Comment on Classifying Your Market Activity

Sudipta commented on 03 Jan 2017, 11:29 PM

Hi Nithin,
This is a great article. Thanks for all your help to clarify the rules & the process. I have few basic questions here.
1. I understand that we need to declare ourselves as Investor or Trader or both. In my case it will be both since I have long term investments as well as F&O. But my question is, where do we declare it ? Is it somewhere in my ITR file, or is it somewhere in my profile created under incometax govt site, or is it to be done by my broker ? Please clarify.
2. I am trading through 2 brokers – one is obviously Zerodha, another is ICICIDirect. It is a different topic why I am maintaining 2 different accounts, but here my question is – what is the consequences of a mismatch of my “activity type” in these 2 accounts ? To explain it better: I am doing mostly investment activities in ICICI. And in Zerodha I am doing mostly F&O and few short term trades. So I am an Investor in ICICIDirect and I am a trader in Zerodha. So how do I declare myself (once I know an answer to Qs 1) ? I guess I have to select the option “Both” but is it really available as an option ? Or do I declare myself as Investor in ICICIDirect and as Trader in Zerodha – which will inherently give me a status of “Both” ? Please throw some light how I should classify myself. Of course I want to take the zero tax benefit on my LTCG, so cannot show that as business income. I have always shown that as LTCG in previous years (but I did not do F&O trading earlier).
3. How do we make a swicth.. I mean what is the process ? I know that we should not make a change. But in case I find out that my “declaration” at present is not correct somewhere, I have to change it at least once to rectify it. Is it allowed and what is the process ?

Thanks a lot in advance.

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