Module 7 Markets and Taxation

Chapter 7

ITR Forms (The Finale)

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7.1 – Income Tax Return (ITR) Forms

The last step of taxation is filing your Income tax returns (ITR), and this can be done using ITR forms. Find below brief explanation on everything important on ITR that you need to know as an investor/trader.

I have noticed from my interactions with many that they are confused between the two actions i.e ‘paying income tax’ and ‘filing income tax’. Many are of the opinion that if they pay income tax the act of filing income tax is not really necessary. This is not true, let me explain why.

Paying Income tax – If you are employed and draw a salary you very clearly know that your employer on your behalf deducts tax (based on your tax slab) and pays the income tax on your behalf. This is usually called ‘Tax Deducted at source (TDS)’. Now what if you have an income sources besides your salary?

For example for the given year assume besides drawing a salary, you also made a profit by actively trading delivery based equity trading. As we now know this activity falls under “Non-speculative Business Income”. Since the employer is not privy to this activity it becomes your responsibility to declare this source of income to the Income tax department and paying the appropriate amount as tax.

Filing Income tax returns – Filing income tax returns is a mandatory way of communicating to the IT department all the sources of income you have including your salary. An Income Tax Return Form (ITR) form is simply a form that you need to fill up declaring your sources of income. There are different ITR forms for different sources of income. You may wonder why I should file my returns when I don’t have any other source of income besides salary. Well, in such a case by virtue of filing your income tax returns (via appropriate ITR form) you are officially communicating to the income tax department that you do not have any other source of income.

So in essence, the act of filing your returns is your official communication to IT department about all the source of income that you have along with the tax you have paid against that income. You do this via the prescribed ITR forms.

More formally, an ITR is a prescribed form through which the particulars of income earned by a person in a financial year and taxes paid on such income are communicated to the Income-tax Department. There are different types of ITR forms, one needs to select the appropriate ITR form, based on the different sources of income. These forms can be downloaded from here https://incometaxindiaefiling.gov.in/

7.2 – ITR forms and its uses

In the context of this module, which is focused towards individuals having investments as capital gains or trading as a business income, the important ITR forms to know about are:

ITR 1 – when you have only salary, interest income, or rental income from only one house property, you can use ITR 1 forms to file your income tax returns. This is the most common type, but if you have capital gains or trading as a business income, you can’t use this ITR form.

ITR 2 – when you have salary, interest income, income from house property or income from capital gains, you can use ITR 2. So if you are an individual who only invests in the market (remember investor, hence capital gains), you need to use ITR2

ITR 3(ITR 4 renamed to ITR3 from 2017) – when you have salary, interest income, income from house property, income from capital gains, and income from business/profession, you can use ITR 3.

So if you are an individual who is declaring trading as a business income, you have to use ITR 3. If you are an investor and trader, you can show trading under business income and investments as capital gains on the same ITR 3 form.

ITR 4 (ITR 4S earlier) – this is similar to ITR4 but with presumptive scheme if section 44AD and 44AE used for computation of business income. ITR 4S can’t be used to declare any capital gains of if losses has to be carried forward. So you can use ITR 4S only if you have business income (speculative + non speculative), but it is best avoided if by use of this form you are reducing your tax liability. 

7.3 – Exploring ITR 4 (4S until 2017)

The advantage of ITR 4 is that it can be used by tax payers who do not maintain regular book of accounts or want it to be audited (refer chapter 2) provided your turnover is lesser than Rs 2 Crores for the year.

You can get away without maintaining books or getting audited if you firstly calculate turnover based on section 44AD (check the previous chapter) and then declare 6%* of this turnover as your presumptive income. You have to then pay taxes adding this 6%* of the turnover to your other income and pay tax as per the slabs. 

So if you are a trader with turnover less than Rs 2 Crores for the year (was Rs 1 crore until FY 15/16) and profit less than 6%* of the turnover with only business income (not possible if you have capital gains), you can declare presumptive income of 6%* of the turnover, and get away from the need to get your books audited. There is no need to pay advance taxes if you are using ITR4 (4S earlier), but you are not allowed to deduct any business expenses against your income. 

For example, assume my salary was Rs.500,000/- for the last FY, and I had incurred F&O loss of Rs.25,000/- on a turnover of Rs.400,000/-. Since my profit is less than 6%* (25,000/400,000) of my turnover I will need to use ITR4, maintain books, and have them audited. Instead of this, I could use ITR4S and declare 6%* of Rs.400,000/- (business turnover) or Rs.24,000/- as my presumptive trading business income even though I have incurred a loss.

Update:  % is reduced from 8% to 6% from AY 2017/18 or FY 2016/17

My total income for the year is Rs 500,000 (salary) + R 24,000 (business income) = Rs.524,000/-. Therefore my tax liability would be as follows –

Upto Rs.250,000 – No Tax

Between Rs.250,000 to Rs.500,000 – 5% – Rs.12,500/-

Between Rs.500,000 to Rs.524,000 – 20% –  Rs.4,800/-

Total tax = Rs.12,500 + Rs.4,800 = Rs.17,300/-

Here, by virtue of declaring a presumptive business income of Rs.24,000/- I’m paying additional tax of Rs.4,800/-. This works out to be a cheaper alternative than getting an audit done for which the CA fees could have been Rs.15,000/- and above. So using ITR4 would make sense only if your turnover is low, hence declaring 6% of turnover as income would work out cheaper than paying an audit fees to the CA.

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7.4 – Quick FAQ and notes

How to file the return of income electronically?
Income-tax department has established an independent portal for e-filing of return of income. You can log on to www.incometaxindiaefiling.gov.in for e-filing the return of income. Check this very nice video on e-filing put by the IT department.

Is it necessary to attach documents along with return of income?
ITR return forms are attachment less forms. Hence along with the ITR form (whether filed manually or filed electronically), you are not required to attach any document (like proof of investment, TDS certificates, etc) unless if you fall under the audit case.

However, these documents should be retained by you and should be produced before the tax authorities when demanded in situations like assessment, inquiry, scrutiny etc. But in audit cases, soft copy of balance sheets, P&L, and any notes along with the audit report needs to be attached.

What is the difference between e-payment and e-filing?
E-payment is the process of electronic payment of tax (i.e., by net banking or SBI’s debit/credit card)

E-filing is the process of electronically furnishing (filing) of return of income.

Using the e-payment and e-filing facility, payment of tax and furnishing of return is quick, easy, and hassle free.

Is it necessary to file return of income when I do not have any positive income?
If you have sustained a loss in the financial year, which you propose to carry forward to the subsequent year for adjustment against subsequent year(s) positive income, you must make a claim of loss by filing your return before the due date.

What are the due dates for filing returns of income/loss?
If no audit: July 31st

If audit: September 30th

What is to be mentioned as “nature of business” on ITR 3 (ITR 4 until 2017)? 

Nature of business can be mentioned as: Trading-Others (Code: 0204)

If I fail to furnish my return within the due date, will I be fined or penalized?
Yes, if you have not furnished the return within the due date, you will have to pay interest on tax due. If the return is not filed up to the end of the assessment year, in addition to interest, a penalty of Rs. 5,000 shall be levied under section 271F.

How to show profit and loss on balance sheet?  

You can show all positive turnover as gross receipts, and negative turnover as gross sales.

Can return be filed after the due date?
Yes you can. Return filed after the prescribed due date is called as a belated return. If one could not file the return of income on or before the prescribed due date, then he can file a belated return. A belated return can be filed within a period of one year from the end of the assessment year or before completion of the assessment, whichever is earlier. A belated return attracts interest and penalty as discussed in previous FAQ.

For Example – In case of income earned during FY 2013-14, the belated return can be filed up to 31st March, 2016. However, if return is filed after 31st March, 2016, penalty under section 271F can be levied.

If I have committed any mistake in my original return, am I permitted to file a revised return to correct the mistake?
Yes, provided the original return has been filed before the due date and the IT Department has not completed the assessment. It is expected that the mistake in the original return is of a genuine and bona fide nature and not rectification of any deliberate mistake. However, a belated return (being a return filed after the due date) cannot be revised.

Return can be revised within a period of one year from the end of the relevant assessment year or before completion of the assessment whichever is earlier.

Example, in case of income earned during FY 2013-14, the due date of filing the return of income (considering no audit) is 31st July, 2014. If the return of income is filed on or before 31st July, 2014 then the return can be revised upto 31st March, 2016 (assuming assessment is not completed by that date). However, if return is filed after 31st July, 2014, then it will be a belated return and a belated return cannot be revised. 

ITR forms are typically Microsoft Excel sheets where you can fill all the relevant details, and the calculations happen automatically.

Find attached an ITR 4 form with all types of income, salary, capital gains, trading as a business, and rental income. This should act as an easy reference if you are trying to fill this on your own. This is the ITR4 form from AY 14/15(FY 13/14). 

xlsSample ITR4 Form (2014-15)

xlsSample ITR4 Form (2015-16)

xlsSample Computation


Key takeaways from this chapter

  1. The act of paying your taxes is called “Tax Payment”, which can be done via e-payment
  2. The act of communicating different sources of income and tax paid against that is called “Income Tax Return filing”
  3. Filing income tax returns is mandatory, even though you have paid taxes
  4. An ITR form should be used to file taxes
  5. Use different ITRs for different sources of income
  6. ITR 4S for presumptive business income. Use this to lower your cash outflow (paying taxes versus audit fees)

Phew! That brings us to the end of the taxation module. Keeping it simple is most challenging, especially a topic like this where almost every other word is a jargon. Hopefully I have done a decent job with it, and this module acts as your ready reckoner for everything on taxation when trading and investing.

Financial discipline is the key to long term wealth creation, and it starts with compliant filing of your income tax returns. It is best not to avoid or postpone especially with advancement of technology and reach of our income tax department.

Do help spread the word,

Happy Trading,

Nithin Kamath
Zerodha

Special thanks to  Tax IQ for providing valuable inputs throughout this module.

Disclaimer – Do consult a chartered accountant (CA) before filing your returns. The content above is in the context of taxation for retail individual investors/traders only.

698 comments

  1. rao says:

    my total income is less than 250000 per year includes trading losses/gains ,can i pay income tax or not ? or any other forms to fill and submit

    • Nithin Kamath says:

      You don’t need to pay any tax if your total income is less than Rs 2.5lks. But do go ahead and file your income tax returns using ITR4.

      • Vinod says:

        Nithin , My salary is less than 2.5k after adding my total gross is also less than 2.5k,you have mentioned that less than 2.5k is not required to pay tax,But you insisted to file ITR-4 is that mandatory..in that case what should I attach.

        • Nithin Kamath says:

          Vinod, if your total income is less than 2.5lks, then filing ITR is not mandatory. But it is advisable to do so. There is nothing you need to attach, you just have to fill the ITR4 using the help of CA and file it online.

  2. L V S RAO says:

    My salary is Rs 7,00,000/-PA and i have trading loss of around Rs 5,00,000/-. 99% of my trading was in Future & Option & only 1% in equity cash.Total turnover is below 1 crore. Please advice which ITR to be filled.

  3. shiva says:

    I think u forgot to mention about rebate of 2000, which is provided to resident individual

  4. Manish Agrawal says:

    Sir, my business income (personal business, not intraday or FnO) is less than Rs 2.5lac. My turnover is less than 1 crore and I have losses of about 70000. I have traded in delivery based, intraday and options. Do I need an audit?

    Since my total income is less than 2.5 lac, I thought that I won’t need an audit.

    • Nithin Kamath says:

      Manish yes you are right, no audit as you don’t have any tax liability as your total income less than 2.5lks

  5. Kathir says:

    I have been searching in the internet for taxation on trading as a business. I am delighted to see such a comprehensive coverage of the concept explained well in one place. It is wonderful to see links to some other relevant articles also. Thanks for the nice work!!!

  6. Ganesh Suresh Keer says:

    Hi Nithin,

    In the module you mentioned that we have to use ITR 4 if we declare ourselves as trader. But I checked the income tax site and it mentions that ITR 4 has to be used for AY 2014-15. Currently I will be filing returns in AY 2015-16. So I cannot use ITR4. Again ITR 4S does not have facility to record capital gains. So I am in dilemma which form to use. ITR 4 or ITR 4S?
    Please advise.

    Regards,
    Ganesh

    • Nithin Kamath says:

      Ganesh, new ITR4 forms is still not up on the income tax website. It is expected to be available in the next 10 days.

      • Ganesh Keer says:

        Thanks Nithin for the reply.
        In the training module you had mentioned that if you want to save audit fees can declare 8% profit and file returns using ITR 4S.
        But in the new ITR 4S, I don’t see a section where I can enter details for capital gains which I had made in 2014-15 year. Do I have to use another ITR for capital gains in addition to ITR 4S.
        Regards,
        Ganesh

        • Nithin Kamath says:

          Ganesh, like I have mentioned above ITR4S can’t be used if you have capital gains. New ITR forms are being put up by the IT department this year, ITR4 should be out in the next few days.

  7. Vishal says:

    Great Article, I have been trading for more than 5 years but never got any insight

  8. Sanatharam says:

    Regarding claim:As a scalper,if I am trading 20 F&O trades per day and my yearly income is around 5lakhs & have to pay 25k as per the slab. For example per day brokerage+taxes are around 1500rupees and approx 3.6lakhs/year.If trading is my only source of income & if iam filing itr how much i can able to claim?

  9. Sanatharam says:

    The claim limit should be around INR 25000 not more than that sir?

  10. Sanatharam says:

    Can I claim 25k or 3.6 lakes?

    • Nithin Kamath says:

      You can claim for entire 3.6 lks. Along with claiming 3.6lks in brokerage and charges, you can also claim all other expenses that I have mentioned in chapter 5.

  11. Bhushan says:

    Hello Nithin,
    I should say its a great initiative by Zerodha. I appreciate this effort for retail traders.

    I have investment in delivery based shares and also trade in Futures and Options. I have sold some shares from delivery and made an overall loss of INR 1,000 (approx) and an overall loss of INR 85,000 in F&O. I do not have any income from salary but I made some profit through Bank Fixed Deposits on which bank has deducted TDS. I need your advise on the follwing –
    1) I should use ITR4 or ITR4S?
    2) I still don’t see ITR4 available for assesment year 2015-16? By when we can expect ITR4 to be made available?
    3) Since, my income is well below the limit of INR 2,50,000 I am not supposed to maintrain any book and no audit required?

    Please provide your valuable suggestion.

    Thanks,

    • Nithin Kamath says:

      1. ITR 4
      2. Should be available in the next two weeks
      3. Yes, no audit required.

      • sunneljohny says:

        Hi Nithin….this module a great help indeed…..a big thanks for it. To be more clear in the above case, can we add other business expenses like phone & net bills along with the F&O losses to be carried forward in ITR 4 if total income less than 2.5 lakhs without any audit?

  12. ashok6062 says:

    Hi Nithin,
    Thanks for great initiative.
    I have short term capital losses and also intraday losses(only 3 intraday trades). Do I need to file ITR4?
    If I do not want to carry forward intraday losses then can I file ITR2?

    • Nithin Kamath says:

      Ashok, if you want to be 100% compliant, yes you have to use ITR4 as there is no other way to show your intraday losses which has to be considered as speculative business income. Speculative business income can’t be declared on ITR2.

  13. Wajid says:

    Can ITR4S be used to claim for all the business expenses ?

  14. MURTUZA HUSSAIN says:

    Hi Nithin Kamath,
    suppose i have no other income other than trading in f&o and made a profit of 550000 excluding (brokerage,stt,turnover charges etc)
    1.how incometax have to be paid (will they send notice to me ) or stt and other charges includes the income tax ? if not ,then how do they collect tax from me
    2.does 5.5lakh needs auditing
    3.is turnover calculated on the value or on my profits and losses

    • Nithin Kamath says:

      Murtuza, there is no one line answer for this. This entire module, Markets and taxation, explains it in detail. Do read up.

  15. Pratheesh says:

    Hi Nithin,karthik n zerodha team,
    I take this opportunity to express my sincere gratitude to zerodha team especially to Karthik & Nithin for giving such a valuable content to its [email protected] of cost.
    I can say no other broker in India till now gives this kind of valuable contents through their portal.I m quite sure u r the game changer in this industry.From the starting with discount brokerage concept,now u r reached a milestone of giving sophisticated platform like “pi” with technical chart n put orders in same screen to traders @ free of cost.
    I think, leading broking houses till now even think on this kind of tools..
    Through ur best selection of modules in varsity u done a tremendous work for educating every kind of participant in market…Traders and investors u addressed especially through “technical analysis & fundamental analysis”…if a layman gone through ur varsity modules will at least have made a minimum knowledge about what is balance sheet ,P&L &Cash flow statements of a company.
    Another golden feature in ur varsity is newly added taxation topics by NITHIN,m quite sure no other brokers in India currently gives such a kind of back office ,here u named it as Q.
    with every information a person needs regarding his trades,especially in tax related matters 100% sophisticated solution u r giving to clients .

    Karthik,Hats off man,what a beautiful presentation by u on varsity..everything simple n perfect from ur side….* neglecting very few typo in accounting related topics.after my 10th std my study ended on 2001 when i completed my MBA ,
    I can claim 95% books read by me for educational purposes by different author’s are making the learning process is quite complex and boring,
    My bottom of my heart m saying u r a man gifted with extra ordinary writing skills…all chapters written by u in varsity are quite valuable..this is the only topics i read completely after my 10th std.ie now [email protected] of 38.aft 23 years.
    Lastly , Congrats NITHIN for the efforts you put for tax related matters for traders and investors..and your New efforts started 5 months back through change.org for exclude business of trading in securities& derivatives from section 44AD.for trading community…
    My only sorrow is that year 200I onwards I am working in this industry as dealer,Relationship Manager,Branch manager kind of profiles,currently running a franchise with another broking house..Till now i havent get such a chance to work with your kind of brilliant young team..
    Please add work in progress modules in options and trading strategies also..with out much delay..

    • Karthik Rangappa says:

      Pratheesh, I’m a bit overwhelmed reading you comment 🙂 Thank you so much for such kind words and encouragement. The idea is to ensure that over time we discuss each and every topic related to markets on Varsity. So please do stay tuned for more!

      Btw, can you please point out to the typos, I’ll fix the right away 🙂

    • prabhuk says:

      Hi Nithin. I completely agree with Pratheesh. He has expressed whatever has been in my mind for a long time. I’am regular varsity reader and I have made my entry into markets only because of varsity. Your Varsity initiative is fantabulous. Varsity has made it very easy for everyone to learn and understand about markets. There is a honesty and integrity in the writings and this is not like other people teaching about markets. I say varsity is unique. There is nothing like varsity available on this world wide web. Thank you Mr.Nithin for giving us this very very unique product. Slowly I’am progressing in trading activity thank you ZERODHA (Nithin, Karthick, and everyone in Zerodha) from bottom of my heart. Through me almost 7 to 8 people have joined Zerodha it seems I can make money through this can you please explain the process?
      Anyways I have few questions about taxation (1) How are commodities trading taxed same like business income? (2) If I invest in gold etf then isit same as commodity trading? When is commodity module coming up in varsity?

      • Nithin Kamath says:

        Thanks Prabhu for the kind words.
        1. Yes commodities trading is similar to F&O trading, non-speculative business income.
        2. Gold ETF is not commodity trading, it is like trading stocks/mutual funds.

        There are still a bunch of modules to finish. Btw, the technical analysis module can be applied for trading commodities as well.

  16. kashinath says:

    1) Assume Pension+Bank int is processed in ITR1 for FY 2013-14.
    2)Again assume that some speculative income and short term income is left- out in FY 2013-14.
    My question is how to consider this left-out speculative income of FY 2013-14 during this FY 2014-15?

    • Nithin Kamath says:

      You cannot consider this for FY 14/15. What you can do though is to go back and file revised returns for FY 13/14.

  17. kashinath says:

    If revised return is filed for FY 2013-14 now, does this invite interest on tax due?

  18. kashinath says:

    If revised return is filed for FY 2013-14 now(after refund order issued by IT dept.)does this invite interest on tax due and whether revised return has ti be migrated from ITR1 to ITR4 or so ?

    o

  19. kashinath says:

    Thanks for your in regard to interest.Whether revision of ITR1 of FY2013-14 be made in ITR4 now ?

  20. Bhushan says:

    Hello All,

    IRT4 still unavailable on e-filling website. Does anyone have any information by when it will be made available and is July 31 is the last date for filing return even for ITR4?

    Thanks,

    • Nithin Kamath says:

      July 31st last date is for ITR2(even that is extended to Aug 31st this year). ITR4 should be out soon, last date will be most likely end of september or even october as this year new ITR forms are being introduced.

  21. ganesh jagdale says:

    thank u so much sir for giving me such important information. this questions were always on my mind. but now cleared
    now i was doing trading and investment in market since 2005. i have traded through sharekhan and way2 wealth broker previously now doing trading through zerodha.
    so what should i do for my previous losses as at the end of the each year there is no profit and having no records for that. but for current fy there may be chances of profit.
    can i start to maintain records of transactions from now onwards since no back dated record available with me.

    • Nithin Kamath says:

      Ganesh, all back dated records (atleast for the last financial year) should be available with your brokerages. So make sure to file your returns for FY 14/15 and do it regularly from this year atleast.

  22. SRIKANTH says:

    what should we declare our nature of business?
    i can find only as forex trader

  23. Saravanan says:

    Zerodha had made a trend set an is now a pioneer in the technology ,tools , and the knowledge sharing portal, simply awesome
    Great work Nithin and Zerodha Team,
    Good tools to name few ranging from Varsity,SPAN ,Margin,brokerage calculator, pulse,PI, 60 Day challenge,Quant,tradingqna,rowd cand so on ,expecting KITE soon ,I want to involve in alpha testing of the KITE is it possible ?

  24. srikanth says:

    Thank you nithin for the reply
    1. Actually I am a new user so my request is that if your team can then y dont you make a video of filling returns or about how to pay tax and also filling returns so that it benefits to all new users.
    Thank you
    2. Do we have to coleect any statement form from your office nithin??

    • Nithin Kamath says:

      Srikanth,
      1. The idea of putting up this module was to make life easier for traders. Everything you need to know is already on this module. The actual filling of ITR form can be done in multiple ways, and it is best to consult a CA for this.
      2. You can login to Q.zerodha.com and pull our tax P&L report and ledger statement. This is more than enough.

  25. B Sen says:

    Hi Nithin,
    Thanks a ton for such a great initiative.
    I have a query. I am a salaried professional . Last year I opened my Trading+Deemat account mainly for the purpose of Long Term Investments. However, i also did a some Intraday Trading out of curiosity and eagerness to learn. In doing so I have incurred a loss of Rs. 1600 INR in those Intraday trade orders.

    My question is that is it mandatory to show the Speculative Loss (Indraday) in my IT Return. What if i do not want to carry on the carry forward my Intraday losses? Can I file ITR1 in such a case where i do not carry forward my Speculative Losses? As the amount of loss is not huge i want to get around the hassle of going through CA Audit. Also, i do not have any Short Term or Long Term gain. Kindly let me know your thoughts on this

    Regards,
    B Sen

  26. Bhushan says:

    Hello Nithin,

    Could you please attach an sample filled ITR4 from previous years here to be used as sample? That will a great help to many first timers.

    Thanks,
    Bhushan

  27. Bala says:

    First of all I thank Nithin and Karthik for the detailed explanation about taxation. It was indeed ver useful and almost answered 90% of the queries which I had about taxation. It would be very helpful if you could clarify on my below query . I had done intraday trading during March 2015 . My turnover is 2500 , where as my speculative profit is 1800. Should I need to use ITR4 for filing returns ? If so , my profit is more than 8 % of the turnover , is auditing required( as auditing is required only if the turnover is more than 1 crore and if turnover is less than 1 crore and profit is less than 8%) . Can ITR4 be filed without auditing ? As I have speculative profit I believe I should not use ITR4S . Kindly clarify and advise which form needs to be used . Thanks in advance.

    • Nithin Kamath says:

      Yes Bala, you will need to use ITR4. Yes, you can use ITR 4 without the need of getting audited. Yes ITR4S can’t be used as you have speculative income. Guess the module helped. 🙂

  28. Charles says:

    Sir, If income is below exemption limit and net profit less than 8% of the turnover; i am not liable to auditing (44ab), so i must select NO in the itr4 , is it right. Can you please tell who are required to maintain accounts as per sec 44aa? Thanks

    • Nithin Kamath says:

      Yes No in ITR4. Section 44AA is applicable mainly for professionals (doctors, teachers, architects, and others).

  29. GB says:

    Wow Nithin! this is excellent work! A complete guide. Thanks a ton for this wonderful presentation!

  30. GB says:

    One question NIthin on which I need your suggestion, If I have only short term capital gain in equity delivery trades and long term capital gain on some debt mutual funds, no F&O , NO Intraday, can I use ITR4S? since investment is the single source of income and no salary.

  31. Prashant says:

    Hi,

    Just had a look at the new ITR 4 form. To an average joe, the form is pretty intimidating…..My only source of income currently is active trading in F&O. I want to show it as a business. But the balance sheet section of the form is very elaborate and it seems difficult for an average trader to prepare a “corporate style” balance sheet that this form supports. The P&L section also a very comprehensive (while it may be a good thing), it confuses us because i am not sure which fields are necessary to be filled.

    Unfortunately, there are very few CAs who understand the “trading” situation correctly and give convincing advise. I wanted to do this on my own but now i think i may have to find and depend on a CA

    • Nithin Kamath says:

      Yep, filling up the ITR4 form is quite daunting. I think best thing to do would be to make a note of everything, and tell the CA that this has to be filled in ITR4, all CA’s should be able to do atleast that much.

  32. GB says:

    oh Ok Nithin, thanks then. I happen to trade sometimes every other day in Delivery equity no F&O no Intraday.. That is why was not sure if I should classify them as short term capital gain or business income. since I dont have any other salary or business income. So from your answer I read it as it is fine for me to use ITR2. Kindly revert if my understanding is not correct.

    • Nithin Kamath says:

      You can use ITR2, but like you said if trading equity is like your primary business then yeah probably you should declare trading as a business. If you are doing so, then yeah ITR4S or ITR4, in ITR4S there is no provision of capital gain, you have to show it as business income itself.

      • Murtaza Telya says:

        Hi Nithin,

        My trading account size is only Rs. 1,00,000, and I am not making a net profit annually at the moment, but I am still making some equity trades that have short term capital gains. I am confused, because I have no taxable income and hence I don’t need to pay any tax, but I have short term capital gains on some trades. Would I still be liable to pay the 15% STCG tax ?? Would really appreciate your feedback on this.

        • Nithin Kamath says:

          Murtaza, if your total income for the year (including all your other income + STCG) is lower than 2.5lks, then it not mandatory for you to file ITR. You will also not need to pay any taxes on the STCG. If it is more than 2.5lks, yes you need to pay 15% on STCG as taxes, and file it using ITR forms.

  33. jaydivanji says:

    I’m a full-time trader. I’m filling up the ITR4 form. Here are a few questions from me so far:

    1) Balance sheet section (No Accounts case):
    6a, 6b, 6c: Do I have mention ‘0’ for sundry debtors, creditors & stock-in-trade?

    6d: Amount of cash balance – do I have to mention it? If yes, is it the net profit/loss? Or is it just the bank balance on March 31, 2015? Or is it the net total of bank balance & P/L?

    2) P&L Statement (No account case)
    53 a – What is the gross receipts? Is it the turnover?

    3) I got provident fund payout from the company I last worked in, for the FY 2013-14, in October 2014. At present, since I’m not employed, what do I show this income as?

    • Nithin Kamath says:

      1. Yes
      Net total of bank balance and P&L

      2. This is upto how you want to declare. We typically show all positive turnover as gross receipts and negative turnover as Gross sales.

      3. Provident fund payout is not an income but capital receipt.

      • jaydivanji says:

        Thanks a ton, Nithin. Your help is much appreciated.

        In which section is capital receipt filled in?

        • Nithin Kamath says:

          Haven’t seen the new ITR4, but last FY under OI (other income) 5 (e) Capital receipt if any. Best to consult a CA for this.

          • jaydivanji says:

            Thanks for your reply, Nithin. I am taking a CA’s help now to file the returns. Oddly enough, he doesn’t know how to declare short-term trading (or FNO trades) as non-speculative income in the ITR4 form, so going ahead with declaring short-term trading as STCG. He said there’s no field/column in the form that says ‘non-speculative income’. Could you please tell me which section you use to enter the non-speculative income data?

          • Nithin Kamath says:

            :), not advisable to show F&O trading as STCG, too many notices have been getting sent by IT department recently. Check out the excel download of the sample ITR4 form above. It is non-speculative business income. Show the nature of business as trading-others (code: 0204). Show all positive turnover as gross receipts and negative turnover as Gross sales

          • jaydivanji says:

            Thanks a ton for your reply, Nithin. Much appreciated.

          • jaydivanji says:

            Nithin, could you please tell me the CA you consult? Is it a firm like cleartax or something? I tried to understand by looking at the sample ITR4 form to see how you declared short term trades (F&O, equity) as non-speculative business, but I couldn’t understand anything. The CAs I’ve come across don’t know how to show short term trades as non-speculative business. So I’d appreciate it if you could let us know about your CA.

            Also, can you upload a sample ITR4 form for a pure trader (one who doesn’t have a regular job. Does only trading). It’ll be very helpful.

          • Nithin Kamath says:

            Will try adding another ITR4. Have friends who are CA’s, also the guys from Taxiq.in help us.

  34. deep says:

    Hi Guys
    Really excellent and informative stuff all over varsity and I truly appreciate your initiative towards demystifying the subject of taxation.
    Also, the patience and promptness that you guys show in clearing the doubts of us lesser mortals is commendable..bravo guys!!
    Having said that, I myself have a some queries that I may be asking after going thorough the chapters few times, if I couldn’t find the answers. The first one is: Can I show a profit of more than 8% of turnover, even though I have incurred loss (or my profit is less than 8%), and pay tax by including that (>8%) profit in my income, to avoid the hassle/fees of audit by CA in “ITR4”; the way you said is possible in “ITR4S”?

    • Nithin Kamath says:

      Not possible in ITR4, if you want to show presumptive income it has to be using ITR4S.

      Cheers,

      • Deep says:

        Thanks Nithin 🙂
        Some more clarifications pls:
        1. As per my Q-reports, My intraday (Equity only) details- P/L: +5806.65 & turnover: 13174.65;
        and my Short term trade (Again, equity only) details – P/L: -8685.60 & turnover: 493295.00. Now, if I show both of these under Speculative business income, I have a net loss and, hence, I have to get the audit done. Will it be acceptable to show only my Intraday equity profit & turnover for speculative income while showing my short term losses under Capital Gains and, thereby, avoid the audit requirement (as for my intraday trades only, audit conditions are not met)??
        2. I also faced an auction-penalty for a short delivery on an intraday-trade. Under which type of trade details are they listed in Quants reports? Also, just to make sure, it will be considered under my P/L only right?
        TIA 🙂

        • Nithin Kamath says:

          1. Yes, you are supposed to intraday as speculative and overnight trades as short term capital gains separately.
          2. If you had an auction penalty, it won’t be captured on Q/QUant currently. You will have to manually add it on your P&L.

          • Deep says:

            Ok…Many thanks again
            So, the turnover and corresponding P/L, as per my Q-reports, do not include that auction penalty amount and are inaccurate, right??
            And while accounting for that penalty manually, should I count it as an intraday PL (since the original order type was MIS) or as short term trade PL (as the settlement was actually made on T+3 day)??

          • Nithin Kamath says:

            Yes, the auction penalty amount will not be part of P&L. But they would be showing on your ledger. Yeah, you could consider it as a short term trade.

          • DEEP says:

            Thank you so much Nithin, for resolving all the queries patiently! 🙂
            Cheers!

          • DEEP says:

            Hi Nithin
            One last (hopefully) query regarding my short delivery please:
            The quantity for short delivery was 150 (Take-EQ). On T+2, I received contract note for auction of 23 shares specifying the buy price and other charges(so no problem for these 23 shares). For remaining 127 shares, my ledger is showing a net debited amount of Rs.12518.96, under the heading “Squring-UP Adj for,TAKE-EQ 127 Qty”. Now, how do I breakup this amount into buy price and charges,as there’s no contract note available for these 127 shares?

          • Nithin Kamath says:

            There are no STT/brokerage charges in case of short delivery (atleast at zerodha). So you can divide the value by the number of shares to consider the buy price.

          • DEEP says:

            THANKS A TON NITHIN!!
            I’m almost done with filling up my ITR4, just last two queries please:
            1. In the “Amount of Cash Balance” section, in no-accounts case under BS, should I fill my trading account cash balance and/or PL (as on 31-3-2015)?
            2. I have not paid any advance tax for my (speculative) business income, but I’m eligible for refund, even after including this business income in my salary income (as my employer has overpaid my TDS). Do I still have to pay self-assessment tax for that business income separately or will it be adjusted and accepted against that overpaid TDS?

          • Nithin Kamath says:

            1. Cash balance in your trading account + what is in your bank account.
            2. It will be adjusted against overpaid TDS.

          • DEEP says:

            Thank you so much Nithin for your amazing help.. could file my ITR4 on my own just because of this awesome initiative and kind support of yours!! 🙂
            Now I just hope that I don’t receive any notice by IT dept for wrong filling or something. But no matter what, it was a great learning experience and I really feel lucky to have stumbled upon Zerodha in the beginning of my trading career itself otherwise this could’ve well been a nightmarish period.
            Thanks again..stay blessed Zerodha! 🙂

  35. GS says:

    Hi, You have given a very nice explanation of all the tax rules. My turnover in F&O trading is less than Rs.1crore. But I have incurred a loss for which I want to claim refund. Do I need to get my accounts audited?

    • Nithin Kamath says:

      If your total income for the year ( F&O Loss + any other income of yours) is greater than 2.5lks, that means you will have tax liability and yeah will need an audit. You can’t really claim for refund, the loss you have made can be setoff against your other business profits, hence reducing the tax liability on the other income u have.

  36. GB says:

    Thank you Nithin!

  37. Shiraz says:

    I have a question on filling taxes. Could you please tell me whether gains from commodity trading will be listed under capital gains or as gains from business?
    I see there are mixed reviews online. Some say they have to be under capital gains and some say business as they do not have dividends. Please help me out here.

  38. Sid says:

    Hi Nithin

    I am Siddharth (NRI).Firstly I must say this is a excellent peice of work. Here is my case:

    I have following incomes:
    1. Interest income : apprx 72.2 K.
    2. Tax free income:2.21 lacs
    3. Deductions (80C,80D,80TTA) = 79321 & possibility to deduct 33k under 80 E
    4. I have income from F&O profit :2.54 lacs (turnover is less thn 1 Cr.(script wise) and profit is more thn 8% ) and I have capital gain less thn 10 k.
    5. Losses to be carry fwd : Business income 20 k and speculative business 57k.

    Now my questions are:
    1. ITR 4 or ITR4S? (Since 4 years I am filing ITR 4, still not sure!!)
    2. Can I treat capital gain together with business income only, that is F&O profit.
    3. I dont need auditing right ?
    4. How should one tackle BS schedule for F&O income?Can I leave it black ?

    Thanks in advance.
    Best
    Siddharth

    • Nithin Kamath says:

      1. ITR4
      2. If you are considering yourself as a trader (check chapter 1), then yeah you can show capital gain as business income.
      3. No
      4. Since you don’t need an audit, you can mention “No-account case” in the BS schedule.

      Do consult a CA once.

      • siddharth saboo says:

        Thanks Nithin.

        Even when I am in no audit case, I dont understand what should be filled in heads like amount of sundry debtors, creditors cash balance. I am doing F&O,its not a real business setup.

        Also, till date I did not mention nature of business as trader. Because I was adding /deducting the profits and loss from my tution income. But now as I am not doing that any more,is it okie to change nature of business ?

        Thanks in advance.

        • Nithin Kamath says:

          Siddharth, you can leave all those fields blank. It is best to get a CA fill the form for you, ITR4 is quite complex. Yes it is better late than never, do start declaring your trading income.

  39. Sivakami M says:

    Hi, With respect to Non Speculative Loss whether we can’t carry forward the entire amount to next Ass. year (2016-17). In the current Ass. year (2015-16) my income (Rental & Bank FD’s) are less than my nil taxable income and I don’t want my Non Speculative loss getting offset with my current income.

    • Nithin Kamath says:

      You will have to offset all your business profits and losses, and only the net loss can be carried forward. So if you have 1lk rental income, and 2 lk trading loss, you can carry forward only 1 lk business loss to the next year.

      • SIVAKAMI M says:

        Thanks for your reply. Without offsetting we cannot carry forward the entire loss even though my other incomes are less than tax slab?

        • Nithin Kamath says:

          No you can’t. So if your rental income is 1lk and trading loss is 3lks, you can carry forward only 2lks. You cannot carry forward 3lks, just because your income is less than min tax slab.

  40. Harsh says:

    I have salary income of apprx 600000/- and tax is already deducted by company for rs. 15000/-. Further, i have an income from delivery based equity transaction of Rs. 12000/- (Total buy value – 530000/- and total sell value – 542000/-) and Loss from intraday trading of Rs. 17500/- (Total buy value – 1,29,00,290/- and total sell value – 1,28,82,800/- )
    The above values are derived from the statement given by my broker on the average buy and sell rate basis.
    I have following doubts :-
    1) For delivery based – Do I need to show the income of 12000/- as income from capital gains ?
    2) For Intraday – Do I need to show the loss under the head “income from buss/profession” ?
    a. Should I consider the turnover equal to the loss I have suffered or is there any other way to calculate it.
    3) Which ITR form to be used ?
    Please suggest..i have done share transactions for first time and now confused with how to treat profit and loss of in filing returns?

  41. Ashutosh says:

    Hi Nithin,

    Please help me in calculations :

    Salary : Rs 1500000
    Rent Income from Flat : Rs 90000
    Interest (SB) : Rs 20000 (after deducting standard Rs 10000)
    Intraday Equity Trading (Speculation) : Rs 100000
    Short Term Very Frequent Trading : – Rs 50000 (Loss).

    Now questions and confusions:

    1. Can I consider Short Term frequent Trading as ‘Non-Speculative’ ( as mentioned in your module)
    2. Can I offset these Short-Term (if Considered as Non-Speculative) with Intraday (Speculation) and other income heads , means:
    Income Other Than Salary = Rent + SBInterest + Intraday(speculation) + Short-Term(consider as Non-Speculation)
    = 90000 + 20000 + 100000 -50000 = 160000
    3. As per your module , Non-Speculative Losses (Short-Term Trading Frequent) Can be offset with Speculation + Other Income.

    Please help and guide me here , I am little bit confused.

    Thanks
    Ashu

    • Nithin Kamath says:

      1. yes you can.
      2. You cannot offset non -spec loss with spec gain, they have to be kept separate. But yes, you can setoff against other income (other than salary).
      3. No, I haven’t said anywhere that you can setoff with non spec losses with spec gain. But yes you can against other business income (like rent etc).

  42. Lakshmi says:

    My net loss is from F&O trading. STCG is from shares.

  43. Lakshmi says:

    Sorry, my F&O net loss is not getting set off against STCG as I mentioned earlier.
    In CYLA schedule this F&O net loss is getting set off against income from other sources (bank FD interest). Is this right or am I missing something? Since my total income is below 2 lks, there’s no point in having it set off this year. I want to carry forward this business loss and not have it set off this year itself. How do I do it?

  44. Lakshmi says:

    For my F&O trading I have filled up only P&L under No accounts case: Gross receipts 110,000. Gross Profit 52000. Expenses 7000. The resulting net profit is calculated automatically and shows in BP schedule under A1 and other places automatically. Haven’t filled u anything else. What am I missing? Why is the F&O loss getting set off against current year’s Bank FD interest of 70,000 instead of getting carried forward?!

    • Nithin Kamath says:

      Lakshmi, you can carry forward only net business loss (after adding all your income). You cannot choose to ignore one income because the current year you are in a non-taxable slab.

      • Lakshmi says:

        Much thanks for your reply… So, net loss in business has to be mandatorily set off against income from other sources in the current year itself? Does it also get set off against salary income, income from house property or capital gains?

        • Nithin Kamath says:

          Not against salary income or capital gains. It will offset all business income like rental, interest, and etc.

          • Lakshmi says:

            Thanks again for your response. Appreciate it a lot.
            So if I do 3 small F&O trades, my F&O loss will be treated as business loss and all business tax laws will apply but it will happily get offset against my personal bank FD interest (FD made many years prior to starting this ‘F&O business’)!
            …..I think it’s not true that laws don’t go beyond common sense 😉 Income tax laws do. And then some!
            Considering that more and more retail investors are getting into derivatives, the govt should introduce separate tax laws for derivative trading instead of lumping and dumping it under business, just as there are for capital gains.

  45. Hitesh says:

    Hello Sir,
    Thanks for your valuable help. I have salary income after all deduction is Rs 220000.00 + STCG (Sale of shares) Rs 27000.00 (profit 30% of money invested) and Speculation loss (Intra-day Trading) Rs-4000.00. Which ITR form should i Use??? DO in need any aduit for the same as well???Plz Provide ur guidance as I am very confused…

    • Hitesh says:

      Few things I Forget to mention that I am an INVESTOR not TRADER in share market And my Total Salary Income is 380000 (Excluding any deduction). And if i supposed to fill ITR4 then in which section I can fill Speculation Loss .

      • Nithin Kamath says:

        hmm.. don’t know how cleartax will be able to do this. But yeah, in ITR 4 sum of all profits can be mentioned in gross receipts and sum of all losses in gross sales. Your net loss will be loss – profits.

    • Nithin Kamath says:

      Intraday trading is speculative business, since you have business income you will need to use ITR4.

  46. dhrupad says:

    Hello Team Zerodha, I have been trading with you for more than two and half years and have never bothered to look for any other broker. After having read (and also understood thoroughly) your entire module on taxation, I have no words than to mention “just fantastic”. All the best to the entire team for the exponential growth of Zerodha Customers. I have two basic questions, answers to which I think I know but yet not confident so asking again. 1. Sum total of my income from other sources (only from interests and dividends, no salary, no capital gains, no other business income and no house property income) and losses from FNO works out to be less than 2,50,000. I think I must file ITR4 and I dont need Audit. Am I Correct? 2. What should be mentioned under the heading “Nature of Business”. I find that only “0204 Trading-Others” seems to be the right option. Can you please advise?

    • Nithin Kamath says:

      1. Yes you need ITR 4. If you have no tax liability (all ur income combined less than 2.5lks), no need of an audit.
      2. Yes, that should be the nature of business, mentioned in the chapter above.

  47. bhaskar says:

    Number One service and Good Knowledge given by you.
    1)I have traded in only in Options in f&o, with a turnover of 2lakh and a profit of 13000, so can i go for ITR-4S. I will pay extra tax(profit less than 8%) rather than go for audit.
    2) Next financial year can i go for ITR-4 if i am have any loss or profit to show expenses plus audit.

  48. Syl says:

    Hi Nithin, thank you for such an informative article.

    I have a few questions if you don’t mind. I earn only from my websites by showing ads. My total receipts for fin year 2014-25 were 15.4 Lakhs.

    1. Can I use ITR 4S, as I am not a Professional and merely selling traffic.
    2. In ITR 4S will I have to declare my income as 8% of 15.4 Lakhs. My profit is around 13 Lakhs. So is it up to me whether I declare 13 lakhs or 8%? And is this legally okay if I declare 8%?
    3. What to enter in “Amount of the cash balance”? My business is online so there is no cash-in-hand, everything is in the savings account. Can I leave it as zero?

    • Nithin Kamath says:

      Syl, we are trying to keep the focus in this module on taxation while trading on the capital markets. Don’t want to digress from the topic.
      Best,

      • Syl says:

        Well can you atleast answer ques 2 and 3? I wouldn’t be asking you to, if it wasn’t really important. The last date of filing the return is tomorrow and I would really really appreciate you help with just those 2 questions.

    • Nithin Kamath says:

      ITR4S excludes businesses like commission. Also it is never a smart idea to take a route that can cause a loss to IT department. In your case, you can’t really declare 8% of 15.4 as profits, because ur actual profits are probably the entire 15.4lks (minus the expenses). For example in your case, for 15.4lks ur tax liability will be 2lks + as per the IT slabs. But if you declare only 8% of 15.4lks as profit, u would have to pay no taxes. So best not to do this, if IT dept has a problem there will be a 1% penalty per month on tax not paid.

      ITR4S was meant for small traders, grocery shops etc, who had very little income. Govt tried to make it easier for them to file returns.

      Cash in hand is cash + money in savings bank

  49. S.Lawrence says:

    Dear Nithin Sir,
    Iam very much appreciating the interest you have shown in updating our knowledge and understanding on Taxation for trading activities through Varsity. With this understanding, I have filled my ITR sucessfully( 1st time) with in a short span of time by including all my trading income. Thanks a lot!
    My best wishes for the expanding sucessful future of Zerodha!.
    Regards,
    S.Lawrence

  50. Nagaraj Gupta says:

    Dear Zerodha,
    I am a Insurance advisor(self employed) and having commission income(4,67,000) and I am a regular F&O trader in zerodha, Now for FY 2014-15 I have incurred loss of 1.5 Lakhs and my total turnover as per p&l statement is 14 lakhs. I want to know which ITR form should I use, Does tax audit required? and I want to carry forward the loss. As I am planning to declare the loss for the first time. I tried contacting many CAs and other friends. But unable to get the complete clarity. As tomorrow is last date for filing and in case of loss carry forward. Kindly provide me suitable solution ASAP.

    • Nithin Kamath says:

      Nagaraj, just answered on Zconnect:
      You will need to use ITR 4. Ur total business profit (commission – trading loss) seem like it is more than 8% of turnover. So u will most likely not need an audit. Check this module:http://zerodha.com/varsity/module/markets-and-taxation/ explains everything. Best to consult a CA.

      • Nagaraj Gupta says:

        Nitin sir, thank you so much for your kind reply. But can you clarify that on which head in itr4 i need to declare this loss and adjust with the my commission income. will it come and LTCG, or STCG or any other head. My local CA seems to be in confusion state. See if you can help me out. Thanks in advance.

        • Nithin Kamath says:

          F&O trading is business loss/gain. So same head as you would mention any other business profit/loss. If your CA can’t figure that out, hmm.. probably u should use someone else. Check out the sample ITR 4 in the chapter above.

  51. DA0218 says:

    Nithin, you have done a commendable job on this section. Cleared lots of confusion. Keep it up.
    Regards

  52. Ganesh Rathod says:

    Hi Nitin,
    I am a government servant. I have invested in equity. How long I should hold a bought share so that I did not involve in trading as government servant…

    • Nithin Kamath says:

      It depends on which department you are working in. But as long as you are doing delivery based trading (buy and hold for more than 2 days), it shouldn’t be an issue. But do confirm once.

      • Ganesh Rathod says:

        Nitin, thanks for your kind reply. I keep buying shares for long term. During filing of income tax, should I consider value share while I bought or the value of share on last date of financial year?

  53. Ankit Mishra says:

    Hi, my audit is going on. My CA’s team asked me to calculate the month wise profit/loss for the audit. While doing so I have discovered a thing. In the 1st quater of FY 14-15 (i.e April 14-June 14) I had a profit of Rs. 54000. I have a total loss of Rs. 6,78,000 in FY 14-15. I was in a job till August 14. My question is that was I liable to pay any advance tax due to the profit in 1st quater even though I had loss in complete FY. I havent paid any advance tax for the shares as I didnt know and at year end I was at loss. Am I at a non compliance cause I didnt paid advance tax even though I had loss in FY?

  54. ravindranath says:

    i am holding nre deposits, ( before i invested for 5 years/ 10years, 3 years back i came back from abroad. ther interest earned on deposits are taxable? ( since i invested when i was nri ). if so on which section?

    • Nithin Kamath says:

      NO taxes on interest earned on NRE deposits.

      • ravindranath says:

        pl mention section, my auditor is not accepting since i came 3 years back, he said (even thou i invested when i was nri), ur income is taxable. but as per u my income is not taxable. pl mention under which section? so that i can refer and try to convence him. how many years i can hold this deposits.

        • Nithin Kamath says:

          Ah my bad, didn’t see the “I came 3 years back, in ur previous question”. I thought you were still a NRI. If you have returned back, more than 2 years back and/or if you weren’t a NRI 9 out of last 10 years, you will be considered as an ordinary resident and taxes has to be paid on all income.

  55. Jayesh says:

    Hello Nithin,

    Thank you so much for your articles and your hardwork. I get motivated by seeing your hardwork and achievement so far.
    I have a small query, as per your responses it means that if we are in a net loss at F&O, we can either use ITR4 or 4S based on minimal of both of them ( If total tax is less than 15k then presumtive tax else pay the CA 15k), Am i wrong?
    Also why is turnover considered and not net loss instead? I have a total turnover of ~18L, but the net loss is <10k.
    So in this case you would suggest me to hire a CA and pay 14k instead of paying 10% of 18L as presumtive tax

    Regards

    • Nithin Kamath says:

      Thanks Jayesh. Using the presumptive income route is not advisable. But yeah, if you have turnover of 10lks, you can show 8% of 10lks or Rs 80,000 as profit and pay tax as per the IT slab you fall in on that. If your turnover is less, then yeah, ITR 4S could be the route, otherwise best to use ITR4.
      Why is turnover considered? 🙂 IT department considers you like any other business.

      • JAYESH says:

        Thank you so much, But what would you suggest me in this case,
        Since its a loss of 10k with trunover of more than 10L
        wouldnt it be 15k(Audit charge) + losses=> 15k-10 for ITR-4
        and 80k for ITR-4S
        Please help?

        Regards
        Else it would be 80k right?

        Regards

        • Nithin Kamath says:

          You could show 8%, so yeah 80k for 10lks turnover as profit. Add this 80k to your income, so if you are in the 30% bracket, you pay 24k as taxes. Your rather just get the audit done paying 15k to the CA and also get to carry forward the loss to future.

  56. venki says:

    Last year AY 2014-15 I filed ITR 4 with help of a CA. I told them to do audit. They said not required and filed ITR 4 alongwith my salary details and loss of 13 L in F & O. It was processed and did not receive any defective notice. But this time AY 2015-16 the same CA filed in the same manner with loss of 2.5 L. But received defective notice with error code 32. Please suggest me. What need to be done. Thank you.

  57. Ashok says:

    Sir,

    Am a software employee and i have been trading for more than 5 years ini FnO. But i never goot profit and never filed taxes. Can you advise me what to d now.

    Regards,
    Ashok.

  58. lakshman says:

    Hi if i take some funds from family n friends n give back after some time say 1 year or more by giving some returns is it good i take cash or by bank transfers how will i be able to take in to taxing part will i be having some extra care how to go about this give some idea

    • Nithin Kamath says:

      Taking cash is not advisable. If you take cash and put it in your bank account, how will you account for the source of income?

      You can borrow money as a loan, and then probably move it to your trading account (again not advisable because it will be like doing portfolio management which SEBI bars any unregistered entity to do). In terms of taxation, nothing much changes for you or your friend. You borrowed money, and u r returning it with an interest.

  59. *Ro* says:

    Hi Nitin

    My Question is regarding ITR 4S. What if my turnover is 80 lakhs and my profit is 30 lakhs (as per the Tax P&L on kite)? In that case can I still show my income as 8% of 80 lakhs? Which just turns out to be 6.4 lakhs. Am I compliant if I do that? Obviously I can voluntarily show the income is 30 lakhs and I am more ethical by doing that. But my question is not about ethics over here. My question is that by showing income as 6.4 lakhs, Am I compliant?

    There are 3 main benefits of doing that
    • No tax audit
    • No book keeping like P&L, Balance sheet etc
    • And last but not the least, I am not paying tax on 30 lakhs but only on 6.4 lakhs

    From your example and of what I have googled, it looks like I am compliant but it will be great if you clarify. Mind you, I am more interested in being compliant rather than being ethical. I want to pay all the taxes that are officially due, but also save as much as I can without being non-compliant.

    In fact this example can apply for any high margin business. Like I buy small screws at 10 paise and sell them for 90 paise. Hence at the end of the year my profit would be 80 lakhs on a turnover of 90 lakhs. Can I just show may income as 8% (7.2 lakhs) and file ITR 4S?
    Frankly I strictly believe that we should all pay taxes, but what I don’t understand is why do I need to take an effort for something that the government earns. They should give me an IT officer who will look at my trading activity and compute the tax as relevant. Why should I pay even pay Rs. 100 to a CA, only to make sure that the government earns its revenue correctly? 90% of the individuals would not know how to make a Balance sheet or a P&L. Me being from commerce background, I don’t know how to keep these books. You will agree that even after the guidance from yourself, practically making P/L, Balance sheet is not easy, especially when it’s in a particular format like probably in ITR4 format. my query is specially for F&O

    Albeit, undoubtedly the tax guidance that you have given on Varsity is invaluable and so much of help. I do not really have words to express thanks to you and the way you do the business. What you have done over past few years will really work like a benchmark for other brokers. I have seen that sometimes the progress is slow, but you as a broker have explored avenues that none other have. All other brokers are interested only in the broking income. I really admire people who create wealth not just by doing the business, but also by creating a lots and lots of value for their customers. Nitin, you are one of them. I think there are currently two firms which are really doing well in terms of creating value for their customers, one is Ola Cabs and the other is Zerodha. Hats off to you, guys….

    It will be great if you can answer my question about ITR 4S…I want to be compliant and still not pay too much of tax!!!

    PS. I have already mailed you to let you know how fab your kite platform is…

    • Nithin Kamath says:

      Rohan, thanks for all the kind words.

      Coming back to ITR4S, hmm.. it is a loophole in the system and yes you can technically pay only 8% of the turnover as taxes. The issue though would be in case of a scrutiny (chances of it happening is 1 in 100), if the ITO realizes that you have taken the route that has caused a loss to the exchequer, hmm.. he might demand for the difference in tax and interest for the period it was not paid. So I’d advise you to file using ITR4 itself, ITR4S is suggested only if someone has done really small amounts of turnover and is required to do an audit.

      • *RO* says:

        Thanks Nitin. Frankly I wouldn’t really worrry about scrutiny if I have followed all the prescribed rules. This was really of help,Nitin. Thanks again….

  60. tuhsar says:

    thank you for these wonderful articles

  61. [email protected] verdhan says:

    Hi kartik
    If my profit is turnover is less than 1crore and profit more than 8% from f&o only,then simply I can final tax at end of year using ITR4S without auditing and without paying advance tax

  62. Sunil says:

    Hello Nitin,
    Is 80c deduction (1.5 lakh) available for speculative business income and non speculative business income? I know 80c is not available for short term capital gains.
    Thank you for informative module on Taxation.

  63. Nitin sir thank you for simplifying everything.
    Sir I have lost more than 18 lacs out of which 10 was taken from friend as a loan which form I need to fill and do I need to do an audit

  64. And it was in option trading

  65. Nithin kumar says:

    Hi sir iam a small trader, i tried to trade in options few month 2 months back, now iam not doing it, if i see my P&L statement it is showing profit 3000( three thousand ) and turnover 300000 (three lakhs)(since most of the times i made losses), since overall iam in profit only , so do i need to pay tax for this small amount?? if yes since my profit is far below what needs to be done sir? if i go for ITR 4s i need to pay 8% of my turnover 3 lakhs which is far greater than what i earned, , if i go for ITR 4 auditing is required which again requires lot of money i guess , please advice me in this sir thanks in advance

    • Nithin Kamath says:

      If you use ITR4S, you show profit of 8% of Rs 3lks which is Rs 24000. Taxes on this will be based on the IT slab you fall in, if in 10% slab, you will have to pay Rs 2400 as taxes. But it is best to use ITR4, even in ITR4 you can just show 24000 as profits instead of Rs 3000 thus avoiding an audit. Speak to a CA once.

  66. S.N. Sinha says:

    Could you kindly tell that in ITR-4S, in schedule NOB BP, what is the nature of business for future and option trading?

  67. Anwar says:

    Shop act license require for Non-Speculative business ?

  68. Raman Ahuja says:

    Hello Nithin Sir,
    I might have a situation and believe you can provide me appropriate guidance. I have made several visits to CA’s in last few months with not very clear response. I’m an independent IT consultant. Last year I earned 5.4 Lks in professional fees (Income tax code- 194J) before TDS deduction. And my estimate for this year will be 6.00 Lks before TDS deduction. I filled ITR-4s form last year and intends to do the same for this year too.

    Now here is the situation, if I do intraday trades and make small profits let say 8K.
    1. In such case, under which head my Income from intraday trading will fall?
    2. Which ITR form shall be most applicable ITR-4 form or ITR-4s?
    2. And do I need to prepare books of accounts?
    3. If so, which are the major books I need to maintain like Journal entry, General Ledger, Trial Balance, Profit and Loss, Balance sheet etc.? 4. And do I need to get those accounts audited by CA?

    Kindly help

    • Nithin Kamath says:

      1. Speculative business income.
      2. ITR4, you can’t show speculative in ITR 4S
      3. Just general ledger and balance sheet should do, P&L would anyways be provided by the brokerage.
      4. Audit required if turnover more than 1 crore for the year or if profit less than 8% of turnover. Check this chapter.

  69. Raman Ahuja says:

    Thanks very much Nithin sir for clarifying things out.

    And just to confirm, as per Chapter 6.2 at link provided by you.
    Turnover means ALL BUSINESS TURNOVER, and
    Profit means NET BUSINESS PROFITS.
    So, the ITR return should looks like:

    Case 1:
    Professional Fees 5,40,000
    Intraday Tunover 1,25,000
    Gross Turnover or Gross Receipts: 6,25,000
    Income from speculative business: 8,000
    Less: expenses (phone, car, meal, internet, brokerage, STT) 2,50,000
    Net Profit = 3,83,000 (61.28% of Tunover)

    Case 2:
    Professional Fees 5,40,000
    Intraday Tunover 1,25,000
    Gross Turnover or Gross Receipts: 6,25,000
    Income from speculative business: -8,000
    Less: expenses (phone, car, meal, internet, brokerage, STT) 2,50,000
    Net Profit = 3,67,000 (58.72% of Tunover)

    In both cases ITR4 be used and i’m assuming since Net Profit is greater than 8%, an audit should not be required. Though I have to maintain General Ledger, and P&L (consolidated with broker provided trading General Ledger, P&L). Am I taking it in right direction?

    • Nithin Kamath says:

      Yep ITR4 and audit not required. (For professional income, ITR required if turnover more than 25lks). Yep you are right.

      • Raman Ahuja says:

        Hello Nithin Sir,
        Just wanted to say thank very much you for outlying the “complected” tax matter in plain and simple language.
        And out of curiosity would like to know, what if someone decides to make share trading as his/her full time business. What registration number (service tax number, sales tax number etc.) shall be most applicable for setting-up sole proprietorship firm?

        • Nithin Kamath says:

          Thankfully you don’t need any of those registration numbers. You just have to use ITR4 and file your returns as a business. 🙂

  70. dinesh dave says:

    I have got rental income and income from bank FD which form i should to file

  71. Brajendra says:

    When the next module will come?? Eagerly waiting for the same…

  72. Khyati Verdhan says:

    Hi kartik
    If my turnover in f&o is 98,00,000and my profit is more than 8% of it. Clearly I should use ITR4S in which 8% of turnover =8,00,000 for which tax comes out to be 60,000 as per slabs. So I use challan itns280 and mode of payment would be???
    I think here is no need to pay advance tax
    Please correct me if I wrong any above. I made screenshot attached.

    • Nithin Kamath says:

      Hey Khyati, it is best to never do anything that can cause loss to the IT department. Calculate taxes in both ways, using the normal IT Slabs (without taking turnover into consideration), see your net profit and see what slab you fall in. If the tax is more than the Rs 60,000, best to not use this loophole of getting away declaring 8% of turnover as profits. Also use ITR4.
      ITR4S is suggested only if your turnover is very small, and if you are having to unnecessarily having to get your books audited.

  73. Khyati Verdhan says:

    Hi Nitin,
    Thanks for your answer.
    I have no problem for paying taxes of my profits on trading f&o.
    I simply don’t want get involvement’s like paying advance tax or going to CA to audit books.
    Is there a way to pay taxes on profits simply on the end of year???

    • Nithin Kamath says:

      Trading is considered like any other business, if you are profitable you have to pay advance tax. If you don’t pay advance tax, you need to realize that you will be causing a loss to the govt. So it is best to pay advance tax, I have explained how here http://zerodha.com/varsity/chapter/taxation-for-traders/. You don’t need a CA for this. Going to CA to audit books is again a mandatory requirement if your turnover is more than 1 crore or if profit less than 8% of turnover in case turnover is less than 1crore.

  74. raddi says:

    please continue varsity initiative……plz

  75. DD0718 says:

    hello sir I am a psu bank employee so i have salary income bank fd income rental income and i also did some f&n trading in which i have incurred some loss so which form should i fill? as i am in psu bank employee is it ok to fill form itr4? plz guide me…thanks

  76. usha gupta says:

    sir,in 2014-2015 i have shown a loss of 24000.00 from non speculative business.
    this year my income from pension,rent of the house is Rs5 lakh and 9 thousand.no profit or gain from non speculative / speculative business this year.
    how can i claim the 24000 loss of last year and what shall be my tax liability this year. i have already made 1.5 lakhs tax saving investment this year.

    • Nithin Kamath says:

      Usha, business losses carried forward can be offset only against other business gains. You can’t consider pension or housing rental as a business income. So ideally you can’t claim the Rs 24000 loss.

  77. DEBASISH NAIK says:

    * QUESTION :
    Sir,
    I am an advocate by profession, I file my Income Tax Return regularly in form ITR 4S. I file NIL return every year. During the Financial Year 2015 – 2016 ( A.Y. 2016 -2017 ) along with my legal profession I have started doing commodity trading in MCX ( Non – Agriculture i.e. CRUDEOIL ) . During this F.Y. ( 2015 -2016 ) I have incurred heavy loss in MCX commodity trading of around Rs 150000/- , I have gained around Rs 2500/- till date but overall loss till date is around Rs 150000/-.

    I want to know the following things regarding filing of ITR for the A.Y. 2016 – 2017 :
    1. In what form should I file the I.T return ITR 4 or ITR 4S ?
    2. Under what category should I file the I.T. return Business or Profession or both Business & Profession ?
    3. Will I get any benefit of the loss that I have incurred during this F.Y. 2015 – 2016 while doing commodity trading in MCX ?
    4. If I would have gained money in overall MCX commodity trading at the end of the year apart from the loss that I have incurred during this F.Y. 2015 -2016 then on what basis I would have filed my I.T. return ?
    i. On the turnover of the trading during the F. Y. 2015 -2016 ? If turnover then how to know / determine the turnover of the whole year ?
    ii. If on the total income of the F.Y. deducting the loss incurred , then will I show the total income of the F.Y. or 8 % of the total income of the F.Y. or anything else , please advice ?

    5. Till date no T.D.S. has been deducted from my trading income, I want to know when does T.D.S is deducted when the MCX trading income exceeds Rs 20000/- P.A. or more ? OR No T.D.S is deducted whatever may be the total income P.A. during a F.Y. , Please inform ?
    At present my source of income is from legal profession and MCX commodity trading only , please answer my queries in my e-mail i.d. [email protected] so that I can e-file my I.T. Return properly without any error, so that I will not face any problem in future.

    Thanks & Regards,
    Debasish Naik.

    • Nithin Kamath says:

      1. ITR 4 is always preferable. But since you have done only non-speculative business (F&O trading and not intraday equity trading), you could also use ITR4S. But with ITR 4S you cannot carry forward the loss, so best to use ITR4.
      2. Business and profession
      3. Yep, if you have any other business income (not ur lawyer or professional income) you can set it off against it. Or else you can carry this forward for next 8 years and set off against any business gains in the future.
      4. I have explained this in detail in this chapter. Make sure to go through the module once.
      5. There is no TDS deducted, you will have to file all taxes yourself.

      Also best you get an opinion from a CA as well.

  78. Prem says:

    I am an Individual. I have regularly submitted ITR 4. But I have not submitted my ITR 4 for AY 2015-16. Please tell me can I submitted ITR 4 for AY 2015-16. Please tell me one more thing, Now I want to submit only ITR 4S, Can I submit ITR 4S, Now? Please help me?

    • Nithin Kamath says:

      Yes you can file delayed returns. The only issue would be that you will not be able to carry forward any losses if you have in AY 2015/16

  79. Debu says:

    In the financial year 2015-2016, I have income from the following sources

    1] Income from salary
    2] Income from other sources
    3] 1 running Recurring account
    4] 1 Blue chip Mutual fund account
    5] Intraday equity loss
    6] Delivery Equity loss
    7] Interest from bank account(less than 10000)

    My questions are

    a] As I have done intraday trading so I need to file ITR 4. Is it correct?
    b] If I need to file ITR 4 and under which head, I need to show
    i) Income from salary
    ii) Income from other sources
    iii) Intraday equity loss
    iv) Delivery Equity loss
    v) Interest from bank account
    c] Should I need to calculate amount of interest accrued till 31st march, 2016 for Recurring account and Blue chip Mutual fund account since they will not
    be matured 31st march, 2016.
    d] Do I need to go for audit as I have loss in both Intraday equity and Delivery Equity?
    e] If I do not trade(Intraday equity) in the next year but do Delivery Equity then do I need to show losses in equity intraday?
    f] Which ITR form do I need to file in the next year if I stop Intraday equity? Can I show it as investment in the next if I only do Delivery Equity?

    • Nithin Kamath says:

      a. Yes
      b. Nature of business can be mentioned as: Trading-Others (Code: 0204)
      c. It depends on how you are maintaining your books. It can be on accrual basis or when cash realized basis. Best to do it on accrual.
      d. Yes, since you have losses on intraday equity. Delivery equity if showing as capital gains, no need of any audit.
      e. Yes,best to show.
      f. YOu can use ITR2 to show capital gains only.

  80. Raj says:

    Please update it to reflect budget 2016 changes.

  81. meetkulkarni says:

    Hello Nithin,
    I am salaried person. I trade using my wife’s demat/trading account.
    1) Do i need to include gains/loss from this account into my salaried IT return?
    2) If i buy/sell YES Bank 2 futures lot per day, my turnover is 25 lacs, so 2 crore limit is not applicable for me. is that right?
    3) If i have to include gain/loss from wife’s account into my IT return, then what is my nature? Trader/Investor? what forms do i need to file?
    4) If not above case, then What will be my wife’s status? Trader/Investor?

    Thanks in Advance.
    Aniruddha

  82. 3046 says:

    Hello Nithin,
    Last financial year I incurred heavy loss as below
    Intraday gross profit₹30,540.60
    Intraday turnover₹30,540.60
    Short term gross profit₹-1,20,854.30
    Short term turnover₹57,13,725.90
    Total Charges₹18,216.40

    Futures Gross Profit₹-2,89,122.50
    Options Gross Profit₹-24,273.75
    Total Gross Profit₹-3,13,396.25
    Futures Turnover₹5,11,637.50
    Options Turnover₹1,33,503.75
    Total Turnover₹6,45,141.25
    Total Charges₹36,446.82

    1. Which form is better option for me: ITR4 or 4S
    2. How can I carry forward both these losses

  83. geo says:

    if you are unemployed and non-salaried person but a full time time trader, which form do you use?

  84. Ankit says:

    Hi Nithin,karthik n zerodha team, I am eagerly waiting for other modules where I am unable to find anything. For ex: Commodities, Currency, IR Fut, Trading Psychology, Risk mgmt., and Trading Strategies. Also, please advise any other source which you think would be helpful to learn these modules.

    I have to confess, all the existing modules are very well written which seems useful to novice and seasoned trader/investor. Thank you guys.

    Best Regards. Ankit

    • Karthik Rangappa says:

      Ankit – thanks for the kind words. We will start working on ‘Commodities, IRF, and Currencies’ module in about 15 – 20 days. Request you to stay tuned. Cheers.

  85. Jay says:

    I do plan to consult a CA, but the problem is so far the CAs I have encountered just don’t know how to enter the details of short term trades as non-speculative income or how to enter F&O income and turnover. I’m purely a trader, I have no other income.

    All I seek is this: Which entry goes where in the ITR4 form. As in, the schedule and section number. If you can provide me these details, I can finally tell the CAs what I’m looking for.

    Here are the details of my FY 2015-16:
    Interest from savings bank & Infra bonds: 12173
    Total dividend: 14189.25
    Total intraday losses: (25604.4)
    Total short term trade profit (to be shown as business income, not STCG): 70221.6
    Total futures profit: 10307.5
    Not traded in options
    Total capital gains: 74554.51
    Total short-term trades turnover: 1929948.20
    Total intraday (speculative) turnover: 52684.40
    Total futures turnover: 71107.50
    Total trading expenses (Brokerage + STT + service charge + turnover charges + Stamp duty + SEBI charges) in futures: 17571.85
    Total trading expenses (Brokerage + STT + service charge + turnover charges + Stamp duty + SEBI charges) in short term trading and intraday: 22760.26
    I couldn’t get the separate expenses for intraday and short term trades from Zerodha records. The records show the charges together. Is it necessary to show the speculative and short-term (business, not STCG) expenses separately? If yes, how to get the separate info from Zerodha records?
    I will be very grateful if you could fill out a sample ITR 4 form with the above details. It will be very helpful for pure traders like me who have absolutely no other source of income.

    • Nithin Kamath says:

      There is a sample ITR form filled in the above chapter, check it out. The link above Key takeaways from this chapter. About charges, currently intraday and short term are combined. We will this year give it to you separately. You will have to proportionate to your trading turnover reduce the charge from total charges. If you are showing it all as business, you can show charges combined.

  86. Manju says:

    Hi Nitin,

    Excellant information. I’ve query on taxation on selling of shares in below scenario.

    For Ex: I’ve 100 shares of ABC of 10 Rs each so my invested amount is Rs 1000. Now after a month the share price of ABC becomes 15 Rs. Now I decide to sell 6 shares which is 900 Rs and I’ll keep remaining 4 for more than 1 year. So I want to know whether this comes under taxation? Appreciate if you can explain.

  87. MSP says:

    Hi Nithin,
    I am using ITR4, have filled the P&L sheet, i am filling point 53 , is this be appropriate ?, besides this i have income from property as rent, here, i need to show brokerage paid to estate agent, in which point i can show this.

    Regards,
    MSP

    • Nithin Kamath says:

      In case of rental income, there is a standard deduction of 30% you get (including brokerage and everything else). So if you have 1lk of rental income, you pay taxes only on 70% of this.

  88. MSP says:

    Hi Nitin,

    Thanks, ITR4, p&l sheet, which point needs to be filled for f&o income .

    Regards,
    MSP

    • Nithin Kamath says:

      Check out the sample ITR4. You can show positive turnover as gross receipts and negative turnover as Gross sales. F&O income will be receipts – sales. Check out all the chapters.

  89. MSP says:

    Hi Nithin,
    I was filing return in Thane(Mumbai) ward, now i am shifted to Kerala and executing trade from here, however, my permanent address belongs to Thane, hence, which ward or circle i should mention Thane or Kerala
    Regards,
    MSP

    • Nithin Kamath says:

      If you have moved to Kerala for long term, it is best to change address. Otherwise, you can continue to use the Thane address. If in case of any scrutiny, you can appoint an authorized person (your CA) to represent u in Thane.

  90. MSP says:

    Hi Nithin,
    My Future realized profit is coming -135140.75, in p&l sheet , where this amount has to put.
    Regards,
    MSP

    • Nithin Kamath says:

      You can mention all profits in receipts and all losses in sales. So if you had Rs 100 profit and Rs 200 loss, mention Rs 100 in receipts, 200 in sales, so net sales will be Rs 100 which is a loss.

  91. Subhajit Sarkar says:

    Do you have your own CA for the audit? Do you give this service to your clients? Is there any restriction for Govt. employee on trading like intraday or swing? Say I am not a Govt employee now but in future if I get a Govt job do I have to close my Trading/Demat account?

    • Nithin Kamath says:

      We don’t have any CA’s to do audits. Yes, there could be restrictions on speculative trading (intraday), best to clarify where you are employed. You would not need to close any account even if a govt job, unless asked.

  92. MSP says:

    Hi Nithin,
    Mine is a case of moving to Kerala from Thane, hence circle and AO would change, should i wait to file returns until this happens ?

    Regards,
    MSP

    • Nithin Kamath says:

      No need to wait. You can file and also submit a copy of your request letter to move from Thane to Kerala.

  93. shrawan mishra says:

    thanks a lot for this information. sir I am salaried person. in financial year 2014-15, I had booked 11000/- profit in intraday (equity) and 10000/- loss in short term (equity delivery). around 800/- in STT, 100/- in stamp duty and approximately 1200/- other expenses like AMC, brokerage etc. so net was nominal loss. I ignored this nominal loss and filed ITR1 and paid TAX before due date. I should file ITR4 but filed ITR1 as the loss was nominal. is there any problem?

    now this year (f.Y.2015-16) I have profit of Rs. 12000/- in intraday (equity) and short term capital loss of 115000/-. expenses like STT, journal, stamp duty, brokerage etc are 9000/-. I have invested 75000/- in ELSS (tax saver mutual fund) last year in SIP. I think I should use ITR4. total turnover in intraday is 65000 and in delivery case it is 65 lakh. you have written in an example that loss of 25000/- be treated as profit even though it was loss. in my case what would you suggest?

    thanks

    • Nithin Kamath says:

      The thing about income tax filing, is that it is self policing. It is a problem only if IT department sends you a notice. The chances of getting notice is really high, if you have traded on exchanges and not declared the activity. Very easy for IT department algorithms to spot it. So it is best to declare the profit/loss when trading using ITR4. Since you have a net loss, that means you haven’t evaded any income tax, so it should be okay. But if you get a notice, you will still have to go meet an ITO and explain why you didn’t declare this.
      Yep this year, since you have done intraday equity, you have to use ITR4. Short term loss can be shown as short term capital losses. Show intraday trading as speculative business on ITR4.

  94. shrawan Mishra says:

    thank you very much sir.

    last year I filed ITR1. Now how to rectify it? is there any way to file ITR4 now for f.Y.2014-15?

    • Nithin Kamath says:

      Yes Shrawan, you can modify/rectify your the forms you have already filed. You can’t carry forward any losses though.

  95. Shrawan Mishra says:

    sir, as I told earlier everything. if I modify then do I need to get my balance sheet audited? So should I show loss for the f.Y. 2014-15 as the loss is not going to be carried forward. and if I show loss then auditing is required.

    can I file ITR4S showing only intraday activity ( turnover less than crore and profit more than 8%).

    • Nithin Kamath says:

      If you don’t intend to carry forward the loss, if you show profits as 8%+ of your turnover, you don’t need any audit. If tax on this 8% of turnover as profit is very small, it makes sense to show profit to avoid audit. If not, yeah, best to get audit done.
      You can’t use ITR4S to declare intraday equity trading which is considered as speculative business.

  96. BKD says:

    Hello Nithin Sir,
    Thanks a lot for this valuable information you provide.
    I need you help in selecting the correct ITR form.
    I am a salaried person of 20% tax slab.
    In FY 15-16 , I had done only Intraday trading and in a a over all loss of 15k.

    Could you please let me know which ITR form i should be selecting.

    Regards,
    BKD

    • Nithin Kamath says:

      Since you have done intraday equity trading, you will need ITR4 to declare this speculative business loss.

  97. d says:

    hello nitin sir,
    thank you very much for this chanpter regarding taxations.
    my question is can’t we sum up all our income and file the it return accordingly, for example

    + income from pension
    +income from rent
    +income from fd inerest
    +income from other business (profit or loss)
    +income from stock market (equity intraday / positional / f&0), (profit or loss)
    total income is say any number
    and pay tax according to the total income, regardless of turnover, audit or different types of itr forms

    thank you in advance.

    • Nithin Kamath says:

      You can use ITR4 (which is meant if you have business) and show all of this in respective heads of income. All the income can’t be shown under the same head on the ITR form.

      • D says:

        Thank you very much for your reply…

        but what about the turnover and audit?
        i don’t want an audit that’s why i want to consider the total income from all the sources and pay taxes as per the slab.
        please guide me in this regards…

        thank you very much.

  98. Vaibhav says:

    I am quoting an excerpt from this chapter:
    “For Example – In case of income earned during FY 2013-14, the belated return can be filed up to 31st March, 2016. However, if return is filed after 31st March, 2015, penalty under section 271F can be levied.”
    are we sure here that the last date for filing Income is 31st March, 2016? or is it 31st March, 2015?

  99. Romeo says:

    Dear Sir/Madam,
    Recently i filed my ITR-4 form but after filing i realized that i had made a mistake and that mistake was that there is mismatch of Re 1 in Balance Sheet of ITR-4 form, and that mismatch is between Proprietor’s fund and Sources of Funds.
    My question might sound silly but because of this mismatch of Re 1 can my ITR form be rejected ? 
    Shall I revise this ITR-4 form ?
    I am very much worried, I need your guidance, awaiting your reply.
    Thank you.

  100. Hemna says:

    Dear Nithin,

    Can you help to answer the following:

    1. Have salary of 5 lakhs during FY15-16. Also STCG of 2000 and F&O loss of 1.25 lakhs. Reading by the article i guess ITR 4 will be required and audit also required. Kindly confirm the understanding.
    2. Can the STCG of 2000 be sett off against the F&O loss?
    3. Can you please help with any CA in Mumbai who does this type of audit and help in filling the balance sheet and P&L in the ITR 4.

    Thanks

    Hemant

  101. MSP says:

    Hi Nithin,

    I have downloaded ITR-4 file from the site, and filled the details.
    However, while uploading at the site AY 2016-17, is giving error, upload valid xml file.
    Please suggest way out for this.

    Regards,
    MSP

    • Nithin Kamath says:

      MSP, usually the utility offered by IT department itself has some problems every year when it is put out. Maybe you should try it in one or two days once again.

  102. Shenoy says:

    Hi Nitin,

    I am salaried individual and I do pay tax and file return. I have started buying and selling shares recently. If I remember I did purchase shares of a company and sold it in less than 12 months. The profit amount was very small(around 12k). If i need to file this as well, how to do this? Do i need to submit a separate form? If yes then form number? or do i need to include in the same ITR1 which I use to submit my salary income.

    Thanks,
    Sundaresh Shenoy

  103. Suresh says:

    Hi Nithin,

    Saw your comment regarding avoidance of ITR4S and filing ITR4 instead in cases where turnover is high as ITR4S was meant for small traders and business. However, Sec 44AD clearly says that any eligible business having turnover less than 1 Cr. (2 Cr from next AY) can declare presumptive income (8% of turnover) and pay tax accordingly. Further, eligible business is any business excluding the business of plying, leasing and hiring goods carriages which are covered under Sec 44AE. This shows that trading in equity and commodity derivatives, excluding intra day equity trading, is an eligible business under Sec 44AD.
    Also saw your comment regarding ITR4S not being applicable in case of capital gains from shares. But what if one wants to declare the capital gains as business income, which can be done in case of traders, by also including the sale side value of the shares as part of turnover. In my opinion, F&O traders who also treat equity share trading (excluding intra day share traders) as business, are eligible for being treated as a business under Sec 44AD and can file ITR4S, provided the total turnover including share trading turnover is less than 1 Cr. This will avoid the hassles of filling up ITR4, which requires a CA’s help, and also maintenance of regular books of accounts. Going by the language of Sec 44AD, the IT department should not have any problems in such filing. Your comments pls.
    Thanks and regards

    • Nithin Kamath says:

      Suresh, ITR 4S I agree with you on everything. The cases where I have been telling people to use ITR4 instead is where there ITR4S is being used for reducing the tax liability. Assuming you have made 10lks trading profit, at highest slab you have to pay 3lks in taxes. If turnover was say 50lks, a person can declare 8% of this as profit, which is Rs 4lks and pay 1.2lks taxes on this. This will mean by using ITR4S, there was a revenue loss of Rs 1.8 lks to the IT department. In such cases, I think it is best to use ITR4, most ITO’s don’t understand how turnover while trading works, so best to be safe.

  104. lovely says:

    hi Nithin sir , can you guide me !
    sir my age is 44 and full time student of film Direction ( bachelor of cinema 2012-15 ) but going to more than one year late pass out because of goverment college admin problems ….and soon going in the world of work , media and entertainment industry! as freelancer or assist someone
    sir before that 2012-13 i have done trading and following is the case of me …
    I have received the below mentioned notice first time on 14th June 2016 by post.
    SUB: NON FILING OF INCOME TAX RETURN-REG.
    FINAnCIAL YEAR 2012-2013 ASSESSMENT YEAR 2013-14
    Compliance Module on the e-filling portal at income tax India filling
    2012-13
    STT-01, STT-02, STT-03
    sir ,
    i have turnover >> 1 crore but statement of capital loss more then rupees 10000 in equity then 25000 loss in commodity in FY 2012-13 and same year i have changed career direction become full time student so left the trading. And i have no taxable income upto FY 2015-16. since last four years i m living on loan by friend and small saving for continue study and living expenses.so
    (1.) how i reply this notice kindly help me.when i have lost of Rs 35 to 40000/- and no taxable income.
    (2.)Is still after four years this time i can fill return for FY 2012-13 AY 2013-14 and carried forward loss? when i already left trading but not closed demat and broker account.
    (3) i need CA or just my self register and fill reply of this notice.kindly guide me !
    (4) i m interested to enter in future my studied field as Director or film making assistant and along with if i want to start trading again as part time then what profession i have to declare myself and where i found procedure or code when i m going REGISTER YOURSELF at efiling portal
    (5) when is my past like trader or student how i treat or declare myself in consider of above this notice what profession fill in present at REGISTER YOURSELF?
    (6) if i will not trade than work of film makers as assistant main thing what profession i describe because who knows future you are not just after college you are going to direct film as chief directoror may be whatever work will come for surive so how profeesion describe when still income is not generate or at present status is student..
    kindly give me light !

    Thanks
    xyz

    • Nithin Kamath says:

      1. Reply back online (no need of CA) saying no taxable income.
      2. You cannot file returns now, you have to do it within 3 years.
      3. No need of CA, you can do this yourself.
      4. There is no registration required. At the end of the year, you have to use ITR4 forms to file returns. I have explained in this module, do go through all chapters.
      5. If you are not trading now and have only fixed deposit income, just use a normal ITR1 form. Most websites like cleartax etc, do this at Rs 100 odd rupees per ITR form.
      6. Even if you don’t have an income, it is a good practice to file ITR returns. Go through the chapter on ITRforms to know which form to use .

  105. Lovely says:

    NITHIN KAMATH !
    salute sir ! Great help ! first time i visited this site when i got IT notice looking help and there and you have support me ! my heartful thanks ! Aap ne apna bana liya ! you give me smile , confidence and clarity! sure i will go through module

  106. Rajiv says:

    Hi Sir, thanks a lot for such an article on tax.
    1. i have loss on F&O. Can I offset it against the PF withdrawal in the same year. PF withdrawal is taxed separately by the PF department while withdrawing. Thanks.
    2. is there plans to have any tie up with any CA specifically for ZERODHA customers with better pricing. Thanks.

  107. JEYASHANKAR B says:

    @Nithin ,
    I’m a new doctor- getting a salary/professional charges about 3,00,000/year.
    I’ve lost F&O about 30,000 (absolute, including brokerages, taxes etc) Speculative 300₹ ( one to two times only). My turnover of about 3,00,000.
    Can I file ITR (S) as follows?
    1. 50% Professional charges :1,50,000
    8% trading turnover:₹25000
    Net taxable income(Presumptive): 1,75,000(1+2)
    Thus, No need for audit and no taxable income.
    Kindly answer me.

  108. MSP says:

    Hi Nithin,

    Thanks so much for your guidance, i have filed form 4 return, thanks for your patience for my irritating queries as a layman.

    May God Bless You.

    Regards,
    MSP

  109. Rajiv says:

    Hi Sir, thanks a lot for such an article on tax.
    1. i have loss on F&O. Can I offset it against the PF withdrawal in the same year. PF withdrawal is taxed separately by the PF department while withdrawing. PF accumulated from 2012-sep to 2015-sep. withdrawn on 2016-jan. Thanks.

  110. MSP says:

    Hi Nithin,

    I need to pay advance tax, i had used ITR4 for filing the return for AY 2016-2017, kindly let me know, what i need to do for this, there are losses also of AY2016-2017 which needs to offset.

    Regards,
    MSP

  111. MSP says:

    Hi Nithin,

    Indeed , i am clear now, Thanks so much, just one query, do i need to consider standard deductions which i am going to make this year , while calculating advance tax.

    Regards,
    MSP

  112. Sajitha says:

    have read your blog related to taxation. If it is long term capital gain we don’t have to pay tax. But when we are treating short term capital gain as capital gain other than business income we have to pay flat 15%.
    Now can you please provide me with details like what are the things that we have to do for this procedure. How to calculate the taxable amount and what are things required to submit while tax payment.
    And how zerodha back office Q is helping us in this procedure. What are the tools that we get through Q.
    If I consult with CA, as you explained in your blog they will talk with jargon and all. By reading your blog I think you can explain better than any one else.
    Actually in your blog you only highlighted capital gain as business income. Now tell me from the perspective of short-term gain as capital gain

    • Nithin Kamath says:

      Sajitha, capital gain is straight forward. On the ITR2 or ITR4, show long term capital gain and short term capital gain separately. That’s it. Suggest you to look at the ITR form.

  113. JEYASHANKAR B says:

    @Nithin , Having looked at the sample form itr4, analysis of pl section,
    I see that settlements(positive F&O and negative)- differences are considered. And PL section, Gross receipts are mentioned as sum of N6+N8+N10( Sum of positive settlements FO, Speculative and sale of shares in the previous sheet). My question is
    1. If Gross receipts is the turnover, then only the positive settlements/differences and sale of shares are considered by the software right? What happens to declaring the negative settlements and differences as turnover?
    2. Is there a separate place in the itr4, where turnover as calculated by the rules are to be mentioned?
    3. Balance sheet is balance of the business or profession right? Not personal balance sheet..
    So, if draw from business and put it in FD, I don’t need to show it in Trading business- but from other income isn’t it?
    Kindly reply ASAP.
    Regards.

    • Nithin Kamath says:

      1. All positive turnover +settlement/differences is shown as gross receipts. All negative turnover etc is shown under gross sales.
      2. No separate place. Sum of sales + receipts is the turnover.
      3. Balance sheet is one per individual, so you show all your personal and business income on it. If you draw money from business and put it in FD, you still have to show it.

  114. JEYASHANKAR B says:

    Thanks again Nithin. Really helpful.

    • JEYASHANKAR B says:

      Slightly confused again…
      Sales and Gross receipts are the same right.. As shown in part A-P&L.
      (1) Sales/ Gross receipts of business or profession (Net of returns and refunds and duty or tax, if any)
      If you meant to say negative turnover should be included in
      (7)Purchases (net of refunds and duty or tax, if any)[That’s how it’s done in the sample ITR provided]
      1.Then you meant (1)+(7) is the turnover: Sales/receipts+ purchases?
      Just to clarify that I got this right..
      2. Positive turnover(I.e., realised positive differences ) . Buy a lot 75 NIFTY fut @8000 and sell at 8100. Turnover By positive settlement would be 100*75=7500.
      3. Though negative turnover (Another day – Nifty [email protected] and [email protected] )= 7500 is mentioned on debit side, it will be considered in purchases (7)
      4. If I got that right, I see in the sample form that equity purchases and sales are also included in purchases(7) and sales(1) respectively. If (1)+(7) is considered as turnover , then turnover would also include purchase of shares.. Isn’t it? Which it shouldn’t.. Am I right?
      5. And how to include premium received from sale of options in it?
      Would be really grateful, if you would answer me. Thanks.

      • Nithin Kamath says:

        1. Ah my bad. Yes you are right.
        2. yes
        3. yes
        4. IF you are showing equity delivery as capital gain, you don’t have to bother calculating turnover for all such trades. If you are showing equity delivery as non-speculative business income, you need to show selling side of the equity delivery trade as turnover (sales).
        5. Have explained calculating turnover in this chapter. You have to calculate the turnover and mention it in the ITR (document the way you determined the way u calculated for future reference).

        • JEYASHANKAR B says:

          Thanks Nithin.. I did read everything in that chapter..
          About 4, I will show everything shares as non Speculative business turnover. Kindly help me.. So, If I include sale of shares in (1) Gross receipts and sales and my question is
          1. Should purchase of shares be included in (7) purchases? Because if I include it, then as you’ve said turnover =(1)+(7) according to the SOFTWARE. So, it’ll show as double isn’t it?
          2. If I can’t show purchase of shares in (7) where should I show it? So that profit is computed straight.
          3. Also, if I include sale of options in negative settlement, what should I do to balance the other side- show purchase of options??😭

          • Nithin Kamath says:

            Jeyashankar, Turnover requirement is to only determine if you need an audit or not. So don’t try to add turnover details within the ITR4. Use the purchases and Sales to fill the negative and positive amounts. Turnover calculation do separately to see if you need an audit or not.

            1. Show purchase of shares and also sales of share in receipts so that profits are computed straight.
            3. For all the short options, MTM it to the closing price of the option on 31st march. So show buying value as close of that on 31st. You can carry forward this position at this price to the next financial year.

  115. Elam says:

    Hi Nithin,
    Thanks for this initiative.
    It would be really helpful, if you could update the ITR4 form to reflect the current version. Also, please write few words on Mr.X ITR4 form with his income, capital gains, derivative details and carry fwded loses in figures. It will add more details to the example. Right now, it just shows the figure which i am not able to figure out where it comes from.
    Also, how can one mention the STCG loss in ITR2 form? (I am an investor with net STCG loss in the last FY). Thanks in advance.

  116. JEYASHANKAR B says:

    @Nithin,
    Thanks.

  117. Imran A says:

    Excellent help. Thanks Nitin. I am a Zerodha member (di0xx7).
    Kindly let me know a few things for ITR- FY-16-17 (AY 17-18). So that I will keep documents ready for submission according to your advice.
    Major income source for FY-16-17 (AY 17-18) is through stock purchase and sales in cash market only. No F/O or derivaties. I am preparing three logs; one for Long term stock transactions sold after a year that have no tax liability, one for Short term stock transactions that I took delivery of and sold after purchase date but before a year’s end and attracting 15% stcg tax, and finally the intra-day trades that will have tax liability as per income tax slab for businesses (around 30%).
    Is this the right approach to classify the taxable transactions?
    Secondly, how do I claim my office rental, employee( one assistant for market monitoring) cost, TV & Laptop depreciation? Do I need employee logbook, rent receipts document to be submitted for ITR claim?

    • Nithin Kamath says:

      1. Yep, right approach.
      2. You can keep all these receipts of expenses for your record. No need to be submitted while filing ITR. While filing ITR you just have to mention all your expenses.

  118. Abhinav Jhunjhunwala says:

    I need to fill ITR 5 for my daughter’s Private Discretionary Trust. The only income is interest on Fixed Deposits.
    I have entered the interest amount (including TDS amount) on OS tab and TDS deducted by bank on TDS tab.
    Now, on PARTB – TI – TTI tab, when I click on Calculate tax, it calculates tax on the interest amount, which is less than 50000.
    What am I doing wrong? There is no tax payable, as nett income is less than 50000

    • Nithin Kamath says:

      You need to use ITR7, ITR 5 is for firms.

      • Abhinav Jhunjhunwala says:

        Nithin, as per I-T website
        ITR 5 – This income tax return is meant for firms, LLPs, AOPs (Association of persons) and BOIs (Body of Individuals).
        Since I am referring to a Trust (AOP, private discretionary trust), I need to fill this and not ITR 7

        • Nithin Kamath says:

          Yeah if it is AOP, then ITR 5. Also for AOP there is benefit of tax slabs, calculated at the highest rate for all income.

  119. kvsree says:

    Hi, I am using ITR-2, here different question from P&L Statement present in Zerodha. can some one help me and mail me to [email protected]

  120. mvsraju says:

    I am a salaried employee within the 30% tax bracket. i have been doing some practice trading in F&O. My total turnover last year was
    Equity F&O turnover = Rs 3031 with Profit = Rs 45
    Commodities Futures turnover = Rs 3380 with Loss of Rs 700
    As this a very small turnover, what do you suggest as this will be eligible for audit if shown as business income or is it necessary to show as business income at all.. please suggest

    • Nithin Kamath says:

      While filing show profits of 8% of turnover, you will not need audit. So around Rs 400 profit on F&O and commodities. On Rs 800 you will have to pay tax according to the slab you fall in, but you will avoid audit.

  121. Abirami says:

    Sir, i am Housewife and my husband gave 1 Lakhs to me for trade, i have lost 41000 out that, and i am not a salary person as well as no other income for me. whether i have to fill IT returns or not, since i was a F&O trader, no equity trade or investment. If Return required which form please guide me

    • Nithin Kamath says:

      Abirami, best to fill ITR. Show the 1lk as a gift (won’t be taxed), you can show the loss and carry forward it as well. Use ITR4

  122. Debanjan Das says:

    hi

  123. Debanjan Das says:

    Hi

    I have loss of Rs 4 lacs ( JP ruined me) in equities and loss of Rs 4 lacs in F&o. I assume that i need to file itr4 to carryforward the losses. Why is the same not visible in my login section. DO i need to get the returns audited? ( My income from salary is Rs. 12 Lacs.)

  124. JEYASHANKAR B says:

    In ITR4, I have asset, say, a phone for 9000 … And I fill 9000 as opening WDV , and closing WDV is 8100(10% depreciation) . I have claimed 900 as depreciation. Now I want to disallow 50% of it 450₹ as personal expense.

    Schedule BP 12(I) says
    Depreciation allowable under section 32(1)(ii) (column 6 of Schedule-DEP). 12(I) :₹900

    Column 6 of schedule DEP is 900 only. Where to deduct this disallowable depreciation?
    Thanks.

    • Nithin Kamath says:

      Personal expenditure can be shown in Part A-OI.

      • JEYASHANKAR B says:

        Thanks Nithin… Finally filed my itr4 ..
        I have one more query:
        I remember reading , that SPECULATIVE transaction will not come under Presumptive income.. Can you tell me the exact section disallowing SPECULATIVE transaction under section 44AD?

        • Nithin Kamath says:

          I have reworded what I had written earlier. What I meant was that there is no provision to show speculative transactions separately.

          • JEYASHANKAR B says:

            Thanks Nithin.
            Last one, So,Technically, Even if I have capital gains, I can show the rest as Presumptive income and pay 8% on it using ITR4 (not S) and not maintain books of Accounts, balance sheet and profit and loss and getting it audited.

          • Nithin Kamath says:

            As long as you are showing 8% of turnover as profits, yeah you can use ITR4 and not need an audit. By showing profit you are not evading any taxes, you are probably paying more, so yep all okay.

  125. PRASOON GUPTA says:

    Hi Nitin

    I have a query about ITR form, which one you would recommed for me ITR 4S or ITR4?
    I am salaried professional
    income from salary: 7lac
    had neet relised in intra day equity: Rs-30,000 (turnover 45,0000)
    had net realised profit in F&O: Rs-1,30,000 (turnover 3,30,000)
    Finally i turned up in losses (means profit is below 8% of turnover <2crore).
    So shall i need to fill ITR4 or could i show profit of 8%( even trading in intraday equity) and avoid audit by CA.
    please guide i am very confused about it, can i carry forward losses in ITR 4s?

    • Nithin Kamath says:

      Preferably ITR4, as in ITR4S there is no way to carry forward loss. If you use ITR4S, you will end up showing 8% of turnover as profits, on which you will end up paying 20% taxes (since you are in the 20% slab).

  126. Sameer says:

    Hi Nithin,
    I tried all other websites but I got something tangible only at this page wrt return filling. Great content.
    I am also a proud zerodha user. Last fiscal itself I started investing in equities and therefore I decided to file ITR myself.
    But following are my few queries , please help me out.

    My Salary is around 9lpa and income from short term capital gains is 11 K and intraday gains as 1 K.
    700 dividend and 800 bank interest.

    Following are my queries.
    1) Do i need to maintain accounts as per section 44AA?
    2) Do I need an audit under section 44AB?
    3) There won’t be any entries in the Balance sheet, right ?
    4) As per the sample ITR4 2015-16 uploaded above , In the P&L , 1.A.iii ) Other operating revenues (specify nature and amount)
    following entries are made.
    POSITIVE SETTLEMENTS
    POSITIVE TRADE
    SALE OF SHARES
    Could you please elaborate a bit on these entries. and which one I need to write in the ITR
    5) I purchased a TV of worth 30000 can I include this in P&L? As I watch business news channel and I guess this can be included as a business enabler , Right ? If yes, under what head it will included
    Purchases or other expenses in the P&L.
    6) Do i need to show interest and dividend in P&L ? as these are not taxable do I need to even show these in the ITR ?
    7) In the capital gains schedule ,In 3.1.a.iii , Expenditure wholly and exclusively in connection with transfer , basically mean brokearge incl taxes right ?
    8) ,In which schedule do i need to declare dividend and income
    In Schedule OS – Income from other sources or Schedule EI – Details of Exempt Income (Income not to be included in total income) ?
    Please try to reply asap.
    Thanks ,
    Sameer

    • Nithin Kamath says:

      1/2. You have to decide this based on your turnover.
      3. If audit then u need everything, otherwise nothing.
      4. This is already explained in the chapters. I think it is best to take a CAs help.
      5. You can claim depreciation, under office equipment.
      6. Best to fill in other sources, so don’t need to put on P&L
      7. Yes
      8. Dividend exempt under EI and taxable dividend income under OS

  127. Tarun Dahiya says:

    Hi
    In Sample ITR-4 Excel
    In Analysis of PL Reports sheet, Under P&L account
    Purchase of Shares 150,000 Sale of Shares 100,000
    (Equity Delivery)

    While Just below in the same sheet
    Short Term Capital Loss
    Sale Consideration 100,000
    Less: Cost of Purchase 120,000
    Why isn’t Cost of purchase matching to Purchase of Shares when both are for equity shares kept for less than 1 year or are these for different equity shares ?

    Please help

  128. Tarun Dahiya says:

    ITR4 Sample Excel

    How is Equity share sell in CG screen line item 3 ia(CG excel sheet ITR 4 Form) which is Full Value of consideration and bi (Cost of acquisition without indexation) different from P&L sheet line item 1-A-iiic (Sale of shares) and Purchase of share value ??…Are these for different equity stocks ? If yes what type of share fall in respective category ??
    PLease help

    • Nithin Kamath says:

      I think you are trying to include both trading P&L and capital gain schedule. If you are an investor, ignore the equity shares bit in P&L. Also it will be very tough to help on filling ITR online. Suggest you to meet a CA.

      • Tarun says:

        I have done trading in F&O, intraday as well taken delivery of few equity shares and sold them before an year….My net is negative..and I didnt have any salary income other than interest income..I want to carry forward losses..Correct me if I am wrong….I dnt need to maintain books and no need of audit..I will be treated as investor..F&O and intraday will come in P&L but for Delivered shares I have choice to show in P&L or in Capital gain sheet..But preferably I should show them in P&L as you have mentioned in Markets and taxation chapter (“calculation of turnover for delivery trades is only applicable if you are declaring equity delivery based trades also as a business income. If you are declaring them as capital gains or investments, there is no need to calculate turnover on such transactions. Also, there is no need of an audit if you have only capital gains irrespective of turnover or profitability”)

        I really appreciate your help
        Thanks in advance

  129. Tarun says:

    Sorry, preferable I should show them in Capital gain schedule (Delivered shares, tenure less than a year)

  130. Tarun says:

    And Lastly, Why in your Smple ITR-4 sheet , deliverable shares are shown in both P&L and and in Capital gain….Shouldn’t it be on only one sheet

    • Nithin Kamath says:

      It is possible to further divide stocks that you have bought for delivery into investing potfolio and trading portfolio.

  131. Haresh says:

    Hello Sir,

    Greetings!!

    I arrived in Europe in Dec-2014, Now I am NRI. I have done few FD in my existing Indian saving bank account without changing Non-Resident status(Done as Resident Indian). That time I didn’t know that I have to do with NRI account. I want file Income Tax Returns FY 2015-2016. I would like to ask you few things.

    1). Is there any problem with FD as resident Indian status ?
    2). I have done FD for long term more than 2 year. Should I count interest as per financial year or on maturity ?
    3). While filing IT returns should I file as resident or Non-resident ? If Non-resident then how much income tax I should pay ?
    4). I have got only income from FD. I do not have any other income in India. Which ITR I should file ?

    Regards,

    HARESH

    • Nithin Kamath says:

      1. No problem. Btw FD with NRE status is tax exempt.
      2. Per financial year
      3. You should based on your current status. As non-residents, the taxes are the same.
      4. Just ITR1

      Btw, we are answering queries here only in the context of trading and markets. Don’t want to digress from that.

      Best,

  132. Honey Aggarwal says:

    Sir, I am a salary person with annual income of 5.5 lacs for 2015-16. In 2015-16 my statement is below. I trade only in f&o and lossses are ₹-15,22,452.50 with Total Turnover₹78,64,343.75. Please suggest do i need to get audit done or if yes. What if i dont show this loss in my ITR.

    F&O

    Futures Gross Profit₹3,000.00
    Options Gross Profit₹-15,22,452.50
    Total Gross Profit₹-15,19,452.50
    Futures Turnover₹3,000.00
    Options Turnover₹78,61,343.75
    Total Turnover₹78,64,343.75
    Total Charges₹59,912.40

    • Nithin Kamath says:

      Yes, you will need an audit. You can take the benefit of showing the loss and this can be carried forward for 8 years. YOu can set it off against future business profits. So best to declare and file the ITR within time. If you don’t show the loss, there is a chance of tomorrow the IT department sending a notice asking why u haven’t declared trading income. You will have to then go and explain that it was a loss and hence.

  133. K V SAILAJA says:

    Wow, hats off to you Nithin sir. Really very useful module on taxation and you have explained it like a spoon feeding and with simple examples. This is the best module i have come across so far to understand the taxation on stock market investments (both LTCG and STCG) and trading income as Business. Really excellent contribution sir, proud to be a Zerodha client.

  134. xlsSample ITR4 Form (2015-16) Dear NITHIN , this itr-4 sample is coorupt and I cant open can you upload one ITR-4 sample which give details of how to make enteries of transaction in future and options
    my client id iis RN-3941
    THANKS

  135. Marzi says:

    Dear Nithin,
    I have a query regarding filing of ITR-4S. I trade futures and shares both. i read somewhere that CBDT considers income from share and futures trading as business income. And ITR-4S allows to file ITR from business income as well as salary both. Filing ITR-4S is very easy and it saves from audit also if net profit is greater than 8% of T.O.
    My question is, will filing ITR-4S in above case attract any notice from IT department? Or is it perfectly OK to file ITR-4S in above case.
    Thanks in anticipation !!
    Regards,
    Marzi

  136. Marzi says:

    Dear Nithin,
    I have a query regarding filing of ITR-4S. I trade futures and shares both. i read somewhere that CBDT considers income from share and futures trading as business income. And ITR-4S allows to file ITR from business income as well as salary both. Filing ITR-4S is very easy and it saves from audit also if net profit is greater than 8% of T.O.
    My question is, will filing ITR-4S in above case attract any notice from IT department?
    Thanks in anticipation !!
    Regards,
    Marzi

  137. shivam says:

    @Nithin
    sir, i am a student.. doing trading from last 1 year 6 months.. i want to file ITR.. can it is possible to file ITR now with late fee?

    In August.. i am little confused that i will fill ITR or Not… but now i think it is better to file ITR..

    can any options left for me now..?

    plzz guide..?

    • Nithin Kamath says:

      Shivam, there is nothing like a late fee. If you have any income tax to pay,you have to just pay the interest for the time period you haven’t paid. You can file late returns, no issues.

  138. AnilSin says:

    Hi Nithin Sir,

    I have intraday profit of 1.3 lac on a turnover of 4.6 lac (I calculated turnover my adding absolute values of buying/selling). I also have equity (delivery) based profit of 1.2 lac on turnover of 90 lac (which is my sale value of equity deliveries). There is no F&O etc.

    I need to file ITR4.

    1. Is my total turnover sum of of 4.6 lac and 90 lac i.e. 94.6 lac for trading?

    2. If answer to above is yes, then it means my total profit is 2.5 lac (sum of 1.3 lac from intraday and 1.2 lac from delivery equity) and in this case profit of 2.5 lac is less than 8% of 94.6 lac. Is audit required then?

    3. If answer to question 1 is NO, then will I need to show my turnover only for intraday i.e. 4.6 lac and profit 1.3 lac and in this case, my profit will become more than 8% and accordingly I will not need the audit, right?

    4. If answer to question 3 is yes, then the equity delivery profit of 1.2 lac will be simply a short-term gain requiring tax of 20% only. Is this the right understanding.

    Your answers to above four will help me a lot in deciding how do I fill ITR4 and whether I will be requiring audit.

    Pls help and guide.

    Thanks again,
    Anil

    • Nithin Kamath says:

      1. If you are showing equity delivery as capital gains, there is no concept of turnover. If you are showing as business income, yeah 94.6lks.
      2/3. If you are showing as business income, yeah audit required. If you show only intraday as business, no audit.
      3. yes
      4. Yep, 15% is STCG and not 20%.

      Cheers,

      • AnilSin says:

        Thank you so much Sir.
        1) I forgot to mention in my above queries that I’ve regular salary income also from my job which is my main source of income. I fall in >30% tax-slab just based on my job-salary. Does my regular salary from my job affect the turnover calculations and audit requirements for my above scenarios of equity trading? And if salary is indeed used in turnover calculations and audit requirements, can you pls give a small example?

        2) Also, my trading frequency is quite high so someone told me that if trading frequency is high then show both intraday and equity delivery as business income and do the audit but show the long-term equity gains alone as capital gains (no tax) in ITR4. Hope that’s fine.

        Above two are the last two queries I have. Thanks very much for your guidance,
        Anil

        • Nithin Kamath says:

          1. Salary doesn’t make part of any turnover calculation(only business profits and losses for turnover).
          2. yep, you could do that. But the idea is to follow the same principle in the following years as well.

  139. AnilSin says:

    Hi Nithin sir,

    Forgot to mention in my above queries that I’ve regular salary income also from my job which is my main source of income. I fall in >30% tax-slab just based on my job-salary. Does my regular salary from my job affect the turnover calculations and audit requirements for my above scenarios of equity trading? And if salary is indeed used in turnover calculations and audit requirements, can you pls give a small example?

    Thanks again,
    Anil

  140. shivam says:

    Hello Nithin Sir,

    Can you tell me some good books from which i can get good knowledge about ‘ TREND ANALYSIS’ ?

  141. amit says:

    sir i have have a business income and agricultural income more than 5000 …which ITR should i file?

  142. ANILSIN says:

    Hi Nithin Sir,

    In my audit report (3CB and 3CD) sent from the chartered accountant, there is no mention of turnover amount, profits amount etc from intraday and equity-delivery transactions. Does 3CB and 3CD audit report not contain any of these figures? He has also provided an additional excel sheet which has subsheets of P&L, Balance Sheet. When the CA would upload his 3CB and 3CD audit reports, is he also required to upload this excel sheet (of P&L and balance sheet) which has the actual details? I shall ask him to upload accordingly.

    Thanks again,
    Anil

  143. Arun Kumar Singh says:

    Hi Nitin sir,

    I have loss in Intraday is Rs 20,000 @ total value 35000 and profit in Delivery base equity is Rs 25000 @ total value 3,90,000. Then how do calculate Income tax and Turnover ?? Is ITR2 form is acceptable??? is audit required for this??? please explain……….I am confused

    • Nithin Kamath says:

      For equity delivery based trades, you show this as capital gains, there is no turnover and all calculated in this case. To declare your intraday loss, you will have to declare turnover and use ITR4. If you didn’t have intraday, you could have used ITR2. Check out the chapter on turnover.

  144. Rajkumar says:

    Dear Nitin,
    I trade from my partnership account in zerodha. Does the same Tax slab is applicable for my firm income.

  145. Debojyoty Datta says:

    Nitin Ji,
    I have only only one source of income that is Share Trading (both Intraday and delivery) In this case how should i fill my ITR using data from Q and which form should I select ?
    PLz Help me
    Thank You

  146. Joshi V.K. says:

    Dear Sir, I am a senior citizen with wife and 25 lakhs of NRI white money and no specific commitment. How should I invest so that i should get sufficient fund on a monthly basis so that I can lead a comfortable life after Tax deduction for its capital gains

    • Nithin Kamath says:

      Mr Joshi, I don’t know if stock markets are advisable if you are trying to get a guaranteed income. If this 25% is extremely important to you, maybe allocate 20% to a diversified equity mutual fund and the rest in a fixed income product (FD/liquid funds etc)

  147. P. Manmohan says:

    If somebody does not want to deduct expenses for his trading income can he treat his income/loss as capital gain/loss irrespective of the type of trading he does and the volume that he generates over a period of one year.

  148. witty_jk says:

    I have e-filed a revised ITR and added fake amount in section VI A deductions -80C, I will get a refund of around 9000, will I be caught?
    If yes then what will be the penalty?

    • Nithin Kamath says:

      hmm… you can be caught. Penalty can be upto 300% of the tax that you have avoided paying.

      • witty_jk says:

        what is the probability of being caught, given that there are crores of people paying tax and i am avoiding only around 8000 to 10000 rs tax; how will the IT dept narrow down to me ? do they have a system ??

  149. Praveen says:

    Suppose me and my partner run a eCommerce business together and earned a revenue of say Rs 10 Lakh. Barring all expenses the true profit is say 8 Lakhs. I have been the front face for the business and I paid my partner half of the profits as salary for her work contribution. 50% of the expenses are in cash and thus making it harder to maintain book of accounts. Does it make sense for me to file ITR-4S should my profit as 4 lakhs out of 10 lakhs revenue (i.e. 40% profits). What form should my partner use to file her taxes ? She has earned salary from me but of course does not hold Form-16.

    What should I declare as “nature of business”

  150. Vishal says:

    Hi Nithin,

    have speculative and non speculative business income, can I file ITR4S to show only 8% of entire turnover as my income and pay tax on that.

    This is because my income from this source will exceed 8% even after deducting all expenses if I go for ITR4.

    Thanks for your help,
    Vishal

  151. Rajib Saxena says:

    Hello Nithin,

    What charges should be paid by a trader (just an idea) if CA audit full time traders, also if audit is not required ?

    I also heard Zerodha provides help to fix your taxation but couldn’t find. I need CA.

    Thanks,
    Rajib Saxena

    • Nithin Kamath says:

      Audit can start around 7k and go upwards upto 25k to 30k. We were helping before, found it tough to support. You can try reaching taxiq.in

  152. Abhijit says:

    Hi Nithin,
    Newbie here. Thanks for these valuable lessons. Just started investing journey through Zerodha and have 2 queries:
    1) Up to now I am a investor only. (Equity Mutual Funds and Equity delivery shares) I have only bought both of these instruments and have done no selling this year. So because my only income this year is by salary and no capital gain from selling, should I be filling ITR 1 as usual or ITR 2?

    2)I am planning to by international ETFs (Motilal Oswal Nasdaq 100). Now these ETFs are listed on NSE but have international stocks, so how capital gains(long and short) from ETFs like these will be taxed? And will ITR 2 cover capital gains of international funds too?

    • Nithin Kamath says:

      1. You could use ITR1 as there is no capital gain to declare.
      2. Taxation works like normal equity mutual funds/stocks. Yes ITR2 is enough.

  153. Rajat t says:

    Assume I’ve made loss in trading n if I don’t file income tax return ,will there be any penalty on me? Thank u.

    • Nithin Kamath says:

      There won’t be a penalty since you haven’t evaded paying tax. But you might unnecessarily get a notice asking for an explanation on why you have traded and not declared on your ITR.

  154. Anupkumar says:

    Hi, Can you please help me with this. My income (which is essentially a fixed monthly salary) is paid as “Professional fees” and it comes under no audit case, but book of accounts is to be maintained. I am not claiming any expenses and showing all the fees received as profit. I am not investing any money in my profession. and its online job. Can you please tell me
    what should I fill in the Balance sheet of ITr4? Till now I have been leaving it blank and there werent any problems. But this year they have sent a notice. In the balance sheet, a) what do I fill in Proprietor’s capital, sources of funds and current assets? b) Should the capital be the whole fees I have received or is it the total money I have in all my bank accounts? c) I believe it should have nothing to do with the amount of money I have and shd deal with only the fees I receive for my job?
    Please advice.
    Thanks for your time and help

  155. Maruthi says:

    Hi,
    I was just trying out some Currency Trading and made about ₹1000 and won’t be trading anymore.
    Should I really need to show this using ITR-4 (includes preparing P&L and BS)
    Or can this amount be included somehow in the ITR-2 as Other Incomes or as a Capital Gain?

    Thanks for any inputs..

    • Nithin Kamath says:

      Hmm… technically you can’t show as capital gain, but a lot of people do. Best to speak to a CA. You can also use ITR4S, and show this as presumptive gain, so no need for P&L or BS.

      • nishigandha says:

        Hi Nithin,

        What does presumptive gain mean? ( you used ” presumptive gain” word in your above comment.

      • Maruthi says:

        Thanks for your reply. I guess I’ll check up with a CA.
        I’m in an odd position where the only Taxable income I make is from Capital Gains and the bit from Currency Trading.
        So I can’t use ITR-4S and shouldn’t be using ITR-2 which leaves me with only ITR-4.
        Thanks again.

  156. Vivek shanbhag says:

    Hiiiii sir recently our family shifted so every identity proof ive it has old address so how can I open zerodha a/c? Pls help me

  157. jOE says:

    HELLO SIR GREETINGS

    I was abroad for last three years and now i come back to india before going to abroad i used to trade intraday and delivery also, my problem is
    1, while during the stay in abroad i had traded in both intraday and delivery without changing the status to NRE in my normal trading account. will it create any problem while filing IT return as
    2, as now i come back i had a normal Nre saving account and bank told me to change to normal resident saving account after achnging whether the principal amount is taxable or not

    Thanking you for your earlier advices thank you

    joe

    • Nithin Kamath says:

      Shouldn’t be a big deal as long as you don’t evade taxes. Make sure to show your trading income on your ITR, do consult a CA for this.

  158. Venki says:

    Assume When I do not have any other income and do only trading in Equity, F&O and Commodity. The turnover is less than 20 lakhs and have profit of 2 lakhs. (consider no other income). Should I File ITR ? If So, Is ITR 4 without Audit acceptable ?

    Thanks,
    Venki

    • Nithin Kamath says:

      Yes, best to file ITR (it is not mandatory as your income is below min tax slab) as there is a small chance of an automated IT notice if you don’t declare. If you receive notice, unnecessary inconvenience of having to meet the ITO and all. Yes, ITR4 and no need of audit.

  159. Vignesh says:

    Hi..

    This is my first year into trading. I have certain queries.

    1) My intraday turnover is 23443 & it is completely loss

    2) Short term loss is -5646

    3) I have a salary income.

    A. Whether i can use ITR 4 & show profit more than 8% without giving audit details? is it possible ?

    (or)

    B Is it possible to use ITR – 4S & show only 8% profit in intraday & pay tax according to tax slab and not to declare short term loss.

    C. Any other option available ?

    • Nithin Kamath says:

      A is a better option.

      • Vigneshraja says:

        Thanks Mr. Nithin.

        • vignesh says:

          In your taxation module, it is updated now as below

          ITR 4S (Sugam) – this is similar to ITR4 but with presumptive scheme if section 44AD and 44AE used for computation of business income. ITR 4S can’t be used to declare any capital gains of if losses has to be carried forward. So you can use ITR 4S only if you have business income (speculative + non speculative), but it is best avoided if by use of this form you are reducing your tax liability.

          A. So is it possible to use this form for speculative business income(intraday trading) ????
          and
          B. I have net loss through intraday so i have to use ITR3 as per requirement. But by showing 8% or 6% profit, we can submit the form without audit details & that will not create a problem ?

  160. Imran Ahmed says:

    Dears, Thanks for priceless advice… appreciate. 3 queries pls.
    1) Was an NRI.. Returned and off work now. Always did delivery based trading in FY 16-17, but once mistakenly forgot ‘cnc’ option and lost rs. 17k in intraday…. so do i have to report as ‘Trader’ in income tax return, instead of investor, for this single mistake ?
    2) If I file as ‘trader’ do i have to pay 30% tax on STCG & LTCG gains too?
    3) If i book STCG loss of 32 lakhs for tax harvesting , will it be offset against LTCG gains of 8 lakhs booked in this FY 16-17?… or LTCG gains are not used for offsetting, either for trader or investor?

    • Nithin Kamath says:

      Hmm.. I’d suggest you to speak to CA
      1. If it is one trade, I’d say show it is short term capital loss
      2. As a trader, you can have both trading and investing portfolio. On the trading portfolio it will be 30% (based on tax slab). Do read through all the chapters of this module.
      3. LTCG is anyways exempt from taxes. Booking the short term loss, wouldn’t really be tax loss harvesting unless you have other short term capital gains to set this off against.

      • Imran Ahmed says:

        Thanks for detailed reply…. concerning 3rd query, I had 10 lakhs STCG profit in fy 16-17. So will the LTCG gains also be offset after offsetting STCG gains? I had read to that effect in these modules, and so I am worried.
        Further, will booking these huge STCG losses in FY 17-18 offset LTCG gains earned in FY 16-17 or only FY 17-18 LTCG gains will be considered in tax harvesting?

  161. radha devi says:

    Sir, I am a house wife and I have shares gifted by my son and made short term delivery based gains. I have no other income for the period. My gains are below exemption limit of 2.5 lakhs. Do I need to file ITR and pay any tax?

  162. srini123 says:

    Hi Nithin,
    My source of income is “agriculture”. Often I indulge in trading in commodity intraday..with losses… lol… If I want to file ITR which form I should use? or better not filing ITR ?

  163. karthik says:

    hi nithin,
    for the finacial year 2015-2016 i had short term capital gain of 21000.
    i have no other in come sources.
    i calculated 15% tax on STCG and paid the amount.
    for e-filing what form i should use…???
    i have tried with ITR2 but i can not fill the columns given for STCG (giving some error message like “column is protected/can not modified”)

    what i can i do now???

    • Nithin Kamath says:

      If you have no other income source, you don’t have to pay any STCG. All taxes is applicable only if you exceed minimum tax slab (even STCG). But it is good to file ITR with 0 tax, maybe speak to a CA to figure how to fill the form.

  164. Rita Kodape says:

    Is it possible for Zerodha to file ITR for willing clients?

  165. arvind says:

    dear nithin ,

    why balance sheet part is left empty in downloadable excel (sample ITR4 Form (2015-16) ) in above example, but in (Sample ITR4 Form (2014-15) Balance sheet part its filled ?

    can you convert downladable ITR4 examples into words & sentences so that for first timers, newbie traders can easily understand it more easily when analysing above ITR examples ?

    • Nithin Kamath says:

      Arvind, we will soon have a webinar on filling ITR4 on April 5th on our youtube channel. Check this.

      • arvind says:

        thanks so much Nithin . eagerly waiting for webinar. interactive demo by filling up a dummy ITR4 would be great. balance sheet , P & L parts of ITR4 are bit complicated for new F & O traders & need lot of handholding . This is where many are making mistakes & getting notices as seen in comments . would love to post lot of queries In that session 🙂

  166. ARYAN says:

    CBDT notifies new ITR forms for AY 2017-18; ITR-4(previously ITR-4S) for presumptive income have some changes…now there are 2 columns to fill in gross turnover or receipts…1)Through a/c payee cheque or a/c payee bank draft or bank electronic clearing system received before specified date…2)Any other mode…..Presumptive income under section 44AD would be 6% for the 1st category as announced by our finance minister on the budget day and 8% for the 2nd category…… so now being a options trader…in which column i have to fill my turnover…presumptive income now 6% or 8% of turnover for stock market traders?????

    • Nithin Kamath says:

      You can use ITR4S only if you have only F&O trading (equity trades – captial gain or speculative intraday equity) can’t be shown. But yes, it is 6% from AY 2017/18. I will update the post above.

      • ARYAN says:

        Hello NITHIN SIR….Thanxx for ur reply….I have one more issue regarding PI software….No doubt PI is one of the best online trading platform but it lacks one basic feature….there is not any single way(neither any screener or scripted alert) to get to know IMMEDIATELY about those stocks which are making fresh intraday DAY’S HIGH OR LOW…in NEST SOFTWARE there is some COLOUR change in BACKGROUND of scrips which are making FRESH intraday high or low and this feature will HIGHLIGHT those scrips in MARKETWATCH and helps to catch the move of the stocks quickly………I already raised this issue in front of ur software developer TRADELAB and on our BLOG of latest update PI…..SIR, I can understand that i m just a regular client of yours to ask u to make changes to the software and also PI is a VENDOR’S PRODUCT and it’ll be difficult to accumulate all of these endless requests….chances of getting my problem resolved in the NEXT UPDATE seems to be low….but as u say ZERODHA means NO BARRIER….so kindly pay attention to my problem and remove this barrier of my trading….

  167. Nilesh says:

    My salary income is 5lks…commodity trading turnover is 97000/-. And P/L = -18000/- (in loss) . So i come under section 44AD. Should i get book audited? Is it compulsory to get audited? Which ITR should i use while filing? Can i use ITR4s for stay away from audit?

    • Nithin Kamath says:

      Replied just now on zconnect. Since you have only F&O trading, you can use ITR4S. If you use ITR4S, you will have to declare profit of 6% (reduced from 8%) on turnover. So around Rs 6000 profit, instead of Rs18000 loss. pay tax on this Rs 6000, which will be at 20% only Rs 1200. But if you want to carry forward the loss, yes ITR4 and audit would be needed.

  168. Check out given link for any information related to new itr forms and e filing
    https://blog.tax2win.in/new-itr-forms/

  169. RIJO JOSEPH says:

    I am a salaried person and have traded very few intraday (1 or 2 ) and some short term trades. I have a profit of 2000 over all and have not traded in F&O.
    1. I believe I have to file ITR 2 . If true, I went to income tax website and only found options for ITR1 and ITR4 under ” prepare and submit form” option.
    2. Is ITR2 submission process different than ITR1 and ITR4?
    3. How to calculate my tax – 20% of 2k ?

  170. arvind says:

    dear nithin

    in audit information : (“Are you liable to maintain accounts as per section 44AA ?”)
    should i tick “no”, but go ahead and fill balance sheet , profit loss in full . ( instead of filling no accounts case areas )

    being a newbie, traded very less as i was in training mode & getting a feel . only 4-5 trades.
    my total income for year was less than 2. 5 lakhs & made a net loss of 2000. ( loss in intraday , profits in f & o , currency futures, STCG etc )

    is it 100% confirmed that i don’t need an audit ?

    if they send a notice ,should i quote section 44AA & 44ad to support my claim of why not getting audited ( as i made a net loss of 2000 but i’m below 2.5 lakh bracket & turnover below 1 crore ) .

    most CAs & income tax helpline people are confused lot themselves 🙂 .
    in cleartax platform when i tested a dummy ITR it was giving error stating i need an audit .

    • Nithin Kamath says:

      If your turnover is less than 1 crore and no tax to be paid, ideally no audit is required. yes, tick no and fill balance sheet. Indian IT, nothing is 100% confirmed. :). I know a lot of traders who follow this method, and haven’t ever had issue even if they are pulled up for scrutiny.

  171. Peeyush says:

    Dear Nitin,

    Its good to read through such a big Taxation knowledge base that you have created on Varsity.

    I am an NRI for past 15 years and since I did not have any income in India never filed returns. Last year first time as a NRI I filed returns for AY 2016-17 & AY 2015-16 but after the due date of 31st July 2016 to claim refund of some NRO interest TDS.
    I had taken help from a CA for same. I was looking at the ITR2 for AY 2017-2018 this year and saw a column asking for all bank details. do I need to mention all NRE/NRO accounts as well as PIS account that I use for equity investments? I just checked my last 2 returns and my CA had filled only my NRO accounts and did not fill the NRE accounts which I had given him. when I checked with him after seeing it now, he said no need for mentioning NRE account as its income is Tax excempt for NRIs and only mention the NRO accounts as the TDS deducted needs to be claimed from them..
    1. Just wanted to confirm is that the case?
    2. If not will this create any issues for the previous ITRs. what is the solution in case I need to add the NRE accounts as I have already received the refunds also for both returns which I had filed after the due date.?
    3. I am planning to mention both NRE/NRO in the latest ITR for AY 2017-18. will that be good enough?
    4. this FY my NRE FDS have matured after 4 years. do I need to show them in the returns if they are tax exempt?
    5. I am filing ITR2 where there is the asset & liability declaration if income is above 50 lakhs. this 50 lakhs is taxable income in India or also includes exempt income like India equities LTCG and dividends, NRE FD interests and my salary income outside india? also the assets purchased in India have to be declared or all the assets in India or abroad?
    6. I have been investing in equitiesmostly for LTCG for past 4-5 years and my total portfolio value this year is now more than 1 crore. do in need a audit being a NRI trading/investing through NRI PIS?

    will appreciate if you can answer my above queries.
    Thanks for your advice.

    • Peeyush says:

      Hi Nitin can you please advice on the above queries. Thanks

    • Nithin Kamath says:

      1/2. No issues as income is exempt. But it is always best practice to declare exempt as well.
      3. Yes
      4. Yes, there is a worksheet to declare exempt income.
      5. Only if taxable income in India exceeds 50lks (not including ur foreign or exempt income). Balance sheet of assets in India (optional to fill foreign assets if you are a non resident).
      6. No audit if only capital gains. Audit is required only when there is business income.

  172. Saurabh Saha says:

    I want to use ITR 4S. I do only intraday nifty future trading and having some other personal business. If I make any long term capital gain from share which is absolutely tax free, could I use ITR 4S? Waiting for your reply.

  173. P KUMAR says:

    Q. Through a/c payee cheque or a/c payee bank draft or bank electronic clearing system received before specified date – what is the meaning of received before specified date in ITR-4 for A.Y. 2017-18 ?

    • Nithin Kamath says:

      The Specified date here is date of filing of the return on due date as per Sec 139 which is 31st July for Non Audit cases and 30th Sep in case of Audit cases.

  174. Mithlesh Kumar Jha says:

    Thanks Nithin for the comprehensive information regarding the tax treatment of the income generated in stock market trading. I’d be grateful if you could help me with below query:

    For FY 2016-2017, a professional with professional income INR 2000000 out of which the profit is 1200000 and the loss in F&O is 1 lakh with turnover 500000. As I understand from the readings here, ITR 4s can be used for filing the return with presumptive income of 10 lakhs or more for income from profession. Can the loss in F&O be set-off against profit in professional income? Also, do you think in this case audit will be required and if so, for which income (loss) – the loss in F&O trading only or both F&O trading and professional income?

    • Nithin Kamath says:

      The Tax calculation is on all types of profession in total. In case of Professionals you can choose the presumptive taxation if you choose to declare 50% of profit for Income under sec 44 ADA. Once you club both the turnover , it automatically offsets. Here the important thing is if its carry forward loss then it can offset only against F & O .

      44ADA. (1) Notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being a resident in India, who is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head “Profits and gains of business or profession”.
      (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed.
      (3) The written down value of any asset used for the purposes of profession shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.
      (4) Notwithstanding anything contained in the foregoing provisions of this section, an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (1) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.]

  175. Vijay Kumar agrawal says:

    If I consider my frequent equity delivery trade as business in come than whether price of script would be turnover or total of positive and negative value ie total of all loss making scrip and profit making scrip

    • Nithin Kamath says:

      Turnover for delivery trades as a business will be value of all sales. Check out the turnover chapter. So if you bought stocks for 1lk and sold for 1.2lks. 1.2lks is the turnover.

  176. Nitin says:

    Sir i am clerk in psu bank. Total salry near 2.5 lak . Last year I have done trading heavily. Some in fno and delivery basis for intraday to month holding. My total turn over crossed over 6laks. And i have invested 3 lak. I am at par now no loss no profit.I haven’t inform my employer. Can i do continue and What form i have to fill to return incom tax. Please help

  177. HARRAM says:

    I DO NOT HAVE ANY SALARY INCOME. I ONLY DO SHARE TRADING (EQUITIES / F & O). FY 1617 MY TOTAL T/OVER WAS APPX 20 L WITH LOSS OF
    12 L AND PROFIT OF 8 L.I HAVE SOME FD INTEREST INCOME AND DIVIDEND INCOME.
    I ALSO SOLD MY LAND WHICH WAS BOUGHT AROUND 7-8 YEARS BACK, SO THERE IS SOME LTCG ALSO. CAN YOU
    PLS ADV WHICH ITR I SHOULD I USE. IF ANY AUDIT IS REQUIRED FOR THE SAME OR I CAN DO AWAY WITHOUT AUDIT.

  178. Priyanka says:

    I am housewife and dont have any income. I mostly trade in intraday or short term.
    My turnover is below 1 Cr. Which ITR form to be submitted ITR 2 or ITR 4
    Whether audit is necessary if I file return through ITR2.

  179. Neelesh says:

    Hi Nithin,

    My short term/ intraday turnover is 186000 Fn o turnover is 11000000 and total net profit is around 770000.
    So can I use itr4s to reduce my tax liability by showing income as 6% of turnover ?

  180. RAJ says:

    i have some income from coaching class and i do trading and have some income from intraday and some income from delivery trades which itr form i need to fill .Total income is less than 2.5 lakh is i require to pay any tax.

  181. Yaswant Kumar says:

    Hello Sir I had done trading on both intraday and delivery based and my overall loss is 40k but my turnover is about 2 Crore .Should i need any audit by CA or not for income tax return filing.

  182. K seshu says:

    Can I get my money back?wat I paid for taxes these trading days!.we are paying a lot for taxes rather than a getting profit amount.suggest me a way to get taxes back,if der is any choice or options….tell me if any other options to get money back which are paid for security, brokerage,stamp duty, exchanges… Please suggest me,I don’t know anything about this!I’m a student in NITK SURATHKAL

    • Nithin Kamath says:

      Hmm.. all the transaction taxes, there is no way to get it back. Cost of doing this business. Income tax is paid only on profits, if you have losses you can carry forward and setoff against future gains.

  183. Jaideep Das says:

    My Salary plus Other income – 15lacs
    My F&O turnover – 53 lacs
    My F&O loss – 2lacs

    Do I need to get my tax profile audited?

  184. Janarthanan S says:

    I am getting salary above 5 Lakhs & Earning some money in option also.
    For my salary, i have given tax declaration in my company, then how can i pay tax for option trading .
    Whether i have to pay tax in another ITR

    Thanks

  185. MSP says:

    Hi Nithin,

    I have to file Form 3 this time, can i fetch information from last times filing and wherever changes are there update the same.
    If yes, how to fetch information from last years filing or i need to fill all the information afresh.

    Regards,
    MSP

    • Nithin Kamath says:

      You will have to enter the information afresh. There is a pre-fill option, but that fetches just name, PAN etc.

  186. harshal says:

    what is mean by tax profile audited
    sir please i am new in trading my first tax willl pay in next year

  187. harshal says:

    sir i have read chapter but if you don’t mine sir can have send the link of all chapter like
    1) understanding share market Basic
    2)understanding the all query related tax
    3)future & option market
    4)commodity market
    5)equity Market
    6)taxes related example and filling tax
    7)and all things link can please send in detail step by step

    thanks

  188. Ujjwal Dutta (RU0993) says:

    Hi,
    For the last three years I filled up ITR 1 form online as I had only income from my salary. From the last FY I started trading, mostly delivery based trading. In the last FY (16-17) I had a net loss. I went through this module and I would like to show this net loss under capital gain/loss. As per the modules I should fill up ITR 2 but when I login to e-filing website of incometax I could only find ITR 1 and ITR 4 in the drop down of online e-filing. I found ITR 4 very complex to furnish.
    Could you please let me know what should I do in this context?

    Thanks,
    Ujjwal

  189. Hemant says:

    Sir
    I want to fill ITR
    How and which ITR I can fill
    I am salaried person and doing trading intraday and normal delivery of equity shares from last 8 years.
    How to show my losses from trading in ITR.
    THANKS

  190. Pooja says:

    Intra-day / Speculative profit -41113.20
    Intra-day / Speculative turnover 55298.90
    Short-term profit 0.00
    Short-term turnover 0.00
    Long-term profit 0.00
    Long-term turnover 0.00

    Total charges

    Brokerage 4301.67
    Turnover charges 1586.32
    STT 6102.00
    Service tax 824.37
    Stamp duty 1074.99
    SEBI charges 97.70
    Total charges 14045.76

    Hi please see the above details. Apart from this I have an interest income of about 50000. I am a homemaker. Which form do i need to fill for my returns. Do i need an audit

  191. Gaurav Agrawal says:

    Hello,
    I had a loss while trading in FnO, and my turnover is less than 1 cr. I want to ask if i didn’t show it, will there be any legal problem.?
    If i still show 6% profit as you mentioned above(even i am in loss) to avoid audit, so the loss acquired in previous year can still be used now?

    Can i show this loss if i am profitable in this year FY17-18 even if i didn’t show in FY16-17

    • Nithin Kamath says:

      THe only problem could be that you might get a notice asking why you haven’t declared trading income. Unnecessary hassle. If you file your returns on time, you can carry forward the loss and set it off against this year profit. But for that, you need to declare the loss (not a % as profit)

  192. Nithin Kamath says:

    No problem as such, if you get a scrutiny, you will have to go explain saying you didn’t declare since you had a loss. If you show 8% profit, you will have to pay taxes on it. Since it is not a loss anymore, you can’t carry forward.

  193. sitamahalaxmi_ch says:

    Sir
    I am resigned for my job one and half year back, since then I am doing trading in stock markets. My income from day trading is 43500 and short term gain is 217900 and long term gain is 71400. I do not have any other income except dividends from companies. Last year I filed ITR 1
    as I have salary. What is my tax and what ITR form has to be filled ?

    • Nithin Kamath says:

      ITR 2 needs to be filed. If your total income is not above 2.5lks, no tax to be paid.

      • sharath2 says:

        HI,
        Where to fill the part time job – domestic salary paid directly to bank account, in ITR 2 ? Worked as a private tutor, institute is not big and not registered.
        Could you please advice

        • sharath2 says:

          sir, any idea on this please.
          Where to fill the part time job – domestic salary paid directly to bank account, in ITR 2 ? Worked as a private tutor, institute is not big and not registered. Part time salary is 1,20,000

          • Nithin Kamath says:

            If its a Part time Salary receipts , it will come under Salary Schedule only. You can have Salary from Multiple people.

          • sharath2 says:

            This part time job with salary received 1,20,000 is a small tutorial institute, as amount is small they have not provided any form 16 and so I don’t have there PAN but I have address.
            will this be a big issue, if I enter this salary without employer PAN details.
            kindly advice.

          • Nithin Kamath says:

            If you have a bank receipt or pay slip, that is enough. No issues.

  194. Shanu says:

    Hello Sir,
    I filled my income tax return recently.. I have started trading in FnO segment from sep-2016, and made a loss of 51000(approx) with additional brokerage of (19000). I didn’t show this in my return that i filled for my salary. Recently i come to know that if i file ITR 4 i can use this loss for 8 years from now. The thing is it needs to get audited as it is a loss (less that 6%..). Can i now file ITR 4?

  195. Arun Kumar Kushwaha says:

    Sir,
    as GST is concern, every professional get to registered under GST.
    and those who owns trading (Futures and Derivatives) only as profession are required to get registered and follow the rules and regulation of GST??
    coz nowhere, no one is talking abt this..
    plz clear this doubt sir..
    thanks….

  196. s vasanth vallabh says:

    sir,
    you have mentioned in the above chapter 7.2 that in itr 4 both speculative and non speculative income can be taken. elsewhere you have said that intraday equity income should not be shown in itr4 ( ref. reply to aryan on 2nd april 17) kindly clarify whether intraday equity income (speculative ) can be taken as business income in itr 4

    • Nithin Kamath says:

      ITR 4 is now ITR3 and ITR 4S is now ITR4. Some of my answers to questions might hence seem off. This change has happened for this assessment onward.

  197. Neelesh says:

    Hi Nithin,
    i have speculative and non speculative business income, can I file ITR4( Itr4s previously) to show only 6% of entire turnover as my income and pay tax on that.
    This is because my income from this source will exceed 6% even after deducting all expenses if I go for ITR3 (previously itr4).

    Thanks,

  198. mahendra singh says:

    Presumptive scheme to be opted for at least 5 Years. (As per Budget 2016) A new condition has been added to presumptive scheme. If you don’t follow presumptive scheme for at least 5 years than you lose all presumptive tax benefits. In short, File presumptive scheme for at least 5 years in continuation.

  199. Pradeep says:

    Hey there, Thanks for the all details which are helpful to everyone here 🙂

    I am new to balance sheet writing for the filing the taxes. I need some help to understand the Funds(it is not so clear in the video by clearTax).
    Can anyone help me to understand “Source of Funds” & “Application of Funds”in detail (& are all the number till 31st March?)

  200. MSP says:

    Hi Nithin,

    I am filling ITR3-2017, I am showing income from FD’s and saving interest in P&L, do i need to show Bank FD details in Balance Sheet, if Yes, then which line of balance sheet i need to put it.

    Regards,
    MSP

    • Nithin Kamath says:

      In case interest is accrued then you can sum up the interest along with FD value. In Balance sheet it can be part of deposit or investment unquoted.

  201. Preeti says:

    Hi Nithin,
    While filing the ITR2 form,there is a typo in the permanent address which is mentioned.I have electronically verified the form.
    Will it cause any issue in future ?is there any way how can I rectify it?
    Your response will be appreciated .
    Regards,
    Preeti

    • Nithin Kamath says:

      You can revise the return. But there is no issue as all communication happens to your email address.

  202. manoj says:

    My salary is Rs 5,00,000/-PA and i have done day trading. Please advice which ITR to be filled.
    Profit and turnover breakdown

    Intra-day / Speculative profit 15183.30
    Intra-day / Speculative turnover 228750.40
    Short-term profit 0.00
    Short-term turnover 0.00
    Long-term profit 0.00
    Long-term turnover 0.00

    Total charges

    Brokerage 57896.73
    Turnover charges 19933.85
    STT 76670.00
    Service tax 10896.57
    Stamp duty 12266.99
    SEBI charges 1228.02
    Total charges 179614.55

  203. GS says:

    I have interest income and income from one house property. I have incurred loss in F&O trading. If I do not want to show the loss and pay my entire tax liability, can I file my return under ITR 1. Or since I do F&O trading I have to declare it and file return under ITR 3 and get my account audited by CA. Thank you

    • Nithin Kamath says:

      You need to use ITR3. Yeah, best to get audited. If you have other business income, you can set it off against F&O loss. Do speak to a CA.

  204. atanu1977 says:

    Dear sir
    If I calculated day wise business turnover from the ledger. face any problem in future from it departments?
    Thanks in advance.

  205. MSP says:

    Hi Nithin,

    In Pre XML it is showing zero entries for even for the entered sheets, what needs to be done.

    Regards,
    MSP

  206. akbhems says:

    Hi Nithin, Can you suggest any CA associated with zerodha, who is based out of Chennai and who can handle my filing. I have tried to mail [email protected], but could not get any response.

    Thanks

  207. Tarun Joshi says:

    Dear Nithin, I am a salaried person ( 11lk pa). Opened demat this year (Aug 2016) primarily for investing. However tried some intraday and f&o trades for familiarisation with market. Following are the details- Intraday profit-461, Turnover-595. f&0 loss- (-9988), f&o turnover-186893. Short term CG- 2078, ST Turnover-32290. Please clarify the following doubts-
    1- Which ITR form shall i fill ( i consider myself an investor for present and future purposes and i do not intend to do intraday/f&o trading in future, note- i was filling ITR-1 until last year)
    2- I do not intend to carry over my f&o losses do i still need to consider earnings as business income and get my details audited. I suppose as i have f&o losses, as per this very informative varsity module on taxes, i need to get my audit.
    3- In the module on taxes, you have initially written that first we have to decide whether we r trader or investor. Further you have written that even if we are salaried and did some trades, we have to fill ITR-3. IT website defines ITR-3 for persons have income from business. In my case, if i consider myself as investor and not a trader and i fill ITR-3 then i am indirectly declaring myself as trader and have to carry on with this view in future. Is this view correct. Please clarify. Whats your advice for me.

    • Nithin Kamath says:

      1. ITR3 this year. If you stop F&O and intraday, ITR2 from next year.
      2. Yeah, you would need to. The other option is since your turnover is less, show 8% of your turnover as profit and pay applicable taxes on that. Do speak to a CA.
      3. Even as a trader you are allowed to have stock holdings/investments. If you stop F&O, you can next year switch back to filing ITR2 to show your investments.

      • sunita says:

        Sir , I want to know that if a salaried person is somehow involved in intraday f&o and short term trading but he is not a full time trader . And he has incurred loss in f.y 2016-17 but he doesn’t want to carry forward losses of intra day and f&o. so can he file ITR2 and claim for carry forward of short term loss on shares?? he intends to stop trade in intraday and f&o and become an investor. Reply asap.

  208. Pradeep Kumar says:

    Balance sheet related — Can anyone help me to understand “Source of Funds” & “Application of Funds”in detail (& are all the number till 31st March?)

  209. Neha says:

    Nithin Sir,
    I have two queries .
    1) my net salary after 80c,80ccd deduction is below 2.5 lakh and my taxable income is zero, but i have done trading also and my total turnover in equity daytrading and FnO is 12 lakh and net loss for FY 2016-17 is Rs. 55000 ,
    A)So i need an audit or not?
    B) which form i should file ITR1 or ITR3

    2) suppose due to complexities of ITR3 and To Avoid Audit i file ITR4 and show 6% of my turnover as profit i.e 1200000*.06=72000 , then i have to add this in my salary income and this way total tax workout for me is around 3000 rs . can i avoid this 3 thousand also by taking a term insurance plan . this will be a godd decision or not ? and dont you think that because this is ( showing 6% profit of turnover) non speculative business income so i had to pay Advance tax also .

    thanx in advance

    • Nithin Kamath says:

      1. A. Need not. but best to consult a CA once.
      B. ITR3

      2. Yes, you can technically take that route. This is an aggressive stance, but can be taken. Yes advance tax required, but penalty will be quite less. Also, the way you are calculating turnover can also be an aggressive approach. Do speak to a CA.

      • Neha says:

        To calculate turnover
        1) i consider all Absolute values of Equity day trading
        2) for Option besides absolute value i also include sell value of all options
        by this way i have reached to total turnover of 12 lakh
        i have not any delivery nor any future trade in FY 2016-17

  210. sameer bakshi says:

    i have income from salary 8 lacs….took loan 13 lacsks and did f&o trading with total turnover 1.8crores and net profit 8 lacs…Which ITR form should i Fill and do i need to get it audit…pls help me out..

  211. nancy bakshi says:

    My husband has deposited 8 lacs to my account and he has did f&O trading through my account…turnover went 1.7 crores and profit of 7 lacs….Which ITR form should i Fill and do i need to get it AUDIT? as i have no other income and the money of 7 lacs was deposit by my husband …pls help me out..

    • Nithin Kamath says:

      ITR3. If turnover is 1.7crores, then yes audit required. But you can take an aggressive approach to calculate this turnover to reduce it further and maybe get away with audit. Do speak to a CA.

  212. akbhems says:

    Hi Nithin, Can you suggest any CA associated with zerodha, who is based out of Chennai and who can handle my filing. I have tried to mail [email protected], but could not get any response.
    Thanks

  213. Atul says:

    Hi! Can we itself file our return for F&O trading as only business(whether in profit or loss and below audit limits) without going for a CA?
    please reply

  214. Nik says:

    I am salaried person.
    MY income is 10LKH
    FY16-17 losses = 7LKH
    Trun over for year = more than 10 CR

    Which ITR form should i need to fill?
    is there audit require ?

    I have also losses in FY15-16 what should i do for that year ?

  215. MOHAN. B.R says:

    SIR, besides my income from pension which is up to 4lakhs and interest earned on fixed deposits, i am also doing intraday trading wherein i have incurred losses with two brokers amounting to Rs. 2 lakhs. I would like to know from you the itr form which i have to use for FY 2016-17?Also in previous years i have used Itr 2 by showing the trading profit or loss under STCG.Please clarify.

    • Nithin Kamath says:

      ITR3 and this has to be shown as speculative income.

      • ganapathi says:

        Sir I need to fill ITR 2, but interest received from friend is nearly Rs. 80,000 credited to bank only, bank FD interest Rs. 65000, I could only see one place in ITR2 under schedule OS there is Interest Gross, I have interest received from both bank and friend, these interests needs to be seperately under different schedules or should sum all and show at same place.
        kindly advice.

        • Nithin Kamath says:

          Total interest income need to be summed up here including saving bank interest.

          • ganapathi says:

            Thank you for unbelievable support.
            I) As per your article Long Term Capital loss on shares is dead loss, and we show it in ITR 2 only for compliance purpose. But final xml generated by java based tool is showing LTC loss as
            Losses of current year to be carried forward (total of row xi of Schedule CFL): 12000
            Under Schedule CG: I have filled following ::
            From sale of, (i) listed securities (other than a unit) or zero coupon bonds where proviso under section 112(1) is applicable or unit of a Mutual Fund transferred on or before 10-07-2014 (taxable @ 10% without indexation benefit)
            Am I doing anything wrong. should I show Long Term Capital Loss at some other place.
            Please advice.

          • Nithin Kamath says:

            Seems right what you are doing. But if you are not sure, best to take some advice.

          • ganapathi says:

            As per some of articles in other sites, Long term capital gain / loss on shares, must be shown only under schedule EI, not under schedule CG, under schedule CG it is for long term capital gain for immovable properties etc.,
            request you to let me know if you have different view.

          • Nithin Kamath says:

            Yeah in schedule EI.

  216. aishwarya says:

    I have incurred loss in intra day trading. If i show the same in ITR 4 then i will have to get my books of accounts audited. is there any other option?

  217. Naresh Kumar says:

    sameer bakshi

    July 10, 2017 at 4:37 pm

    Hi,
    I have income from salary 10 lacs , Capital Gain, short term capital gain and did f&o trading with total turnover 3 lacs and losses 60 thousand from F&OW, hich ITR form should i Fill and do i need to get it audit…pls help me out..

    • Nithin Kamath says:

      ITR3. Since turnover is very little, maybe you can declare 8% of this as profits and avoid audit requirement. Do speak to a CA.

  218. Akash Singh Rawat says:

    Sir, my salary is 8lpa and intraday loss of 8000 where I can show this loss in ITR 2 so that I can balance it in next financial year ?

    • Nithin Kamath says:

      YOu can’t show it on ITR2, you need ITR3 and show it under speculative income

      • Akash Singh Rawat says:

        Can I fill ITR 3 without audit ??

      • nikhil2 says:

        HI Sir,
        Do you have sample ITR 2 filled.
        and also Non-speculative income Rs. 62000 ( but less than 6% profit ) and salary income nearly 4 lakhs means, ITR 2 with audit (or) ITR 4 with audit
        pls advice

        • Nithin Kamath says:

          If nonspeculative business income – then ITR3 (was called ITR4 till last year) and yes with audit.

          • nikhil2 says:

            Since Total income becoming more than 2.5 Lacs, and there is Equity Cash- Intraday (Speculative) small turnover, and Equity Cash – Delivery based ( Non speculative ) both have Profits.
            But total turnover well below 1 Cr ( nearly 20 lacs )
            We have got ITR3 audited, these audited documents should I keep with me for future or upload it some where.
            Kindly advice

          • Nithin Kamath says:

            Yeah, you should keep the ITR3 with yourself. If the CA has audited it, I am guessing he has already filed your ITR (upload to the income tax department). Do confirm with your CA.

  219. akbhems says:

    Hi Nithin,
    I need to file ITR 3 and cannot file ITR 4 (ITR 4S earlier). ITR 4 has option to specify 6% presumptive income, while ITR 3 has only Section 44AD(This is in schedule BP line item 35). Can we still show 6% presumptive income in ITR 3 and declare the same in Section 44AD entry?

    Thanks
    Ajit

  220. Tarun Joshi says:

    Dear Nithin,
    Thank you for your earlier reply. I had one more doubt. I have salary income of 11lk pa.
    Intraday profit 461, Turnover 595. f&0 loss (-9988), f&o turnover 186893. Short term CG 2078, ST Turnover 32290. But i have bank interest income of 66000. So for 6% criteria, total f&o loss adjusted profit(non-speculative)=66000-9988=56473. Turnover=186893 i.e profit/turnover=30.2% >6%.
    1-Do i need audit in this case. For calculating audit requirement, can total profit be taken including interest income and total turnover as f&o turnover as for bank interest income, there is no turnover.
    2- If audit not required, as i am effectively reducing my taxable income using f&o losses, is there possibility that IT dept may cause trouble. Thanks in advance

  221. N CH SURYA KUMAR says:

    i m salaried person and salaried income is Rs 7.5 lac
    INTRADAY/SPECULATIVE TURNOVER is Rs 48,389.05
    SHORT-TERM TURNOVER is Rs: 80,674.65
    Total loss for for FY :2016-2017 is Rs: -19405
    NET REALISED PROFIT is Rs : -30,193.47
    Can i declar the same to to income tax department? if yes kindly guide me which form i have to fill and how tO FILL?

  222. Arun Kumar Kushwaha says:

    Hi there,
    Suppose Total Turnover from F&O is 4 Lacs in FY 16-17. and has a loss of 20,000
    and if i opted for ITR 4s and declare my income @8 %…. which is 32,000 on 4Lacs, which is less than Taxable income.

    is IRT 4s can be opted in this scenario?
    is audit is Required?
    Books of accounts is required to maintain coz profit is less than 8% and there a loss in that year?

    and one more thing….. opening a current bank account is better option for those who trades in F&O??
    some one told me if i will have current account IT department will not send me the compliances if i do my transaction through Current account with Zerodha account.. it that true?

    Thanks…

    • Nithin Kamath says:

      Yeah it can be used. No audits on ITR4S. For F&O, you can continue with individual SB account, current account doesn’t give any advantage.

  223. Alex says:

    I have made a loss of 22,500 in last financial year and my annual income is 2 lakh. Should I get an audit? if yes, is there any way to avoid it while filing tax?

    • Nithin Kamath says:

      Since your total income is not taxable, you dont’ technically need an audit provided you don’t have turnover more than a crore. Check the chapter on turnover to know more.

  224. Anuj Kumar says:

    SIr, I have intraday gross prfit is = -1291,short term gain =2268 and total charges is 3410 while in option profit is 6500 and total charges is 11300.
    I have net turnover is less than one crore. Which ITR should I used and charges paid are to included in loss or not..I have annuual income of around 12 lakhs.

  225. DIPAK says:

    SIR, MY main source of income is stock market . I have Intraday Profit =37201 (TURNOVER i.e. sum of both positive and negative differences = 265157), Short term capital gain profit = 334038 (TURNOVER i.e. total value of the sales = 13506866) and Loss in FNO = -35053 (TURNOVER i.e. 598019), I dont want to audit my book. if i show my intraday profit as business income , which is 6% > Intraday turnover and if i show my Short term capital gain profit under SHORT TERM CAPITAL GAIN SECTION and if i dont show my FNO LOSSES is there any problem in future ?, can i file ITR 3. Is It A Right Way To Do This ?

  226. RAMESH says:

    sir, if i have 200000 short term gain profit and only sale side turnover is 7000000, that means my short term profit is less than 6% of the turnover. if i show this profit under SHORT TERM CAPITAL GAIN then any need to audit my book.

    • Nithin Kamath says:

      If you have capital gain, there is no concept of audit. It comes only in case of business income (intraday/F&O). You dont need an audit.

  227. SUBHASIS says:

    Dear sir, i have intraday loss 50000 ,turnover 300000 and i have delivery profit 220000 and i also FNO loss 25000,Turnover 225000, if i show profit in intraday 25000 which is >6% of intraday Turnover and if i show FNO profit 25000 which is >6% of FNO Turnover and if i show delivery profit under short term capital gain , then am i liable to pay tax on 20000 on 10% rate . Is there audit required.

  228. DIPAK says:

    SIR, CAN I SHOW MY INTRADAY P/L & SWING TRADE P/L BOTH IN UNDER SPECULATIVE BUSINESS INCOME AND FNO P/L UNDER NON-SPECULATIVE BUSINESS INCOME. IF YES THEN AFTER ADJUSTING MY TRADING EXPENSES IF MY INCOME EXCEED 250000/- THEN IS IT TAXABLE AS PER NORMAL SLAB ? IF I CALCULATE TURNOVER i.e. sum of both positive and negative differences IN ALL THREE CASES & IF I MADE PROFIT >6% OF THIS TURNOVER NO NEED ANY AUDIT. CAN I FILE IT BY MYSELF ?

    • Nithin Kamath says:

      Swing equity trade is non-speculative or capital gains. Yes if income exceeds 2.5lks, u will be paying as per tax slab. Even short term capital gain tax of 15% is not applicable if your total income is less than 2.5lk. Yeah, you can file it yourself.

  229. not maintained books of account , i need my turnover for the last two years, how to get it

  230. pranay_a1 says:

    Hi Nithin,

    First of all I must tell you that I admire your energy and drive to answer the queries on this forum personally. I really appreciate and am thankful for the user friendly , simpler , low cost and transparent/ informative Eco system created by you and team for traders in India.

    Coming to the question, I am trading with zerodha in futures for last two years and I have been filing ITR 4 with audit. I understand that ITR 4 has been renamed as ITR 3 from this year . Do i need to file revised ITR formats for previous years as I want to carry forward the losses.

    Regards
    Pranay
    DP1501

    • Nithin Kamath says:

      Thanks Pranay. If you have filed ITR4 last few years declaring the loss within due dates, no need to revise (govt deciding to call ITR4 as ITR3 is applicable only from this AY). If you haven’t declared the loss, you can’t do it now and carry forward it.

  231. vijayendra H P says:

    Hi Nithin,
    From this year I’ve been trading with Zerodha. Last year I was with other broker and I filled my profit and loss of my trading statement given by the other broker was quite straight fwd and that was accepted by auditor. But this year I gave zerodha statement to auditor and he is not accepting since it doesnt contain the dates of my bought and sold. He is asking simple trade statement which contains bought date and sold date and most imp profit and loss of every trade. sample is below . Your trade book doent contain a P & L of each trade . Pls let me know how to get from zerodha as early as possible.

    Buy Date Scrip Code Security Name + Quantity + Net Rate Bought Amt – Quantity – Net Rate Sold Value Sell Date Weighted Avg. Balance Qty Profit:Loss

    Thanks a lot . Very happy with Zerodha’s customer oriented approaches. Good going . Best wishes.
    Vijayendra

  232. DIPAK says:

    SIR, IF I HAVE LOSS IN INTRADAY OR FNO OR DELIVERY TRADES , IN ALL CASES AUDIT MANDATORY.

  233. rohan029 says:

    Hello sir,
    1, How to check shareholding pattern of a company. For example for Eicher Mototrs in moneycontrol.com I am just able to see Individuals / Hindu Undivided Family are holding 3.4% shares. But I am not able to see their names, so how to check their background?

    2. How to check who are the promoters for this company?

  234. Raman says:

    SIR Please me..
    I am new as it is my first itr process and only few days left.
    Here is my case.
    I am govt. Servent.
    My net salary after deduction is 410000.
    I also do trading in delivery and total loss is 15000.
    Kindly tell me.
    1. Can a govt sevent do trading
    2 if yes, then which itr form should i fill.

  235. Vinayak says:

    I got profit 38000 in last year(2016-17) in equity, short term. I have 6Lac salary. But i didn’t took money from zerodha account. I invest profit amount again in some other shares. Do I need to pay tax. 15% ??

  236. Neelesh says:

    Hi,

    Do we need to add mutual fund and lic investment in proprietor fund of balance sheet in itr3 which are long term investment?

    Thanks,

  237. Shailesh says:

    Hi Nithin,
    I am a salaried individual with commodity turnover of 4.5L, with net loss of 28K. I believe reporting 8% profit under 44AB in ITR4S will still require me to pay 8%*4.5L = 38.250K. What if I do not report the loss at all? In that case, I may not be able to offset the gains in the coming years, but I am fine with it, as it saves me the auditing hassle/8% tax, both of which are equally/more expensive. There is no loss to the government/tax evasion in any way, this year of later, which makes me think this approach is fine.
    Please suggest if I am correct.
    ~Shailesh

    • Nithin Kamath says:

      You will have to declare your trading income on the ITR. If you declare, there is a turnover and there is a profit/loss. Either you show as loss and audit to carry forward this loss. Or else you have to show a profit.

  238. Prashanth says:

    Hi Nithin,

    I am a salaried employee with tax slab 2.5-5 lakh. I have tried different trades out of curiosity and here is my loss/turnover.

    For AY17/18
    Intraday equity loss: 1300. Turn-over 1500
    Short Term Gross Loss in Equity (STCG) – 4000 Turn over 77000
    F&O Equity loss – 4000 Turn over 8000
    Commodity F&O Profit – 2300. Turn over – 25000

    As I am on overall loss and turn-over is less, can I skip mentioning STCG and file ITR4-S(ITR4 now) by showing 6% profit of total turnover of F&O’s only?.
    I want to skip auditing.
    Also I filed my ITR1 already. Now i can see only ITR4 option in my Submit form option. Hope revised return is applicable for this.

    • Nithin Kamath says:

      Best to use ITR3, what you can do is since turnover is less,show 6% as profits and pay tax on it accordingly. So turnover on 1lk, 6% is 6k profits, and in 10% tax slab that is around Rs 600 in tax. You can skip audit this way. But consult a CA.

  239. S ansari says:

    I am a salaried person.
    income from salary 2.6lakh
    intraday profit = 4293
    intraday turnover = 15863
    short term loss = 5546
    short term turnover = 237839
    which itr form will be suitable for me ?
    will i have to pay tax for intraday gain?

  240. Jignesh Patel says:

    Why delivery values are included in P&L in your example? As per explanation given earlier, only intraday and derivatives transactions should part of P&L.
    Purchase of Shares 150,000 Sale of Shares 100,000 (Equity Delivery)

    Delivery trades are part of capital gain (Schedule CG). Do we need to repeat same in Schedule P&L also?

    • Nithin Kamath says:

      We show it in P&L. On your ITR you can show it as capital gains.

      • Jignesh Patel says:

        Thanks for reverting on this. Confusion is it is also shown in ITR as per attached example in ITR section “Profit and Loss” > 1 > A > iii > c. Also Sales is added in “Profit and Loss” > 6 includes delivery sale of 150,000.
        Income from business and profession is computed in ITR includes delivery trades as well. Same repeated in Capital Gain (Schedule CG). This is case of double taxation.
        Please check.

  241. rajesh kumar says:

    hello sir, i am salaried person. i do intraday only. and had a loss of 1253 rupee in F.Y 2016-17. which ITR i bave to file. If it is ITR4 then where to show this loss in ITR4

  242. ASK says:

    QUERY:
    1. Please show how to show +ve and -ve turnover it in P&L? What does positive and negative turnover mean? And what about purchases?
    Gross receipts: +50000
    Gross sales: -30000 ??

    How to show profit and loss on balance sheet?
    You can show all positive turnover as gross receipts, and negative turnover as gross sales.

    2. If all of the turnover comprises of speculative intraday trades, is section 44AD applicable to it? Can I declare profit of 6% for speculative transactions and get away with tax audit if my turnover is lower than Rs.2 cr?

    Another case, say, Speculative purchase: Rs.1000 and speculative sales: Rs.900, Option purchase: Rs.100 and option sale Rs.102.
    Since there is a loss of Rs.100 on speculative trade and gain of Rs.2 (2%) on option trade, is tax audit applicable? Can i declare 6% in 44AD?

    • Nithin Kamath says:

      1. Best to consult a CA to fill your ITR. Very tough to explain how to fill here.
      2. Yes.
      3. Speculative and nonspeculative business have to be kept separately. But yes, the example you gave audit will be needed.

  243. Vinayak says:

    Hi,
    Can I get the buy and sell date of each shares in zerodha account. I checked in the Q-back office , but didn’t get. please help me where can i get it.

    Thanks in advance

  244. Suma says:

    Hi Nithin,
    I started individual trading on Zerodha since March 2017. So my turnover for FY 2016-17 is 2 lacs with profit of 20,000 through F&O transactions only with no other source of income. Please let me know if I should submit ITR form 4 since I have a turnover of less than 2 crore with no book of accounts maintained or ITR form 3 since going forward I may exceed the mentioned limit as well as have intra-day & delivery-based transactions?

    Thanks.

    • Nithin Kamath says:

      ITR3 is always advisable.

      • Suma says:

        Thanks Nithin.
        I understand for no auditing required and no books maintained, we just need to fill a small section and not the entire Balance Sheet and P&L.
        (1) For 6c: Amount of total stock-in-trade – Shouldn’t this be our current value (investments in equities, F&O, Mutual Funds, etc (as of March 31st 2017)? If this is correct, where can I get this past info for zerodha?
        (2) What is the difference between 53ia: for assessed carrying on business and 53iia: for assessed carrying on profession? Please let me know which is relevant for an individual trader.

        Thanks.

        • Nithin Kamath says:

          1. Investment in Mutual Funds for a trader can be stock in trade. But normally they are kept for long term so no need to show this. Equity can be. Futures and options can be.
          2.Business:- normal trading activities and other than done by qualified professionals
          Profession:- opposite
          The two categories = business *8/6% of turnover whereas profession 50% of turnover

          Business is relevant to the normal trader.

  245. Rahul says:

    Hi Nithin,
    Have read the chapters on varsity on taxation. Thanks for such detailed info.
    Kindly advice on my case as it seems CAs have no idea what to be done here. Looking at the confusion and amount of expenditure for audit etc it seems I would need to do away with intraday& F/O going further.
    Basically I want to avoid audit and books & account by showing profit @6% of turnover(intraday + F/O) as turnover is just 4lac. Is it even possible with ITR3.
    Due to Intraday(speculative) I cannot file ITR4 and have to fill ITR3. I have STCG as well.

    1)Mainly I wanted to know that what can be filled for below.
    Amount of total sundry debtors
    Amount of total sundry creditors
    Amount of total stock-in-trade
    Amount of the cash balance

    2)Do I need to fill PART A-BS for Proprietor’s capital, bank balance etc as well. I filled just the 4 items in sec 6 for no accounts case.
    3)Do I need to fill anything in schedule BP i.e. separate intraday and F/O turnover. I have only filled the Gross receipts as total turnover and gross profit @6% of turnover in P&L sec 53

    Thanks

  246. Shanti says:

    Sir
    I am trading only F & 0
    No any other income
    Which itr form should be filled for fy 2016-17

  247. Saikrishnan says:

    Dear Nithin,

    I opened trading account in zerodha before 4 years.Due to an accident I lost my job before 5 years.
    Started full time trading (Scalping) from last year by getting a loan from axis bank. I m in big loss but my turnover is above 2 Crores. I am in loss , so do i want to pay tax?? Is sep 30 is last date? Please explain me , I can pay directly or it should be audited??

    Equity

    INTRADAY GROSS PROFIT₹6,622.75
    INTRADAY TURNOVER₹6,622.75
    SHORT TERM GROSS PROFIT₹-6,737.10
    SHORT TERM TURNOVER₹4,14,577.45
    LONG TERM GROSS PROFITN/A
    LONG TERM TURNOVERN/A
    TOTAL CHARGES₹1,535.06

    F&O

    FUTURES GROSS PROFIT₹-8,916.50
    OPTIONS GROSS PROFIT₹-87,244.00
    TOTAL GROSS PROFIT₹-96,160.50
    FUTURES TURNOVER₹15,935.50
    OPTIONS TURNOVER₹1,98,47,691.25
    TOTAL TURNOVER₹1,98,63,626.75
    TOTAL CHARGES₹79,323.75

    Waiting for your reply..

    • R Dileep Reddy says:

      As per Income Tax act.. In case of equities Segment..there is no turnover concept only Short term Capital gains/losses and Longterm capital gains/losses to be reported in the ITR form.

      In case of F&O segment Turnover concept is applicable but Turnover is calculated as eg.

      eg: 1.Buy price- Sell price= Profit/Loss
      1.23568-17468=-6110 Loss
      2.15687-45867=30180 Profit
      3.23500-97460=73960 profit
      4.102387-47860=-54527 Loss

      In the above case turnover is Positive and Negative outcome of a transaction/trade is considered as Turnover.
      So the turnover in the above case is 6110+30180+73960+54527=1,64,777 this 164777 is the turnover..

      by using the above concept check ur turn over has reached 1 Crore or above..

      Tax Provision
      a) In the case of profit from derivative transactions, tax audit will be applicable if the turnover from such trading exceeds Rs. 1 crore. b) Tax audit u/s 44AB r/w section 44AD will also be applicable, if the net profit from such transactions is less than 8% of the turnover from such transactions

      • Saikrishnan says:

        Thanks Dileep Sir,

        As you said to calculate by
        Buy price- Sell price= Profit/Loss, I made a turnover of 8,85,000.
        I made a loss of -1,80,000 including brokerage fees.
        After an accident before 5 years , I m not working, I dont have any other income. Just learned stock market and left my loan money in fno trading..I learned that I am not fit for trading in fno.. but equity is safe.. Daily I am learning learning about equity stocks and strategies..

        In this case , if I dont have any salaried income and my turnover is 8,85,000 & overall loss is -1,80,000 from Capital amount. What should I do now? How to fill tax?
        Please let me know.

    • Nithin Kamath says:

      No need to pay tax if there is a loss. You can add your interest cost and carry forward this loss to next 8 years and setoff against all future profits. Since your turnover is more, do get an audit done and yes last date for audit is Sep30th.

  248. Venu Gopal says:

    The ITR -3 form shows Add option for STCG u/s 111A. Should I show all my transactions separately transaction wise or can I just sum up them to show Consideration and cost of Acquisition. Please suggest me

  249. Venu Gopal says:

    When can an Option contract fall under STCG

  250. Anand says:

    Hi Nithin,

    Under no audit case(business income), Are we not eligible to show the expenses like brokerage fee, stampduty, STT and other charges ?

    Thanks,
    Anand

  251. Anand says:

    Thank you !

  252. Hiren says:

    Hi nithin in case of trading under as propreitorship
    1) does commodities derivatives and currency dervatives Profit/loss considered as nonspeculative business income/loss
    2)Does commodity derivatives and curency derivatives profits/ loss be merged with equity ,ad can one setoff commodity, equity and currecy profit/loss against each other
    3)does total calculation of FNo turnover include commodities and currency turnover
    4) after the Gst inplementation, Gst is already getting deducted along with brokerage, does a trader have to pay separate gst to the government based on turnover?

  253. Ajay says:

    Hi Nithin,

    I have a general query regarding trading . I work for a bank. I do intraday trades in F&O segment only. No equity trades. I have declared my zerodha account to the employer while joining.

    1) Is it possible for my employer to track trades being done by me using PAN number etc.

    2) Do you share such data with companies/ employers regarding trades done by your customers.

    Regards

  254. SUNEETA JOSHI says:

    Hi Nitin,
    In case if my F&O turn over is 80lac and total expenses incurred is 20k. So shall i declare my turnover in ITR4 as 80lac-20k.

    regards

  255. Sathish says:

    Hi Nithin,

    My turn over is Rs. 10,00,000, Total Short-term profit is Rs. 59000, Total Charges (Brok,STT, etc..) is Rs.7000.
    Believe i can show Total charges as expenses and so the Total profit is 5.2% of Turn over.

    And also have Rental income Rs.150000. No salary and no other income.

    With this, please help me to understand following

    1. Though my total income (including Capital gain) is less than 2.5 L, do i still need to pay 15% tax for the above Short-term profit ?
    2. Which ITR form to be filled for my case?
    3. When is the last date for filing ?

    Thanks in advance…Regards.

    • Nithin Kamath says:

      1. No, not required.
      2. ITR2
      3. Aug 5th – yesterday.

      • Sathish says:

        Hi Nithin,
        Thanks for Prompt response.

        For #1 I forgot to mention that am declaring “Non-Resident” as am currently working outside India on this FY.

        So, believe i should need to pay 15% tax for this STCG of Rs.59000 ? Pls confirm. Sorry, i searched in detail on this article but couldn’t find the case of “Non-Resident”. May be somehow overlooked.

        Regards.

  256. Rahul says:

    Hi,

    Can you suggest me right ITR form. I only trade in equity intraday and BTST. No Other income source. I am full time trader.
    My intraday loss = 75 K
    intraday turnover = 1.5 L
    Short term profit = 21 K
    Short term turnover = 15 L SO NET LOSS = 54 K
    Overall I’m in loss but I don’t want to carry forward.

  257. jakeer hussain says:

    Dear sir

    my salary 8,50,000
    I traded only nifty futures turnover tradewise is 98,000
    long term(equity holdings) capital loss -40,000
    mutual fund investment ELSS scheme 80,000
    realised profit(loss) is –9,000
    unrealised profit (loss) is –33,000

    1. is audit necessary
    2. book keeping required
    3. which ITR form to fill

    Thank you sir

    • Nithin Kamath says:

      1. Technically yeah. But since turnover is small, you can declare 8% of this as profits and pay tax on that to avoid audit.
      2. If audit, then yeah. Otherwise no.
      3. ITR3

      • JAKEER HUSSAIN says:

        Sir
        Is this 8% or 6%, because in FAQ s it is given that for AY 17/18 it is reduced to 6% from 8%.
        Also in FAQ s it is also said that if capital gains are there ( which I
        I have ) then it is not possible. Which is correct ? Please kindly clarify my doubt.

  258. jakeer hussain says:

    Dear sir

    my sister have no other source of income
    traded only nifty futures turnover tradewise is 78,000
    realised profit(loss) is –34,000
    unrealised profit (loss) is –9,000

    1. is audit necessary
    2. book keeping required
    3. which ITR form to fill

    Thank you sir

  259. jakeer hussain says:

    Dear sir

    my friend has about 70,000 annual income through watch repair
    traded only nifty futures turnover tradewise is 8,600
    realised profit is 8,600
    unrealised profit (loss) is –33,000

    1. is audit necessary
    2. book keeping required
    3. which ITR form to fill

    Thank you sir

  260. Venki says:

    Hi Nithin,
    past 3 years I have filed ITR 4 with tax audit by CA since i had loss which needs to be carry forword in coming years. This year FY 2016-17, i have only salary income so i filed ITR 1. so i have not mentioned the previous years losses which was declared in previous years ITRs.
    please suggest what i did is correct ?
    whether i can carry forward those previous f and o losses within 8 years.

    Thanks,
    Venki

  261. Arun Kumar Kushwaha says:

    Sir,
    what documentation should maintain while taking 5Lac (NEFT) from relative as Loan?? for commodity trading purpose only..
    to satisfy IT Department.
    Thanks

  262. Rajib garai says:

    It’s really a very good work to spread the fragrance of knowledge. I appreciate you and your team. For a long time I want to trade in commodity through MCX . But I am confused a little bit with taxation . I’m a salaried person and want to know how I show my profit in my return file if I do . Actually I do file from itr 1. If I do the trade then do I have to fill the other form and I am to treat as Businessman . I have to audit my account by a chartered accountant . This is the confusion and help me please . Thanks..

    • Nithin Kamath says:

      Yeah Rajib, you will need to use ITR3 to declare your commodity trading income. Show any earning as business income. Business income doesn’t mean businessman. Many salaried people have multiple source of income. Audit is required if your turnover exceeds Rs 2 crores – do go through all the chapters.

  263. Sharanu says:

    Dear Nithin,
    Can you please let me know which ITR form do I need to use to file my returns with the following details:
    1. Interest Income
    2. Agri income greater than INR 5000/-
    3. No Salary.
    4. Withdrawn Employer PF.
    5. F&O, Intraday and Short term delivery trading with loss.

    Actually, I consulted a CA and he filed my returns through ITR-2 without any Audit. The only thing he confirmed from me was that I made loss. As I understand from your explanation, I guess my CA should have used ITR-3. Kindly clear my doubts. Also, I wish to know whether I need to re-file my returns using ITR-3.

    Appreciate your answer.
    Regards,
    Sharanu

  264. Jignesh says:

    Nithin,
    I have below income heads:
    Salary income = 16 lac
    Loss on house property (home loan) = 2 lac
    F&O profit = 80000 (on turnover of 4 lac approx)
    Delivery trading short term gain = 10000
    I believe I can’t file ITR 4 presumptive income as it is not having Capital gain. Can I file ITR 3 with ‘No account case’ ?

  265. Ekta says:

    Hi Nithin

    I have 9.6 lac profit from intraday and delivery-based equity ( 1 year).

    I have paid around 1.23 lac as STT, Rs. 14000 as SEBI-fees and transaction charge and around Rs. 10000 as stamp duty.

    I assume that I don’t need to pay tax on long term equity gain i.e. 6 lac and I need to pay tax 15% on above 9.6 lac intraday-delivery-equity profit. In my ITR, 9.6 lac is business income and 6 lac is exempt capital gain.

    Can you pls let me know if I can subtract the STT, SEBI-fees and transaction charge and stamp duty charges from my 9.6 lac profit out of intraday-delivery equity?

    Or, is it the case that these STT, Sebi-fees, transaction charges, stamp duty charges can’t be subtracted from the profit arising out of intraday-and-delivery based equities even if this is shown as business income?

    Regards
    Ekta

    • Nithin Kamath says:

      Intraday is a business income, so you can subtract all these costs as expense and pay tax on net profits. Btw for intraday you have to pay as per income tax slab you fall in. For short term gain it is 15% (equity delivery short term trades). For equity delivery, STT can’t be deducted. But you can show the rest as cost of improvement of the stock and hence book an expense. Suggest you to go through all the chapters here on taxation.

  266. Anuj says:

    Sir,

    I am a salaried individual working in IT sector.My annual salary income is Rs 5,20,000.I have invested in share market and made both short term as well as intraday gains. My intraday and short term profit is to the tune of Rs 10,000 each.Which ITR form will I need to fill?