Equity Day trading , No F&O ) using ITR 3 although I have made speculative losses. I have already filled BS and P&L in ‘No Account Case........"

Please clarify whether you are eligible for 'No account Case" ?

What is the gross turnover? Is it below 2 Crs.?

Whether you are ready to pay tax over 6% profit margin over the TO? even though you are at loss?

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Ranjan Ladani (Software Engineer) (54 Points)
Replied 21 March 2018

Sir,

My Day Trading business turnover is 220000 and Yes, I am happy to pay taxes on 6% of it. I am opting for ITR 3 as i also want to report STCG under 'Schedule CG' ( Not available in case of ITR 4 )

I request you to visit following thread, I have posted all the details there and requested help from fellow members. Sir, Your views will be of very much help on that thread as well.

Thread Link :
https://www.caclubindia.com/forum/avoiding-tax-audit-in-case-of-day-trading-losses-and-stcg-454013.asp?offset=1

Requesting you also to let me know how to file 'Schedule BP' in my case.

Thanks.

Ranjan Ladani (Software Engineer) (54 Points)
Replied 21 March 2018

Sir, I am posting the complete picture from that thread for your convenience.

I am a Salaried employee ( 6 months in this financial year ). I have day Trading losses of 60000 with an annual turnover of 220000. Short term capital gains are also present.

I am writing here my understanding of taxation. Please correct me wherever i am wrong.

Day Trading is a speculative business Income. Tax audit is necessary in my case as total turnover is 220000 ( < 2 crores ) and Net profit is -60000 ( < 6% of Total turnover ). Use of ITR 2 is not possible if i report my losses.
ITR 4 is ruled out as I also have to report STCG ( Rs. 15000 ) under Schedule CG.
To be fully compliant, I have to use ITR 3 and get the tax audit done.

I am not interested to carry forward the losses and my Primary objective is to avoid tax audit. Here i seek advise from all of you. I feel, I have following options :

Use ITR 2, Report STCG and Salary income, Ignore day trading losses. ( Please remember i am not interested to carry them forward, I just want to avoid tax audit )
Use ITR 4, Report STCG under the head of ‘income from other sources’ and Pay taxes on 6% of my business turnover of 220000.
Use ITR 3, Report STCG and Salary under appropriate schedule. Though i have incurred loss from day trading ( Business ), I report profit of more than 6% of my annual turnover ( In this way i can avoid tax audit ) and pay required taxes. ( 6 % of 220000 = 13200, 20% ( Tax Slab ) of 13200 = 2640 which is gold when i compare it with Tax Audit hassles. )
Club the turnover and net profit from ‘Day trading’ and ‘Short term equity investment’, Declare myself as a businessman ( I feel i can do that as i have worked only 6 months this FY ) and Take presumptive business income route by using ITR 4.

Please advice me on what path to follow in order to avoid ‘wrath of IT Department’ as well as ‘Tax Audit’. Any other suggestions except above are most welcome.

Then a Member suggested me to take Approach No 3.

Follow-up Question that i posted on that thread were :

Altough i have incurred loss, I have to declare profit of more than 6% of turnover. Is it legal in case of ITR 3 ? Can Section 44AD be applied even in case of ITR 3 ?
If i file my profit under 44AD using ITR 3, Does it mean i have to file my business income ( Intraday + FnO ) atleast for next 5 years under this section only ?
What if i stop trading and Shift to ITR 2 next FY. Will i be debarred from using 44AD subsequent FY or Ban is applicable when you are still filing your returns using ITR 3/ITR 4 but not under section 44AD ?

Eagerly waiting for your reply, Sir !

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (171213 Points)
Replied 21 March 2018

1. Once you have decided to declar your intraday trading profit u/s. 44AD, you are not required to file P&L acc & BS (being no account case), but few details under Sr. no. 53 of P&L acc and sr. no. 6 of 'Schedule BS'

NO ACCOUNT CASE 'Schedule P&L'
53	In a case where regular books of account of business or profession are not maintained, furnish the following information for previous year 2016-17 in respect of business or profession

No Accounts Case 'Schedule BS'

In a case where regular books of account of business or profession are not maintained -(furnish the following information as on 31st day of March, 2017, in respect of business or profession).

2. Yes, no need for tax audit and ease of handling any future query....

3. Read the instruction of the ITR 3 as attached....... (for most of your general queries related to ITR)

4. No quetion of any compliance if you do not adopt presumptive scheme in future....... but once opted out, you cannot opt it again for next five years, with compulsory tax audit of books.

5. Advisable to get help of a professional for filing such case..

Attached File : 1648935 20180321221650 itr3 2017 instructions.pdf downloaded: 413 times

Ranjan Ladani (Software Engineer) (54 Points)
Replied 21 March 2018

Originally posted by : Ranjan Ladani
	I am filing Speculative business profit ( Equity Day trading , No F&O ) using ITR 3 although I have made speculative losses. I have already filled BS and P&L in ‘No Account Case’ but when it comes to BP, I feel i have following two options - Case 1 - Case 2 - Please let me know the appropriate way to fill ‘Schedule BP’ in my case.

As suggested I will definitely opt for Professional help. I also request you to give me your opinion of filing 'Schedule BP' in my case. Which is the best case scenario according to you out of two i mentioned.

Thanks.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (171213 Points)
Replied 21 March 2018

Second Option........

Ranjan Ladani (Software Engineer) (54 Points)
Replied 21 March 2018

Thank you Dhiraj Sir. You have been very helpful

MURALIDOSS (INCOME TAX PRACTITIONER) (1317 Points)
Replied 29 March 2018

DEAR SIR,

FOR INTRADAY TRADING , IF TURNOVER EXCEED 2 CRORES IS IT NEED TO TAX AUDIT OR NOT?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (171213 Points)
Replied 29 March 2018

Yes, Tax Audit Report is mandatory provided TO exceeds 1 Cr (except opted for sec 44AD), but you have to calculate turnover by adding the net differencial values of each contract.

Shyam (Taxpayer) (24 Points)
Replied 28 July 2018

I have one doubt about showing my Professional income as 44ADA presumptive income in ITR3:

1) P&L line 53(ii)a, I entered my Gross Receipts

2) P&L line 53(ii)b, I entered 50% of gross receipts as Gross Profit

After doing this, Line 4 in schedule BP line 4 is dimmed (not editable) and shows 0. Is this OK or I need to do something else to ensure that line 4 shows the correct amount?

Thank you.

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Shyam (Taxpayer) (24 Points)
Replied 28 July 2018

Further to my above post, I am using ITR-3 for Presumptive Income because I have a foreign bank account with minimal balance and ITR-4 does not have any schedule to declare that account.