New options trader needs some clarifications

312 views 5 replies

A Kar

Nil

79 Points Joined July 2017

Hello, Slightly late in the day to ask this, but to keep the story short - new options trader, no other income other than bank interest. Made a loss of about 50000. I never realized requirement to calculate turnover etc., assumed only profit or loss need to be shown. My queries are 1. Shall I submit on Sugam (ITR 4)? Reasons - It is almost impossible to for me to understand all sections of ITR 3. Also I read that traders who have shown losses have got limited scrutiny notice for turnover - sales mismatch. Problem - Realized that there is lot of confusion about options turnover calculations and AOs sometimes put arbitrary high amounts. In Sugam if there is a confusion about turnover, the income and hence tax changes accordingly. 2. Shall I submit (ITR 3)? Reasons - My loss remains constant even if the AO decides higher turnover, so no chance of higher outgo of taxes, Worry - 50000 loss on 16 lakhs turnover may invite scrutiny. Plus I dont know where to fill these details in ITR 3. Is there any website or youtube video link for traders? 3. Can scrutiny notice be served even if there is no taxable income? and finally 4. What is sundry debtor and sundry creditor amount for a stock/fno trader?

Replies (5)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

208912 Points Joined July 2016

1. Firstly, you should not have handled such tricky matter by own.

2. For answer to your questions......... for such (loss) cases ITR 3 is the only choice .......... but chances of scrutity in this case may not arise because of nil tax liability.

3. If you wish, a suggestion is to get exact data of your F&O turnover based on differencial values of your settlements. If that is say 16 lakhs........... File ITR 4, declare 6% on 16 lakhs as profit (forget loss) i.e. 1 lakh as income....... which as per your other income sources would not be taxable........... no question on maintaining accounts...... no other compliance, but to prove the turnover figure.

A Kar

Nil

79 Points Joined July 2017

Thank you Sir for your valuable reply. My only concern is that since this is electronic trading the brokerage has given me the Loss amount and turnover in form 10. Still can I claim that I do not know my profits or loss and file presumptive tax? Will the AO create a problem?

A Kar

Nil

79 Points Joined July 2017

Sorry, it just occurred to me now. If I choose presumptive income, do I have to use presumptive taxation for the next 5 years?

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

208912 Points Joined July 2016

"Still can I claim that I do not know my profits or loss and file presumptive tax? Will the AO create a problem?"

You are at liberty to offer profits as per presumptive assessment, even knowingly...... it is as per law. ITO will be not be able to reject the same.

For 5 years compulsion clause, it is other way. i.e. if you do not adopt section 44AD in any year, then you are not allowed to adopt it for next five yrars.

A Kar

Nil

79 Points Joined July 2017

I am unable to post new queries. Hence asking here. In between I had not traded options for 3 yearsand hence did not have any business income. Thus I used it 2. Now if I trade options again can I use Presumtive income?