Comment on Tradetax for income tax returns when trading

V Guruprasad commented on 30 Jun 2017, 11:17 AM

Hi Nitihin !

For all non-speculative, delivery based transactions, total value of the sales is considered as turnover. For all speculative transactions, aggregate or absolute sum of both positive and negative differences from trades is considered as a turnover. This determination of “turnover” is common for all types of trading including trading in equity, and is based on a Guidance Note of the CA Institue. The tax regime, as it stands now, presumes that the “normal” rate of profit for traders is 8% (and incentive at 6% if receipts are through electronic means).

I do not have to tell you that trading in equity is not the same as trading in commodities or other things. As such, the very method of presumptive taxation for a equity trader needs a revisit by the taxation authorities. The determination of “turnover” as above for the purpose of maintenance of books also needs a re-look in as much a commodity trader with a Rs 2 crore turnover and a equity trader with the same 2 crore turnover are totally different.

You, Mr Nithin Kamath and Zerodha, have encouraged Investors / delivery trades by cutting down the brokerage to ZERO. On the other hand, the Finance Ministry who is expected to encourage such Investors (particularly retail investors) have continued to practice a tax regime that is loaded against them (eg. 6% minimum profit, tax audit cut off at Rs 2 crores etc).

I am aware of your Petition (through to the Finance Minister. But, the BJP President Mr Amit Sha ji has his roots in the Stock Broker fraternity and is well placed to readily understand the issue. As one who has already taken solid action to encourage retail investors, you are extremely well placed to revive the efforts. I therefore request you, in this tax season 2017, to revisit the matter and this time take up through the President BJP.

Thanks for your time and patience.

V Guruprasad

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