Taxation Simplified

January 22, 2013

Check out our detailed module on taxation while trading/investing on varsity.

Traders,

I have been trading personally for a very long time and the tax filing times have always been the most painful part, sitting with a CA and accounting for profits, losses, expenses and others. I was in similar shoes as most of you would probably be in right now when it comes to taxation, “Confused”.  There are a bunch of reasons for writing this post:

  • Discussing the best practices filing returns when trading the markets, important because there are divergent views on many topics among traders and CA’s.
  • Simplifying all the financial jargon CA’s use.
  • Letting know the importance of filing returns on time and implications of misfiling or not declaring trading profits or losses.

Om Prakash Jain a brilliant Chartered accountant who is a Zerodha client and also runs TaxIQ will be assisting us in putting up the blog and also in answering queries. We will together try to keep the post and the answer to the queries as simple as possible. We would appreciate if the post and the queries are pertaining to Income tax and related topics while trading stocks, futures and options, currency and commodity.  Do note that this is our view and recommend you to consult your CA before taking any decision.

To begin, couple of important things to know:

Due Dates for filing your returns:

Irrespective of the nature of trades you carry out your income tax returns have to be filed before July 31 for individuals and September 30 for companies. In case your turnover exceeds Rs. 1 crore in a financial year, by turnover I mean the sum of settlement profits and losses in your trading account, then the book of accounts needs to be audited or if any other reasons for having the books audited the due date is September 30 to file your returns. Under section 271 B, failure to submit the tax audit in time has a penalty of 0.5% of turnover or Rs 1.5 lakhs, whichever is lesser.

 Tax Slabs:

The slabs for individuals/HUF are as mentioned below; all persons above the age of 60 are considered as senior citizens.

Upto age 60(M/F) Age 60-80 Age 80 >
Income Range(Yr) Tax Income Range(Yr) Tax Income Range(Yr) Tax
0-2.5lks 0% 0-3lks 0 0-5lks 0
2-5lks 10% 2.5-5lks 10% 5-10lks 20%
5-10lks 20% 5-10lks 20% 10lks> 30%
10lks> 30% 10lks> 30%

These slabs are on your total income as an individual which is the sum of all your incomes, this may include salary, rental, trading profits and etc.

An example:  If I am a 35-year-old person whose net income is Rs 800,000/yr, my income tax liability would be Rs 85,000 (0-2.5lks : Rs 0, 2.5-5lk : Rs 25,000 @10% of 2.5lks, 5lks-8lks: Rs 60,000 @ 20% of 3lks).

In case of companies, income tax is a flat 30% and no tax slabs exist.

 

Taxation while trading Stocks/F&O/Commodities

First most important thing to do for every trader is take a stance on your trading activity because the tax liability would change based on this. Following are couple of  options you have

  • You are an investor, who buys/sells stocks once in a while and you typically would hold the investments you make for a longer period of time.
  • You are a trader, you either actively trade stocks or f&o or currency or commodity.

It is your prerogative on if you call yourself as a trader or an investor, but if your actively trading on stocks or even if occasionally dabbling in f&o,currency or commodity  my advice would be to declare yourself as a trader.

While trading equity or Stocks

Stocks that you hold as an investment for more than 1 year:

a. In Case of Profits

Investor

Any profit you make by sale of shares that you have held for more than 1 year is considered as long-term capital gain and if this transaction is done through recognized stock exchanges for which the STT (Security Transaction Tax) is already paid, is exempt from Income tax under section 10 (38).

So what this means is that if you had bought 100 Reliance shares 2 years back at Rs 700 and sell it today at Rs 1000, you don’t have to pay any tax on the profit of Rs 30,000.

Note: To prove this as long term capital gain, you can attach the contract notes for the buy/sell trades and the Demat statement which shows the credit/debit of shares, if required.

Trader

Any income from buying and selling shares even if more than a year is considered as a business income. This gets added to your income and then taxes paid according to the above mentioned slabs . But since it is a business income you can show expenses in terms of internet, advisory charges etc, any charge that you have incurred for the business of trading and reduce your income liable to be taxed.

Note: Long term capital gain tax for shares which are not trading on the exchanges is 20%.

b. In Case of Losses

Investor

long term capital loss from shares where STT is paid cannot be adjusted against any long or short term capital gain from any source.

An interesting thing to note is that if you do the same transaction without stock exchange( off the market transaction), i.e transfer of shares with demat slip, you can get your long term capital loss set off against long term capital gain of other asset. This is a loop hole that exists in the system presently.

Trader

Your long term loss is considered as a business loss and this could be set off against other business income which is explained below in the f&o section.

Stocks that you buy and sell within 1 year (after taking delivery to your demat account)

a. In case of Profits

Investor

Any gain made by sale of shares through a recognized exchange is considered as a short term capital gain if bought and sold within 1 year. Please note that it is considered short term capital gain only if you take delivery of the shares to your demat account and then sell the shares. Short term capital gain tax presently is at 15%.

Trader

As a business/active trading, any such gain is considered as a business income. This will have to be added to your other income and you will be charged taxes based on the slabs mentioned in the table above. Since it is a business income you can show business expenses to reduce the taxable income, for the business of trading some of the expenses can be broadband charges, rental charges, advisory charges, computer charges, electricity bill, professional fees and etc.

Note that as a trader you are probably paying higher taxes than an investor, but this is the right approach to take. The benefit you get as a trader or trading as a business is that you can set off your expenses from the profit and also carry forward your losses to net off against any future profits, explained in the f&o section below.

b. In case of losses

Investor

Any short term loss arising from the sale of shares can be net off against any short term capital gain or long term capital gain in the future (upto 8 years) provided you have declared the loss while filing the income tax.

Trader

If you are trading as a business/active trading, such a short term capital gain loss can be considered as a business loss and net off against any income other than salary for upto the next 8 years. What this means is that if you made a loss of Rs 100,000 doing short term trading and you made Rs 800,000 in a property transaction, your net tax liability would be only on Rs 700,000.

What this means is a trader  if you make a profit, you need to pay the income tax the same year and if you make a loss you can carry forward the loss for the next 8 years and keep netting it off with any profits you make be it trading or otherwise, provided you declare the losses when filing your returns within due date.

 Intraday/Day Trading Stocks (equity)

While day trading the rules stay the same if you have declared yourself as an investor or trader.

Any profits or losses from day trading is called Speculative; either Speculative Profits or Speculative Losses. A person  intraday trading is automatically considered as someone who is either an active trader or trading as a business.

a. In case of Profits

Profits from intraday trading is considered as a business income, so this will have to be added to your other income and pay the tax accordingly. So if you have earned a profit of Rs 1lk from day trading and Rs 4lks from your salary and other sources, your total income would be Rs 5lks and taxes has the be paid accordingly. But you can show the expenses you incur towards trading to reduce the net tax outgo.

b. In case of Losses

Speculative losses or loss from intraday trading can be carry forwarded for the next 4 years provided you have declared the same while filing your returns within due date. Important to note with speculative losses is that it can be net off only against any other speculative profit you make within the next 4 years and not against any other profits (Section 73(1) of the Income Tax Act, 1961).  So assuming while trading this year you made profit of Rs 1lk from short term trading and Rs 1lk loss from intraday trading, you cannot net off both these. You will have to pay taxes for the Rs 1lk profit and carry forward this loss of Rs 1lk for intraday and net it off against any other intraday profit you make in the next 4 years.

 

While Trading Derivatives or F&O – Equity, Currency and Commodity (NSE, BSE, MCX-SX, MCX)

If you are trading F&O on any recognized stock or commodity exchange, profits or losses have to be considered as business profits or business losses respectively. What this basically means is that if you trade F&O, you have to compulsorily consider yourself as a ” Trader” and not an investor.

a. In case of Profits

Any profit made from trading derivatives is considered as a business profit. You would have to add this income with all your other income and pay tax according to the slabs mentioned above. But since trading income is now considered as a business income, you can show all expenses that you incur to earn this income and reduce your net tax outgo. Expenses like computer depreciation, internet bills, advisory bill, software tool, salary you pay to people whom you have hired and more.

b. In case of Losses

Any loss is a business loss and this can be net off against any income other than salary either in the same year or if you file your losses in time anytime in the next 8 years. This loss would include the trading loss and sum of all expenses that you have incurred towards trading.

What this means is that if you have had a Rs 10lk loss trading derivatives and earned Rs 20lks in any other business (other than your salary), your taxable income would be only Rs 10lk (Rs 20lk – Rs 10lk)

Turnover Calculation

Calculation of turnover is to determine if you need your books audited or not, so audit by a CA is required if:

    • Turnover for financial year is > ₹1 crore
    • If turnover < ₹1 crore and profitability is less than 8% of turnover (Section 44 AB)
    • Also note that if your total gross total income (trading +  Salary or other business) is lesser than Rs 2lks, you don’t need an audit even if your profit is less than 8% of your turnover or if turnover for the year is >  ₹1 crore
  • TURNOVER

    Turnover is being calculated here just to determine if you need a tax audit or not. As per the guidance note from ICAI ( section 5.12, page 23).

    • For Intraday equity — absolute sum of settlement profits and losses per scrip
    • For Delivery equity — sell side value of the stock
    • For F&O (Equity, Currency, Commodity) — absolute sum of settlement profits & losses for F&O) per scrip and the sell side value of option contracts

    Turnover calculation is quite simple for delivery based trades and it can either be done scripwise or tradewise for intraday equity and F&O. By scripwise I mean you consider the profit or loss made on that particular scrip in the financial year as turnover, and you sum up the absolute values of individual P&L of all the scrips to have a consolidated turnover for the year. By tradewise I mean you consider the total sum of  profit and loss of each trade that you have done during the financial as your turnover. Tradewise is a more compliant way, and Zerodha is the only broker to currently give both these turnover reports on your tax p&l on Q.

 

Brokerage, Trading Costs STT and other

Security Transaction Tax (STT)

STT is what we pay as taxes when trading stocks & derivatives on the stock exchanges to the central government. Back in 2004 Mr. P. Chidambaram our Finance Minister made the long term capital gain tax zero to attract investments in the country and to make up for this revenue loss to the exchequer STT was introduced.

Until the assessment year 2008-2009, STT was given as a rebate and was omitted from the assesment year 2009-2010. What this meant to traders like us was that until 2008-09, any STT paid could be deducted from our tax liability, but today paying STT gives us no such advantage. Hence the trading community has been pushing the finance ministry to reduce STT or atleast give a rebate like before.

Brokerage and other Trading Costs

All your trading costs including brokerage can be shown as an expense on your gross income.

Which ITR Form to use

Investor: Either ITR 1 (for individuals having income from Salary and Interest) or ITR 2 (for individuals having income from salary, Interest and Rental)

Trader: Either ITR3 (ITR 4 until 2016) or ITR4(S)  (for individuals and HUF’s having income from a propreitory business or profession)

Companies: ITR 6

*There has been a sudden rush of notices that traders have received from the income tax department recently, if you are one of them do read this blog ” Notice under Section 139(9)?  – Possible Reason”

 

____________________________________________

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I have tried my best to keep this blog simple and do away with all the financial lingo that chartered accountants use. To end this very serious topic with a little rhyme and humor:

Profits or losses, make sure you declare it every year.

Otherwise there could be implications in the very near.

If you haven’t  started filing returns better late than never.

Post your questions here, Om and I will try to answer it at the earliest. Please note that the post and the answers to the queries are our personal view and advise you to consult your chartered accountant before taking any decision.

Happy Trading,

Founder & CEO @ Zerodha


Post a comment




2,455 comments
  1. Sampathkumar S says:

    Great Job, Keep it up!

    AV Roofings is the top roofing shingle manufacturer & dealer in Namakkal, Tamilnadu, offers the best roofing solutions for all your residential roofing needs.

  2. yuvaraj says:

    Hi,

    Does this year’s budget have any proposal to do away LTCG on listed debentures?

    Thanks,
    Yuvaraj

  3. Murali Krishna says:

    My F&O loss is Rs.7,00,000

    Consisting of Positive settlements of Rs.15,00,000/- and Negative settlements of Rs.22,00,000/- and Turnover as per F&O calculations is Rs.2,95,00,000/-

    Whether my case is Tax audit or not?

    In ITR 3 , which turnover  should report i.e. Positive settlements of Rs.15,00,000/- or Turnover as per F&O calculations is Rs.2,95,00,000/-

    If I report Positive settlements of Rs.15,00,000/- as turnover in ITR 3 than what is the use of Calculation of turnover as per F&O calculations, is it only deciding factor of Tax audit?

    If I report turnover of Rs.2,95,00,000/-.as per F&O calculations in ITR 3 than how I arrive my Net loss of Rs.7,00,000/-? shall I put balance figure as purchases.

  4. <a href="https://ebetterbooks.com">Gena Sanford says:

    You have helped me to understand taxation easily and the comment thread also has helped me lear a lot of new things. Thanks for sharing

  5. Laxmi Kant says:

    Now as the delivery is compulsory in stock options, if I choose to only write the calls and let them either expire or settle in delivery what shall be the tax liability. Will it still be considered business income though I am choosing option route to just take/ provide delivery at a later date and get benefitted from the premium if it expires without getting in the money. what shall be the tax liability on such transactions.

  6. josh says:

    How much tax to be paid if one earns a profit of 12lcs (long term capital gains) with an initial investment of 3lcs. and if a person’s salary is less than 4lcs?

  7. AMITAYU says:

    If I buy a share (delivery based) and then sell the share on the same day and earn profit, will it be treated as speculative business income or whether be treated as non speculative/ STCG.

  8. Rahul says:

    Hi,
    I have a query on LTCG. Is indexation benefit allowed on Sale of Equity Share in calculation of Long Term Capital gain/Loss?
    regards
    Rahul

  9. FARHAN says:

    Hello Team,
    Greetings of the day.
    Thank you for putting this amazing blog together. I just have one question. I have borrowed 90K from a friend and made 15k profit with it within 5 months. I have no income as i am a student. Am I exempted from filing tax as i have no salary? Please guide.

  10. Balaji says:

    Hi,
    Could you please clarify on the following

    1. I have got Bonus shares 1,000 Unit on 23-Jul-18 and the purchase price is 0(Zero)
    2. I have sold 1,000 Bonus shares on 24-Sep-18 @ Rs180(1,000*180=1,80,000)
    3. I have purchased the same share on 1,000 Unit @ Rs 167 on 22-Oct-18 .

    In the above scenario how the P&L should be calculated? In my case P&L it showing Rs 1,80,000 as Profit.

    Thanks and Regards
    PV Balaji

    • Nakul says:

      Hey Balaji,

      The P&L is calculated on a FIFO (First In First Out) basis. In your case, the P&L is correctly calculated. Now you must be holding 1000 units at Rs. 167 itself. You can go through this support article for more information on how buy average and P&L is calculated.

      • Balaji says:

        Deal Nakul,
        Thanks a lot for the clarification. I will go through the support article .

        Thanks and Regards
        Balaji

  11. B S Kumar says:

    In reports section, there are two kinds of statements P&L and Tax P&L with different figures. Need some clarification on this. Please guide which statement to be presented for Tax filing.

    • Nakul says:

      You should use the Tax P&L statement for filing your tax return. This report has your trades segregated into speculative, short term and long term transactions.

  12. Dattaram Parab says:

    Hello Sir,

    I have started using Zerodha for trading in FNO-intraday this year. Can you please suggest some CA service to file incometax for trading in FNO and Commodity.

    • Nakul says:

      We are in talks with a couple of online tax filing platforms to help provide CA assisted services at discounted rates for our clients. We’ll announce the partnership in the coming week. Stay tuned for the updates.

  13. Sandy says:

    KINDLY REPLY, THANKS

    Due to physical shares no longer valid, my father transferred his 530 shares of State Bank of India to my demat account through request to RTA and I have 530 shares of SBI credited to my demat account. Roughly, the value is 530*300=Rs159000. He had acquired these shares around 19 years back, the exact purchase price not known. How do I show this in my ITR3 return. Should i show this “income from other sources” or should I show this as “Exempt Income.” I read that any gift above 50000 in a FY is taxable, but this is from father to son, comes under relative category, is the full amount exempt? Kindly give your inputs

  14. rakesh prajapat says:

    i am salaried person in psu. my salary 600000.and i have loss arrond 17000 in intrday and 2000 in short term. and 7000 loss in fno. in FY 2018-19.
    which itr i have to file . do i need tax audit.
    my turn over EQ arround 19000 and fno turnove 17000 arrond
    please help.

    • Nakul says:

      Hey Rakesh,

      You will have to use ITR 3. Also, an audit is required in case your business turnover is greater than 2 cr or your net profit is less than 6% of your business turnover. However, an audit is not required in case your profit is less than 6% of the turnover and your tax liability for the year is zero. But it is advised that if losses are substantial, file the return with an audit. Do check out the Markets and Taxation module on Varsity to understand taxation better. Also, it is advised you consult a CA for filing your ITR.

  15. Deep says:

    Hello, I started trading from last year and lost couple of lakhs, and started profit sharing with other expert who manages my account and takes x percentage from profit. Can we file the amount that I give to expert as expenses in my filing? I don’t get a receipt for that, but it is through bank transfer and it would be more than a lakh per year based on profit.

  16. raj says:

    Hi,

    What is the procedure of Audit? I mean, how it is conducted and do i need a CA?
    Can you please explain what docs do I need during Audit.

    Thanks.

    • rav says:

      Penalty amount will be decided on 30 jan or after. They are insisting on 1.5 lakh,as their method of calculating commodity turnover is not correct.
      For previous FYs, date of audit is passed,hence no point in doing audit now.
      Audit related informations are available in earlier replies thread . u may go through.
      Regards
      Ravi

      • Raj says:

        Ok Ravi, Thanks for the valuable replies.

        But according to act, Penalty is .5% of your turnover or 1.5 lacs whichever is less. In your case (90 lacs turnover), Penalty should be (90 Lacs * 0.5)/100 = 45 Thousands.

        Regards,
        Raj

      • Nikhil says:

        How much did they charge you Ravi

        • Ravi says:

          Actually they dropped penalty proceedings recently,after I met officials and gave detailed explanation in writing, along with tribunal orders,ICAI guidlines regarding turnover calculation etc.

  17. ravi says:

    During AY 2016-17, I did derivative trading and lost 3-4 lakhs.my turnover was around 91 lakhs
    I filled ITR1 instead ITR 3. I also did not get my account audited as I was not aware of these requirements.

    Now IT department has sent notice under 142(1) asking why I submitted ITR 1.
    Also they are asking for detailed audited account, P and L Account, Balance sheet etc.
    They have given just 3 days till 12/12/2018 in E-proceeding option to submit reply.
    Please help ,how to respond .
    What is worst ,They can do. I heard there is penalty of 1.5 lakh for not doing audit.
    Regards
    Ravi

    • raj says:

      Hi Ravi,

      What happened next?
      did you get your account audited or did they charge you with penalty?

      Regards,
      Raj

      • rav says:

        They have initiated penalty proceedings under 274/271B and given time to explain my defence till 31st jan 2019, by meeting them in their office. I will go next week.
        regards
        Ravi

        • raj says:

          Oh,

          How much they are going to charge you?
          I’m afraid it may happen to me as I have filled ITR 1 instead of ITR 3, and I have same Tax condition as you.

          I am really scared.
          Please reply asap.

          Regards,
          Raj

  18. Nitin says:

    Hey I am an day trader lost ₹340000 in equity cash day trading and made profit of ₹122000 in FNO
    So my question is my income is less than 250000 what if I only show profit from FNO and don’t declare the loss of cash intraday

  19. Mohan says:

    I am asking this because, one of my colleagues has taken loan from bank keeping shares as collateral and bought some shares with some percentage of loan which is more than 10 Lakhs. He paid back the loan with interest from salary and other business income. But it seems he has not paid any TAX on the shares bought because he hasn’t sold them and keep them as long term investment.

  20. Mohan says:

    Hi, Zerodha. Firstly i thank for the lowest brokerage and futuristic technological services that you offered for trading.
    I have a broker (Account 1) who is offering 4 times leverage for delivery of equity. I bought Rs. 25 Lakh worth of Shares.
    I traded for the whole year and with the profits gained from Zerodha (Account 2) i have cleared all the Loan with interest to the broker in installments.
    After using ELSS, LIC and House Loans for tax cuts, i was remained with Rs. 25 Lakh worth of Shares approximately (Not sold and all out of the money from broker’s leverage include my capital Rs. 7 Lakh) which i have seen long term investment opportunity and little cash of Rs. 50,000.
    Question:
    Do i have to pay tax on the Rs. 25 Lakh worth of shares and Rs. 50,000? if yes, why? Please explain.
    Thanks in advance.

  21. nitin malik says:

    Hi sir,
    i have intraday gain and short term gain both. Can i show short term gain as a investor and intraday gain as a trader in one itr? if yes, then during calculation of turnover, should i use only intraday turnover or both ( delivery based and intraday)?

  22. usha says:

    one of my friend has account with u and as per his statuemnt his turnover from f&0 is around 26lacs but as to my knwledge i hv taken sales value of F&o which is around 9 crores . just want to be as\\confirm whcih is right method of computation of turnover , he has loss in f&o if his turnover as per u is 26lacs ,does he need tax audit

  23. Giridhar Mallya says:

    Hi Nithin,
    My wife is trading only in equity (intraday) and has incurred a loss of Rs. 3 lk.
    Her turnover is less than Rs. 1 crore
    Her income from all sources is less than Rs. 2 lk (after eligible deductions) and not liable to pay any tax.
    Is she liable for Tax Audit?
    Thanks

  24. SUBRATO BAGCHI says:

    Hi! I had earned some money by selling shares of a company in the year 2013-14. At that time I did not disclose the income to the Income Tax Department. Within a few months of the income I invested 75% of the money to purchase a residential flat. In the year 2016 I decided to disclose the balance 25% in the IDS 2016 and paid taxes. Now my case has been reopened. Can you suggest whether that 75% is exempted u/s 54F or will be taxed as undisclosed income. In the return filed u/s 148 I didnot show the capital gain (75%) and also didnot claim the exemption u/s 54f. Please suggest.

  25. venkatesh kumar says:

    Dear Team,
    Thanks for the beautiful platform. It is gaving me more clarity.

    In zerodha, back office, Tax P&L, combined amount of brokerage is provided.

    At the request of our auditors, I need the split of brokerage for: intraday, short term & long term for the particular year.
    Regards
    S.Venkatesh Kumar

  26. sunil kumar says:

    Dear Nitin Sir,

    I am f&o trader and i have loss 6lakh against 21 lakh turnover..I have no other income. Can I fill ITR without audit. Which form is applicable for f&o trading. Can i fill ITR-3 directly at income tax department website.

  27. Renukaprasad says:

    Hi,

    I did trading first time last year for short term turnover for Rs. 63146.95 and got short term profit of 1104.95. Whether i am liable to file the income tax for this, if so how should i file and pay the tax amount to government.
    Please let me know and guide me.

    Regards
    Renukaprasad

  28. gaurav gautam says:

    hi
    i have bought shares of few companies in 17-18, sold them in same period after few weeks holding each time.
    i ended up having shares of them companies in 18-19, but bought in 17-18 period for 3rd or 4th time. now in tax P/L statement it is showing averaged price of all time holding for 17-18, while some shares have dropped to all time low in 18 fy and some has split. it (tax p/l for 17-18) is showing loss while i have made profit and also deposited advance tax as per my earnings. now i am having some problems in filing ITR 2 as i will have to calculate every buy/sale manually.
    tax p/l is showing average price whether i bought them in FY 17 or 18.
    example- i bought shares of Phillips carbon black under rs.1000 in FY 17 and sold them in same period for profit.
    then i bought the same share again under rs. 250 in FY 18 after the split of share (1/5) .now it is showing loss after average.
    Any ideas i can get tax report for 17-18 period exclusive??

  29. Joseph says:

    Sir,
    I have a STCG of Rs.75,000.00 by trading in Index ETFs (i.e. Niftybees, Juniorbees, Bankbees etc.). In the ITR 2, under Section 111A, it says “gains from sale of equity share or unit of equity oriented Mutual Fund (MF) or unit of a business trust on which STT is paid”.

    While trading in ETFs, STT is not deducted/paid. As such where else can I show this STCG in ITR 2.

  30. s sarkar says:

    i have earned a dividend of rs.7400 from uttam deal and i am also a salaried person, can i get relief 7400/- u/s 80TTA?

  31. VISWANATH says:

    Hi,

    Can you please clarify which ITR form i have to use and do i need to get audit & need to main tain any books for below details.

    Futures realized profit -8820.00
    Options realized profit 1225.00
    Total realized profit -7595.00
    Futures unrealized profit 0.00
    Options unrealized profit 0.00
    Total unrealized profit 0.00
    Futures turnover 8820.00
    Options turnover 16975.00
    Total turnover 25795.00

    Intra-day / Speculative profit 0.00
    Intra-day / Speculative turnover 0.00
    Short-term profit 6719.50
    Short-term turnover 75814.50
    Long-term profit 0.00
    Long-term turnover 0.00

  32. p solkar says:

    hello sir,
    1)my F&O turnover in zerodha tax P&L statement is show to be more than 1 crore and in trade wise turnover xl sheet it shown as 0/zero (accroding to zerodha helpline it’s a mistake) , so what is it ???
    2) though F&O turnover is more than 1 cr. the are over all losses of 70k rupees , so do this needs audit or nor not , i asked a CA and according to him 70k would be considered as turnover not 1 CR and so no audit is required ??? is this right ???
    3) the equity turnover is 49 lacs, and profit is 55k rupees, so does this requires audir or not or paying taxes on the profit is good enough ????

  33. Praveen Jain says:

    Sir,
    I have traded in F&O. if i calculate my turnover script-wise then it is below 1 cr. and profit is more than 8%, hence no audit is required, but if i calculate the turnover trade-wise than it will be more than 1 cr. and profit become less than 8%.

    Kindly suggest, audit required or not ?

  34. Gaurang 8940000824 says:

    Why consider as gift show it as loan what ever you earn would be your increased capital.

    return then with some interest or without interest.

    next time invest in their name if they dont have any taxable income. Why moving here and there?

    Plan it well. Call if more help required. Personal finances matters must be discussed offline

  35. Dil P says:

    Dear Sir,
    I am salaried person and doing trading and futures. My trading and futures has been as per below:

    Intra-day / Speculative profit 1290.60
    Intra-day / Speculative turnover 4282.40
    Short-term profit 37226.50
    Short-term turnover 1925325.75

    Total realized profit -279300.00 (loss)
    Futures turnover 402000.00

    Can you please suggest which ITR is to be filled ( ITR 4s OR ITR 3) Which section in ITR 4s OR ITR 3? I want to include expense towards trading as well in ITR.

    Do I need audit or not ?

    Waiting for your reply..

    THanks in advance !

  36. ram prasad reddy says:

    Hi nithin,

    Can you pls suggest how to compute profit/loss in intraday transactions( speculative)

    As per my knowledge we have to add all positive and negitive differences and show it as a difference and what to enter on debit side and also pls confirm about tax audit limit of that turnover

  37. GS says:

    Hi Nitin
    I have bought shares in my account.When i was in a profit of around 40k , I transfered these shares to dad , mom & spouse through off market transcations as gift.

    Do these transcations attract LTCG or STCG ?

    Regards
    Suresh

  38. viswanath says:

    Dear Sir,

    MY account details are below
    My salary and other income sourcr es are nearly 200000

    Short-term profit 6719.50
    Short-term turnover 75814.50
    Long-term profit 0.00
    Long-term turnover 0.00

    Futures realized profit -8820.00
    Options realized profit 1225.00
    Total realized profit -7595.00
    Futures turnover 8820.00
    Options turnover 16975.00
    Total turnover 25795.00

    Which ITR form is suit for me . I dont want to audit the books.

  39. Mukul says:

    I have made many investments in Mutual Funds, Debt funds using Coin portal. I need to get my P&L report, but I could not find it anywhere in Zerodha portal. Pls guide on how to get this.

    • Matti says:

      We’re working on a P&L reports for mutual funds. Should be available soon.

      • Vishal Gala says:

        Hi Nitin,
        I cannot find P&L reports for mutual funds,
        Were can I download the same.

        • Zerodha Social says:

          Hey Vishal,

          You can now download the profit and loss statement for FY 2017-18 on Console – our new reporting platform. Currently, only the Tax P&L statement for mutual funds is available on Console. For the Tax P&L statement of all the other segments, you will have to check Q for the time being.

  40. invest_novice says:

    Though dividends are tax free(upto 10 Lakhs), we need to disclose them under schedule EI(exempt income) right?
    From where do I get these dividend numbers(From equity and MF)? Only from bank statements or can we also get it from Zerodha q(if Zerodha is the my only broker)? Getting it from bank statement is very tedious since the naming convention for different companies are different. Is there any other easier way to get it if not from Zerodha q?

    • Matti says:

      For now, I’m afraid you’ll have to do it manually. We’re working on a report for this, but it’ll take some time.

  41. Kartik says:

    Sir
    My income is from interest.
    From dec 2017 i started trading
    and my intraday profit is 527 and short term loss of 2882.5 on turnover of 259990.
    Pls assist me to file ITR
    1 which form to be used.
    2. Short term loss can be set off against interest income or not

  42. Punter777 says:

    add sale premium to abs P/L figures for T.O.

  43. Punter777 says:

    The Backoffice Reports are incorrect.
    FnO turnover has to be calculated as absolute sum of Profit Loss each contract pricewise.
    Buy = 200 Bank Nifty Options xyz strike at Rs.20.
    Sale= 40 at Rs.25, 40 at Rs.30, 120 at Rs.12 (avg=18.20).
    If all Sale is taken as avg the the T.O. = 360 (this is what Zerodha does) > Incorrect.
    Each sale (and buy) has to be calculated separately pricewise & absolute Profit or Loss figure thus arrived has to be added, in this case correct T.O. is = 1560 !

    Zerodha, right ?

  44. Rajani Kant says:

    Hi,
    I have not withdrawn the profit and have reinvested it. Do I still have to pay tax and file return.

  45. SaurabhTiwari says:

    This article needs to be updated. LTCGs are no more exempted.

  46. Gautam Prakash says:

    Hey Guys..

    A quick question can STT be shown/added as expense?

  47. Veeresh says:

    Hi,

    I am a salaried person and falls under 30% TDS bracket and this is the first time I’m trading. So need some help in filing the ITR.

    These are my losses:
    ———————————————–
    Intra-day / Speculative profit -6274.30
    Intra-day / Speculative turnover 9614.30
    Short-term profit -3499.15
    Short-term turnover 599428.60

    Total charges

    Brokerage 80.53
    Turnover charges 66.30
    STT 1340.00
    Service tax 26.04
    Stamp duty 61.19
    SEBI charges 3.07
    Total charges 1577.23

    ———————————————–
    Futures realized profit -112035.00
    Total realized profit -112035.00
    Futures turnover 526245.00
    Total turnover 526245.00

    Total charges

    Brokerage 3380.00
    Turnover charges 3165.23
    STT 7529.00
    Service tax 1178.16
    Stamp duty 4521.74
    Service tax 226.10
    Total charges 20000.22
    ———————————————–

    My total turnover is less than 1 Cr (Intraday + Short Term + FnO) = 9614.30 + 599428.60 + 526245.00 = 1135287.9
    My net losses(excluding brokerage + STT and other changes) = (Intraday + Short Term + FnO) = -6274.30 -3499.15 -112035.00 = -121808.45

    I think I need to file ITR using ITR4 form.
    1. Do I need to get this audited by a CA? If yes, then what all documents are needed to do it?
    2. Can I carry forward the losses to the next year? Does my net losses should include charges like brokerage, STT, Turnover charges, Service tax, Service tax while filing the ITR?

  48. dev says:

    Dear Nitin ji,
    If a student gets money from his salaried parents and they file their return.
    Student trade in market intraday and sometimes f&O & very short terms equity with some of the money given by them If he is net loss after in the 1st year of trading (say 20000/-), In this case
    1.Can he attach his loss in parent’s return to get benifit of offsetting of their other taxable incomes?or only he is entitled to his profit/losses?
    2.If he doesn’t want the benefit of offsetting taxable income in future & also being lazy to file something ,is it mandatory to file return?

  49. MG says:

    Dear Nithin,

    Kudos to you for such a wonderful initiative!
    Request you to please help answer below scenarios:
    1) Intraday profit – 20k with 30k as turnover, Short term loss – 30k with 400k as turnover, Rental income – 100k, Interest income – 100k
    Question – is there a need to file Income Tax Return at all? If yes, which one? Is audit required?
    2) F&O profit – 200k with 400k as turnover, Other income 40k
    Question – is there a need to file Income Tax Return at all? If yes, which one? Is audit required?
    Thanks,
    MG

  50. amit says:

    SIr
    I forgot to ask one more question is balance sheet needed for filing ITR 3

  51. amit says:

    Sir
    I have started F and o trading 1 year back but as a result of shorting Sbi bank but due to the recapitalization of banks my trade went wrong and I suffered a huge loss of approx 80000. I am doing research and earning a scholarship of 15000 only. Now my question is I have a huge loss compared to my income so is there any chance for notice regarding it secondly I am not able to face any professional since everyone will laugh at the losses and the income I am earning so is it possible for me to file my return myself.

  52. D CHAUDHARI says:

    DEAR SIR, I HAVE ONE DOUBT
    M total turnover is 20 lacs and i have made loss of about 1 lk, my business incme is less than 2 lacs but my agriculture is income is around 4 lacks . so whether tax audit is applicable for me/?

  53. Mohit Pant says:

    Hi,
    In my turnover report it is showing turnover amount in positive even i have sold those share on loss.
    Ex.. Xyz stock total buy value 2000 Total sell value 1000 but Turnover is coming as 1000.
    I want to know turnover should be in negative in this case or positive.

    I also want to know for tax filing which amount i have to show.

    Consider these Tax P&L value
    INTRADAY TURNOVER ₹247.80
    SHORT TERM GROSS PROFIT less than 15k
    SHORT TERM TURNOVER approx 2 lakh
    do i have to show my turnover value or SHORT TERM GROSS PROFIT value for tax filing.

    Thanks,

    • Matti says:

      The turnover calculation is done only to determine if the there is a necessity of a Tax Audit and we follow the guidance note on Tax audit under section 44AB.
      The turnover for short-term trades is calculated as the sell side value of the stock and is not affected by the profit or loss made. Read more here.

  54. Vishal Patel says:

    Can HUF get tax benefit under section 80c by investing in ELSS mutual fund?

  55. Vasudevan T S says:

    Sir I am 62 years.
    In 2017-18 my Term Deposit interest is Rs.7.22L, My Rental income is Rs. 160000/-
    My trading with Zerodha for 2017-18 is as follows:

    INTRADAY GROSS PROFIT ₹26,289.00 (PROFIT)
    INTRADAY TURNOVER ₹56,089.00
    SHORT TERM GROSS PROFIT -97,474.39 (LOSS)
    SHORT TERM TURNOVER ₹1,56,68,296.51
    LONG TERM GROSS PROFIT N/A
    LONG TERM TURNOVER N/A
    TOTAL CHARGES ₹37,345.63

    F&O
    FUTURES GROSS PROFIT ₹-10,26,892.10 (LOSS)
    OPTIONS GROSS PROFIT N/A
    TOTAL GROSS PROFIT ₹-10,26,892.10 (LOSS)
    FUTURES TURNOVER ₹ 17,79,434.80
    OPTIONS TURNOVER N/A
    TOTAL TURNOVER ₹17,79,434.80
    TOTAL CHARGES ₹44,549.87

    Please clarify the following points:
    1.Should i submit an audited balance sheet?
    2. How much amount of loss i can reduce from my income while computing Tax?
    Can i take the entire loss in one stretch in this year and balance next year ?
    3. Which form should I use?
    4. Do i need an auditor?

    Thanks in advance.

    Regards

    Vasudevan T.S.
    9840851964

  56. Nivedita says:

    Dear Nitin
    1- a very good morning
    2-i want to buy a property worth 1.2 cr .for tat i can avail eider home loan or laon against property(ihave oder one too) or say i can pledge my shares and can get tat loan.
    3-i do futures trading and short term capital gain too
    4-my query is ifi go for loan den would d interest payable i can show as expense on my business income?
    5-if i take loan augainst property or say i get loan from pledging my shares and from that i buy a new house how d interest payable on the loan i can claim as expense??
    regards

  57. Anonymous says:

    One correction ITR-3 was submitted not ITR-4

  58. Anonymous says:

    Hello Nithin,

    I was using SBICAP from dec 2016 to september 2017, I made a switch to zerodha at that time and continuing with zerodha. Though I was not able to completely empty my stocks in SBICAP, I am waiting for the right time. Whenever I See opportunity I sell my shares from my portfolio. Since I was new So didn’t know about the cumbersome tax process and SBICAP simply is not good enough with this.

    My biggest doubt is weather to go for audit or not.

    Last Year, I was at loss (Mostly Intraday) so I have shown the loss as LossesOfCurrentYearCarriedFwd).
    I took a help from CA, he filled it and I have submitted the form.

    But I think the calculations might be a bit wrong, because the broker itself is giving very meaning less P/L statement from which differentiating Intraday and equity was a pain and then the brokerage and other taxes is nightmare. under no circumstances my turnover ever went above 50 lakhs
    Here are some stats

    ITR-4 – Submitted last year before the last date without CA audit.
    So somehow based on the P/L statement, I claimed a loss of 1,37,000
    annual income :-744078
    Tax Saving Deduction :- 148400
    capital gain :- 21802 (Taxd at 15% paid)
    Intraday loss :- 137071 (added here :- LossesOfCurrentYearCarriedFwd)
    Interest income :- added in total also claimed 10000 deduction

    Now this year it is quite complicated because of Zerodha and SBI Cap both

    I have the following scenario.
    Annual Income :- 8,94,000
    Tax saving deduction :- 150,000
    SBICAP Profits in equity (Long term and short term) :-
    Long term profit(LTCG) :- 42500 (after deducting brokerage taxes still apply)
    Short Term profit(STCG) :- 38552 (after deducting brokerage taxes still apply)
    Not able to Distinguish between intraday and STCG
    Futures Loss :- 75566 (added brokerage not sure of taxes) 591227 (Without Brokerage)

    Zerodha losses :-
    Only Intraday loss for the current year :- 3871 (Everything included brokerage and taxes)
    Futures Loss :- 42975 (Everything Included brokerage and taxes)

    Started building Portpolio in Zerodha

    Also I want to set off my long term and short term gains with the future losses (Futures also include BTST now brain capacity is not enough to handle this scenerio)

    This completes the background, here are the queries :-
    1) Not sure of what was filled last year I could only see some (losses of current Year Carried fwd), Since mostly my income will always be above the losses since I trade in that way.
    So I am above 8% profit or Do I need to get an audit since in business income I was at loss last year and this year too but since I am a salaried Employee, I most likely will be getting money for livelyhood It will not fall below 8 % of my total earnings. This year also for business income i am at loss but not in total income. Please suggest if audit is required for my scenario, turnover is less than 50 lakhs, i am just confused of what 8% off total income (Since I am a salaried person) or just business income?
    2) Can I square of interest income and LTCG and STCG profits to Future losses?
    3) Can we claim tax benefit on brokerages also ?
    4) Did we correctly claim the loss of intraday with the tax column :- LossesOfCurrentYearCarriedFwd ?
    5) And is this ok/legal to be a trader and working in IT industry ?
    6) Also the numbers I put in are very close approximates, will that be fine for returns?
    7) It will be awesome if you could put an article showing where to put all profits and losses of various segments under ITR2 and ITR3 and how to setoff the previous year losses as well.

  59. Sanjiv kumar says:

    I m a salaried person & i was filing ITR 1 for Tax.but previous year opened account at zerodha.for FY 2017-18 my salary about 5 lac and intraday gain Rs. 100 ( turn over 13000)and short term loss 25000 ( turn over 4.8 lac)
    Please suggest me which ITR form and carry forward of loss without CA audit is possible?

  60. Pawan Kumar says:

    Dear Nithin,
    Please clearify my doubt as I understand, all EQ P& L report should show total profit from all means like STP,LTP and intra day profit say for 1.4.2017 to 1.3.2018. However for tax purpose it is shown separately as different head.
    But in my report as shown below is not so please clearify.
    My all
    EQ P& L report: Realized profit=5211.32,total charge=3673.63,Net RP=1537.69
    Tax P&L report: Intra Day GP=5544.92, STGP=2070.25, Total Charge=3222.38, LTP=0
    TQ

  61. Jignesh Patel says:

    I have open F&O positions taken in Mar-18. Do I need to show UNREALIZED profit / loss while filing return for FY17-18 year?

    Now if I close them in Apr-18, can I show entire REALIZED profit / loss while filing return for FY18-19?

    • Matti says:

      Hey Jignesh. The ideal thing to do would be to close positions and book profit/loss on the last day of the financial year and reopen the position on the 1st day of the next financial year. But if you have carried forward the position across financial years, best speak to your CA for the best course of action.

  62. Anirban Chatetrjee says:

    Please help me to calculate tax on below data.
    For last 4 years here are profit/loss details on equity/f&o

    Intraday -> 10886
    Short Term -> 169644
    Long -> (-)8804
    Future -> (-)60000
    Option -> (-)67840
    Total Charges -> Equity -> 8804 F&O -> 6918

    Considering all the overall profit coming around 21650, for four years.

    Please let me know which ITR I have to file and what should be estimated tax.

    • Matti says:

      Hey Anirban, if you haven’t filed taxes and have been trading for the past 4 years, best get in touch with a CA.

  63. SANDIP KUMAR DAS says:

    PLEASE GUIDE ME WHICH ITR I SHOULD USE AND AUDIT REQUIREMENT OR NOT F.Y. 2017-18 (A.Y.18-19)
    MY SALARY IS RS. 360000.00
    BANK INTEREST RS. 60000.00
    80C DEDUCTION RS. 125000.00 AND

    SHARE MARKET DETAILS BELLOW:
    Profits INTRADAY/SPECULATIVE PROFIT₹1,736.90 INTRADAY/SPECULATIVE TURNOVER₹2,779.60 (TOTAL OF PROFIT AND LOSS AMOUNT) fox ex PURCHASE VALUE RS. 1000000 AND SALE VALUE 1002779.60
    SHORT-TERM PROFIT ₹-210.95
    SHORT-TERM TURNOVER ₹34,795.30
    LONG-TERM PROFIT0
    LONG-TERM TURNOVER0
    Total charges BROKERAGE₹235.48
    TURNOVER CHARGES₹182.33
    STT₹418.00
    SERVICE TAX₹75.18
    STAMP DUTY₹74.33
    SEBI CHARGES₹3.74
    TOTAL CHARGES₹989.06

    Thanks
    Sandip Kumar Das

  64. Dr.Nagaraj says:

    Sir,
    I am an Individual aged 64 years.
    My income is exclusively from LTCG, STCG and F&O.
    I do not have any other source of income.
    My total income is between 0-3lakhs.
    Some times I meet losses
    My question is :
    1-Which ITR form I should I use to file my tax returns?
    2- Should I pay tax?
    I thank you much in advance for your kind help.
    Regards,
    Nagaraj

  65. Mave says:

    Hi Nithin,

    I am not sure if these query has been replied already in this forum. I tried to find the answer but not unable to do so.
    I have trading in F&O. I have made net losses for last financial year. Do I need to file Income Tax return? Is there a implication even if I have made losses and not filed return. Your urgent reply will be highly appreciated.

    Thank You
    Mave

  66. Seshadri says:

    I have been a Tax payer till 2008. I have not filed IT returns from 2008 ,I have/had no other income.
    I have been trading in FnO from 2012 and never made any profits from 2012 -2017. Also have never filed to carry forward the losses and expenses.
    From 2017-2018, I have started to make small profits in FnO. I understand, FnO trading has to be filed as “Business”. I have following queries in this regard.
    1. Do I have to get Company registration for filing the FnO related Profit/Loss? I guess NOT required. Correct?
    2. Can I file returns, when after detecting expenses from FnO profits is negative (loss)?
    3. Can I use carry forwarded expenses and losses of previous 3 years ( whose Income Tax filling was not done) for this year to reduce the Tax payable?
    4. What to do if my profit ‘minus’ expenses result in less than 6 % of the turnover for the present financial year ?

  67. Pankaj says:

    Hi Nithin you are doing a great job by solving traders and investors queries.

    I have one query:

    I bought 100 shares of Infosys on Monday @1000
    I sell 100 shares of Infosys on Tuesday morning @1020 and again buy them before market closes @1010
    I sell 100 shares of Infosys on Wednesday @1020

    What will be Speculative Income and Short-Term Gain?

  68. mahesh kumar says:

    Does the tax profit/loss statement provided in Q backoffice takes into account the charges incurred (such as DP charges and other charges). are these charges taxable ?

  69. Narendra says:

    I have given order for purchase of mutual funds. Order placed one day before still it takes more time to allot the equity funds. Funds were sufficient. Why it takes more time. Please give me procedure from order placed till allotment.

    • Matti says:

      Hey Narendra, if you’ve placed the order after 1:30 on Friday, it’ll only be processed Monday afternoon and you’ll receive confirmation by Tuesday.

  70. Abhisek says:

    Hello sir
    I am 20 years old trading and investing for short term.
    I had Invested 2.3Lkhs and now i am making a gain of 60k almost.
    I forgot to tell you that I am trading by using my dad’s money i don’t have any income.
    how can i pay tax and if i can which form should i fill and what documents required please help me.

  71. nivedita says:

    dear nitin
    1-a very good evening
    2-Governemnt has taxed ltcg at 10 percent.lets say i was holding a stock for last two year and i wish to sell it tomorrow would ltcg apply on me?? or it will be appplicable to the stocks which are bought after 31 march 2018??
    3-kindly elaborate wen governemnt says index benefit wont be there anymore?wat does dis mean as far as tax filing is concerned??
    4-thnx in advance
    regards

  72. Lappu Jhanna says:

    Are following allowed as expense in FnO Trading:

    1) Fees paid to Non-SEBI registered Advisor/Consultant.

    2) Invoice is available but without GST.

  73. Bhavin says:

    1) If my short term capital gain turnover is 85 lakh and Intraday Equity Turnover is 20 lakh then what is my total turnover? is it sum of both turnover? is it require to be audited?
    2) is it require to pay taxable amount before 31 march? when to pay income tax, before filling return or after filling return?
    3) if my salary is 240000, my total short term profit is 80000, intraday equity profit is 60000 then which form use for filling return?
    4) is it possible to show short term profit in short term capital gain tax and intraday profit with my salary as business income?

  74. Kiran H says:

    Hello Sir,

    Some quotes from this URL and from Varsity. I have my question towards the end:

    https://zerodha.com/z-connect/traders-zone/taxation-for-traders/taxation-simplified

    “You are a trader, you either actively trade stocks or f&o or currency or commodity.”
    “Any income from buying and selling shares even if more than a year is considered as a business income.”

    http://www.incometaxindia.gov.in/communications/circular/circular-no-6.pdf

    “In respect of listed shares and securities held for a period of more than 12 months
    immediately preceding the date of its transfer, if the assessee desires to treat the
    income arising from the transfer thereof as Capital Gain, the same shall not be put
    to dispute by the Assessing Officer. However, this stand, once taken by the
    assessee in a particular Assessment Year, shall remain applicable in subsequent
    Assessment Years also and the taxpayers shall not be allowed to adopt a
    different/contrary stand in this regard in subsequent years;”

    https://zerodha.com/varsity/chapter/classifying-your-market-activity/

    “Thankfully one thing that the circular clarified was that you can be a trader and investor both at the same time.
    So you can have stocks meant as investment for long term, and stocks meant for shorter term trades.
    Just because you indulge in a lot of shorter term trades, wouldn’t necessarily convert all your longer term holdings or investments
    into trades and therefore bring those long term gains under business income.”

    “Similarly, if you are trading F&O or intraday equity trading, you compulsorily have to classify yourself as a trader,
    but you can still show your long term investments under the capital gains head to get the benefit of LTCG being exempt from taxes.”

    My Questions:

    1. If we have long term investments, and at the same time engage in FO/Intraday/short-term – looks like we can take the advantage of long term capital gain. Is that assumption correct? If yes, it would be helpful to update this page with latest information.

    2. In such cases, folks who are in long-term and FO/intraday/BTST/short-term (actual delivery), can we take advantage of short term capital gain also in case of delivery ?

    3. What about BTST, can it considered under STCG as STT is paid?

    Thank you for educating and helping us to take an informed decision.

    Best,
    Kiran H

  75. ajinkya says:

    Hi,

    1. will trading expenses and F&O ,intraday losses can be adjusted against my salary income also ?
    for ex my salary income is 12 lakh, trading expenses 2 lakh, F&O losses 5000, intraday equity losses 38000, short term capital gain 30000, then what will be my taxable income ? explain the calculation for above example, It will be helpful in calculating tax and my understanding, though i will need audit through CA
    2. What all documents will i need to submit to file ITR 3 form for above given example, can i attach P & L reports, will it be sufficient ?

  76. radha devi says:

    hi sir,

    my only income is from share market. my total turnover is 1.2 crores. i have done mostly delivery based transactions and 3 intraday with profit of 300 rs. my profit is 9.7 lakhs, should i need to audit books as profit is greater than 8%. which itr form is to be used and which package to be used for these from cleartax.in . please help

  77. SUBHANKAR SAHA says:

    I HAVE FILED ITR-3 WITH SALARY INCOME RS 340068.
    INTRADAY LOSS RS 63961.
    BUT INCOME TAX DEPARTMENT HAD GIVEN ME NOTICE BY COMPUTING MY TAXABLE INCOME AS
    (340068+63961)=404029
    DOES INTRADAY LOSS ATTRACTS TAX?
    PLEASE EARLY SOLUTION , I HAVE 3 DAYS LEFT TO REPLY…

    • Matti says:

      Hmmm… Seems there’s an issue with either the AO’s understanding or the way you’ve filed. This should be easily resolved. Best check with a CA though.

      • Matti says:

        My bad. I thought this was F&O trading. For equity intraday, the trades are considered speculative and the loss cannot be offset against IT. Best check out the taxation module on Varsity.

  78. Saran says:

    Hi Sir,

    I’m not a regular investor and a salaried Individual ( 12 Lacs Income taxable from salary ). For this year, I traded as below.

    Delivery: INR 260000 ( Buy ) and INR 265000 ( Sell )
    Delivery Net Profit: INR 5000

    BTST: INR 345000 (Buy ) and INR 351000( Sell)
    BTST Net Profit: INR 6000

    Intraday: INR 500000 (Buy) and INR 501700 (Sell )
    Intraday Net Profit: INR 1700

    1) Kindly Help to calculate the turnover as i don’t fully understand how to do.
    2) Kindly advice if i need to file both ITR1 and ITR4 forms ?
    2) Can i show the Delivery/BTST turnover and its profit under Short Term Gain and only show the Intraday Turnover & Profit as Business ?
    3) Audit is required ?

  79. bhalke says:

    Sir,

    I searched for my query i did not find anyone asking this.

    I only do intraday past 2 months and my details are

    INTRADAY GROSS PROFIT ₹ -17,149.85
    INTRADAY TURNOVER ₹ 34,133.65
    SHORT TERM GROSS PROFIT ₹ -305.55
    SHORT TERM TURNOVER ₹ 84,538.40

    Can you please tell me do i need to pay tax for this or any audit required ? and should i mention in my taxable income for this year. ?

  80. Akbar says:

    Sir,
    I am new to trading and my only source of income is profit from trading.If my yearly profit is 10 lacs do i need to file returns separately…if so approx how much tax should i pay?

  81. BHANU PRATAP SINGH says:

    sir ,
    if a investor buy a nse listed equity stock today and sell it after 1 week than you said as per short term capital gain tax 15% is applicable right.so i want to know that this 15% is automatically deducted as in STT ….etc forms or the investor has to fill some tax form and give 15% to goverment himself ?

  82. lakhan singh says:

    I’m a student and do intraday trade daily , earning 100 to 500 rupees daily.
    1. Is it mandatory to me to file income tax return, and what if i do not file return?
    2. When do i have to file income tax return?

  83. Manish says:

    Nithin,

    The loss I mentioned above is completely from Intraday trading of Futures derivative ONLY, which obviously means this is a business loss and does not qualify as speculative loss since this is not loss from trading equity.

    Hence I can set of this business loss against another business income right ?

    this business income is not a salary income since this is not employee-employer relationship but the income as retainer fees due to contract.

    if I can set off this contract income against the massive loss I have incurred I can save a huge tax burden .

    please help clarify, thanks!!

  84. Manish says:

    Hi Nithin,

    I have a trading loss of 11L, but I have my consultancy income of 10L for the FY 2017-18.

    Can I balance both and declare 1L Loss OR is it mandatory to show trading loss separately and consequently requirement of Audit, I am not interested in carrying forward the loss for future years.

    Thanks!

  85. Aniket says:

    Hi Nithin,
    I have annual salary of 4lkhs.
    Along with that,my turnover for intraday is 1lk and and profit is 5000.As it below 8% of turnover, Is it necessary to have an audit for itr4?

  86. deepak kumar malviya says:

    I have done all my trades in F&O and currencies and if i calculate for a particular year overall it was net loss in both the segments. But the overall turnover is 4 crore. So do we have to pay taxes only in case of profits or do have to pay any kind of taxes for the turnovers. As few days back i got notice from income tax saying “Scrutiny assessment proceedings in your case for A.Y. 2015-16” and i have a tax liability that i need to pay. Please clear my concern that do we need to pay any kind of taxes to IT dept against turnover.

  87. balu says:

    hello sir,
    i have some points, may pl. clarify,
    1. what is net profit?
    take a F&NO, turnover is 25000, total gross profit is 25000, the total charges incurred is 18000(3000 brokerage and rest are taxes)
    These 18000 paid to zerodha, in the form brokerage, SST etc, .

    from this case what is net profit?
    1) is it 25000-18000=7000 or more
    2)is it 25000-3000 = 22000 or less
    may pl. reply…

  88. Surya Narayana says:

    I am salaried income tax payer. But also I trade in FnO section. Basically I trade Index futures and Option. In the FY 2015-16 I have incurred a loss in in FnO trading.
    Also I had a land (PLOT) which I bought in the year Fy2006-07 and sold in the Fy 2016-17.
    This year (FY2016-17) while filing Tax return my CA has not setoff capital gain (Long Term ) from land transaction against loss carried forward from FnO business. Is it correct.

    Kindly give your suggestion

  89. TheFinanceSite says:

    It is a bit lengthy artcile but tax is always a typical process. Simple and informative post. Thanks for sharing it.

  90. SUNIL KUMAR says:

    Dear Nitin ji,

    Last time i have discussed regarding ITR. I am intra-day trader in F&O section. I have no other income and had loss 3.6 lakh. I have filled ITR 3 with 3.6 lakh loss. Last time you told me that audit is not required because my turnover was 20lakh and loss was 3.6 lakh. My tax liability was zero. Now today i have received a letter by mail from income tax department that audit is required and my ITR is now defective. They have given 15 days for resolution. Now please suggest best solution.
    Thanks in advance.

    Suneel Kumar

    • Had you previously, before this year also filed under 44AD? Can you share the error code and description on that notice.

      • SUNIL KUMAR says:

        Dear Nitin ji,

        Error code is 33 and error description is ” tax payer has claimed loss under the head profit and loss in business or profession. however he is not filled profit and loss account, balance sheet and audit report.

        Now please suggest best solution. I have filled ITR 3 without audit report because last time you have suggested audit is not required because my tax liability is zero. I have no other income and having loss 3.6 lakh against 11 lakh turnover.

        suneel kumar

        • SUNIL KUMAR says:

          Dear nitin ji,

          I have started trading this year and this is my first ITR-3. CPC has given 15 days for reply. please suggest best solution.

          thanks in advance.

          suneel kumar

          • SUNIL KUMAR says:

            Dear Nitin ji,

            waiting for your reply. Please suggest best solution. I have explained Error code and description which is received from Income tax department.

            Suneel kumar

            • Sunil, You have not filled the profit & loss account & Balance sheet. Getting audited is secondary, but u need to submit this. You can revise your return now. Audit is not required if total income is below 2.5lks.

              • sunil kumar says:

                Nithin ji,

                Thank you very much for your reply. Please confirm about profit & loss sheet and balance sheet. Is CA required for preparation of same. My CA filled only ITR 3. Is separate document required.

                sunil kumar

  91. Sim says:

    Hi,
    First of, this is the best article for a novice like me. It really helped me in understanding the concept. I have a question though.

    If I day trade in F&O and say close it with a profit of 50000. I don’t withdraw this money to my linked ICICI bank account. This money stays in my Zerodha account. Next I buy EQ shares with this 50000. Will I still be liable to pay “Short Term Capital Gain” tax on this 50000?

    Regards,
    S.

  92. anil kumar says:

    hello sir
    My wife started trading since Dec.2016. she started her journey by depositing 1.5 lks cash into bank account and made short term gross loss Rs.1500.00 and F&O net profit Rs.24000.00 in FY 2016-17. she never paid tax & filed IT return. Now in FY 2017-18 till date she made 2.2 lks profit in F&O with turnover Rs. 13 lks and short term capital gain Rs. 1600.00. Now my question is
    1) is any tax to be paid and file return
    2) where to show initial 1.5 lks cash deposited. as she is a housewife
    3)GST registration is required or not.

    waiting for your reply sir
    thanks

  93. syed says:

    Hello sir,

    Im trading and investing for long and short term in equity only.my query for turnover if it exceed above 20 lkhs i have register GST or not. my second query is that we have pay tax on turnover or on profit, if holding for 12 months no tax is required

  94. Divyesh thakkar says:

    I applied for share and it alloted me but now I m confused that can I transfer this share to my family member and thn i will trade nd make profit so the profit is income in the hand of receiver or on the hand of transferer ??

  95. Venkat says:

    Dear Nithin,

    When turnover is sum of Absolute profits in Futures and commodities why in options you add the sale value ?
    It should be only the Absolute profit/loss + received premium in case of only option writers.
    Please think and save people by not printing the Turnover when you are not sure about it.
    Higher turnover is only helping CA’s for audit’s and Income tax officers in name of scrutiny. You somewhere mentioned no harm in higher turnover. Income tax guys taking advantage of this to trouble losers.
    Because of your turnover calculation in the P&L sheet, IT officer is saying i have to pay penalty of 5% on total turnover.

    IT Law says you have to get Audit if profit is 2cr) .
    In options 90% trades fail. Is it ever possible to get more than 8% of turnover except for few jenius.
    This means many option traded will have to get his accounts audited as his turnover will easily cross 2 cr even if he does 40 trades with 5 lakh. This can easily be done in a week.
    With 5 Lakh and 40 trades he has to get a minimum of 8 % on turnover that is 16 Lakhs profit. Is this ever possible ?
    Does this make sense to you ?
    Audit costs Rs 30000. Who benefits out of this? Only CA’s.

    For Option Buyer:
    ============
    Buy price 100
    Sell price 102

    Turnover = 2 + 102 = 104
    8% of turnover is Rs 8.32
    But Actual profit is Rs 2.
    Is it possible to get > 8%. Please ask yourself.
    Adding sale value or premium might apply for option writers when they keep entire premium.
    Atleast if you dont print the turnover we will have chance of explaining to IT Assesment officers.
    Dont go buy what few CA’s say. Please find out the facts correct it. Or dont print anything like other brokers.
    This is my request as i am big victim of this case.

  96. Sundar says:

    Hi Nithin

    I plan to surrender my ULIP Policy that is in loss when compared to the premiums I have paid. The policy is more than 8 years old now. I presume I will receive around Rs 1 Lakh. Should I club this with my total income while filing returns….or should I show this as Exempt Income….Kindly explain

  97. navinder says:

    sir
    I have received I T Notice under 143(1) for F Y 14-15. I am a salaried person. My speculation profit was 2.5 lakhs short term loss is 1.7 lakhs. while filling I showed only net profit and that too set from previous year loss. ITO is asking me to pay tax on 2.5 lakhs speculation profit. My question is my filling return of FY 12-13 and 13-14 i had speculation loss of rs 78 thousand and 27 thousand but I showed combined loss of 2.5 lakhs that include speculation loss,commodity loss and short term loss. i showed short term capital loss carry forward 2.5 lakhs. in FY 12-13.
    Can i set off loss of rs 78 thousand speculative loss from the FY 14-15. some one told me that under sec 154 you can revise and put up to ITO. pl explain and guide

  98. nivedita says:

    hi nitin
    1- good evening to you.
    2- i have done cash intraday loss of 5 lakh on a turnover of less than 2 crore..would i be liable for tax audit?
    3-i havent done no stcg ltcg or futures
    regards

    • If your total income (trading and others) is less than 2.5 lks, you wouldn’t need audit, but if more then yes.

      • nivedita says:

        dear nitin
        1- I acquired loss of 5lakh on cash intraday in ay 14-15 .but while filing itr i have shown loss of 8 lakh
        2-now i got dis notice and assessing officer is asking me how i filed 8 lakh loss when actually it was 5 lakh?
        3- what legally could be d penalty for showing more loss in the itr? i carried forward 8 lakh loss while it actually was 5 lakh including expenses in ay14-15.total income is less than 2.5 lakh
        thnx in advance

  99. rav says:

    I have received notice under 143(2) for AY 2016-17
    it mentions:

    following issue(s) have been identified for examination:
    (i) Whether the investment and income relating to securities(Derivative) Transactions are duly disclosed.

    I am a salaried individiual..filled form ITR1.
    During above period i have done only derivative trading with turnover over 60 lakh and net loss about 2.5 lakh.
    Since i had not filled correct form(ITR4) ,neither i did mandatory audit of my account..what should be my response now. I have to submit my response in e-proceeding(on efiling website) with option of attaching documents.
    What documents to be attached? and what arguments i should mention,a as securities transaction was not disclosed by me (BY filling appropriate ITR Form).

  100. Alok says:

    Hello,

    My CA has said that instead of paying 15% of tax on my STCG, profit should be added to other income like fd interest etc and then accordingly income tax to be paid, he is saying, Actually share profit is business income because transactions are being done frequently. Therefore capital gain provisions are not applicable in our case.
    Pls suggest.

    Thanks,
    Alok

  101. M Dutta says:

    Sir,
    My short term turnover is Rs. 99515/ ( Rs.436/- loss ) and F & O turnover is Rs. 95,527/- with a loss of Rs. 10,275/-. for the year 2016-2017. It is less than Rs. 1.00 cr. My C A say audit will be required. Is really audit required? Please help.
    Thnaks

  102. Alok says:

    Hello,
    My this year income is following.
    Income from FD=7.2 lakhs
    Loss from f&o=2.5 lakhs
    gain from stcg(equity)=1.2 lakhs
    loss from stcg last yr=80 thousand
    Now loss from f&o will get net off from fd interest but my question is will short term equity loss of last yr get adjusted with this year gain, Last yr I have gone through audit, also let me know tax for remaining ltcg will be 15% or will it get added to my remaining taxable income of fd interest

    Thanks
    Alok

  103. Neeraj says:

    Sir, how i matched my turnover of F& O trading with form 10db of my ITR 3 to avoid of turnover mismatch with Income tax deptt. Because sometimes they take turnover mismatch base of 10 db for income tax scrutiny.

  104. GAURAV JAIN says:

    Dear Sir,

    Last year (FY 2016-17) i have filled only ITR-1 because i am a Salaried Person, but did shown my details of Equity profit (7000) and Option’s loss (231000) in the same year, now which form i have to filled to show complete details of last year? ITR-2 ? or ITR-4 ? or ITR-4S ?

    Another question is i have a huge loss from F&O in FY 2014-15 of 13 lacs, and in FY 2015-16 loss of 2.5 lacs and in FY 2016-17 loss of 2.31 lacs , now can i show the details of all 3 previous years loss and carry forward them ?
    If yes then for all 3 previous year or only last year or last 2 year ?
    If yes then which form i have to filled with CA ?

    Please please please help me.

    Regards,
    Gaurav Jain

  105. Ankit Agrawal says:

    I am a Salaried person working in a MNC.
    Apart from my salary; in last year, my Stock trading position is as follows (approx):
    Intra-day / Speculative profit : 4,000/-
    Short-term profit : 40,000/-
    Futures realized profit : 10,000/-
    Options realized Loss : 5,00,000/-
    MCX-Com realized profit : 1,000/-
    My F&O Turnover is more than 2.5 Crores.

    How should I file my ITR.??

  106. V GOPI (DG1729) says:

    Hi,

    The below numbers are for example purposes.

    During the year I have done Intraday trading and incurrred a loss of Rs.3 Lakhs. I aware that this is the speculative business, and to claim this loss in the future years i need to file my return on or before due date. Also, i aware that suppose if we are claiming losses from speculative business, we need to get our books audited U/s.44AB (since less than 8% of Turnover).

    From the guidance note of ICAI, Turnover from Intraday trades will be the sum of absolute values of favorable and unfavorable differences. Here my question comes;

    I think, ICAI guidance note will help to fairly present the P&L only when Intraday traders earns the profit and it is silent on how to present the loss. Please ignore the brokerage and other charges for below query.

    For (eg) During the year, i earned intraday profit from Scrip A – Rs.10 Lakhs & Incurred Intraday Loss from Scrip B – Rs.13 Lakhs which makes up my loss for the year Rs.3 Lakhs.

    As per Guidance note of ICAI, The turnover will be Rs.23 Lakhs (10 Lakhs + 13 Lakhs). To claim the loss of Rs.3 Lakhs, i must write Rs.26 Lakhs expenses. Only then, i can show net loss of Rs.3 Lakhs in my P&L Statement.

    a) Is it fair to show Rs.26 Lakhs expenses, while i have not actually incurred 26 Lakhs? If it Fair, under what head of expenditure we can show?
    b) Any Guidance note/Expert opinion to deal with this matter?

    Regards,
    Gopi

    • a. How is 26lks your expenses? 26lks will just be your turnover. and perfectly fair do declare. Do go through all the chapters.
      b. Best to speak to a CA as well.

      • GOPI V says:

        Turnover Rs.23 Lakhs Less Expenses Rs.26 Lakhs = Only then i can show Rs.3 Lakhs loss in my P&L Account.

        Fact is, The Turnover is Rs.23 Lakhs & Loss is Rs.3 Lakhs. How to Show the gap of Rs.26 Lakhs in my P&L is my question.

        • Venu says:

          Your loss will be the net difference between Sale value & Purchase value and the turnover the absolute sum of these. Your expenses don’t have to exceed your turnover for you to make a loss.

          • V GOPI (DG1729) says:

            If i am going to show the sale value as my turnover and purhcase value as my cost, my life will be easy.

            But Turnover is the absolute amount of profit and losses. Turnover is nothing but my sales for the purpose of Income tax act. My sales is 23 Lakhs.. My Loss is 3 Lakhs… What is my cost? What is the appropriate head that cost should be presented in P&L?

  107. Somenath says:

    Dear Nithin,

    I hope you are aware of a product from a broker (I won’t take name here) who provides a product where you can take margin from broker and use it to trade in cash positions and there is no minimum holding period for the position.

    Although you have margin position, but still you do not have holdings in the demat account.

    You just have to pay taxes on the borrowed capital and provide for any margin shortfall.

    Now my query is that how will IT dept tax this product.

    Suppose I hold the position for over a year. Will this be treated as LTCG? Although I did not technically hold the stock.

    Will I have to fill ITR4 to file the same? Any help would be appreciated.

    Regards
    Somenath.

  108. kunal says:

    Dear Sir,

    I read your article on website regarding Futures & Options. The article was very good & well explained by you.

    But, I have some doubts and queries regarding this.

    Actually, My Uncle is Salaried Employee & Trading in Futures, Options & Shares. But in current FY 2016-17 (AY 2017-18) he was filed ITR using ITR Form 2 with showing the Losses from all Futures, Options & Shares as under Head of Short Term Capital Losses.

    So, My queries :-
    1) Whether IT Department asked any queries & Penalty against ITR Form 2 filed by him…??
    2) Whether he was filed revised return & change ITR Form mandatory….??
    3) If he don’t want to show any losses, then it is allowed now…??
    4) If not done any activity (As per Original Return) then what are the consequences he will be face..??
    5) What is the Solution available to him..??

    Sir, Please try to explained all the queries and doubts.

  109. chella says:

    Sir, whether a student studying in college is allowed to trade in futures and options based on the capital (margin money) given by her mother?

  110. Sundar says:

    Hi Nithin

    For quarterly settlement of funds, instead of transferring back to linked bank account, Zerodha offers the option of investing in “Reliance Liquidity Fund – Daily Dividend Plan” and redemption is done to trading account probably the same day or the next day

    The return for this one day investment is almost close to nil….What are the tax implications of this….is this short-term investment….should we consider turnover for this….For example, if the amount lying in trading account is Rs 1 lakh and it gets invested into the above fund and comes back the next day to trading account, it is like Rs 1 lakh and 10 rupees….If the turnover is 1 lakh and profit is Rs 10, how do we calculate these for IT returns…

    Thanks,

  111. RAJU says:

    HI Sir my short term gain rs 18000 and i have no business.pls tell me whether i have to give tax on 18000 by 15 percent or not.my total income only 18000.so i think its below 2.5 lacs.which form i have to fill.pls tell all us which type of trading force tax audit.is it apply for f&o or intraday.pls tell us so that we take profit and if possible then pls make a video also

  112. sunita says:

    hello sir i am a salery woman and my salary income 5 lacs.in 2016-17 my STCG WAS 20K AND TURN OVER 2 LAC.KINDLY TELL ME WHICH FORM SHOULD I FILL AND WHAT HAPPEN IF I NOT SHOW THESE DETAILS TO INCOME TAX

  113. Rohit says:

    Hi Nitin,

    Thanks for your detailed guide. I would want to understand how to account for tax on BTST trades. Even though BTST are technically delivery trades, no delivery is taken by the trader. From my understanding so far, Intraday trading’s profit will be charged at the trader’s normal tax slab rates while that of delivery trading will be at 15% if less than 1 year is the hold period. Also can you confirm if all the expenses other than STT can be deducted to calculate the taxable amount.

    Example:
    I have executed a delivery buy order for 100 quantity on Friday at Rs. 100 and then sold it on Monday at Rs. 150 before taking delivery. Again I have placed another buy order for the same quantity at Rs. 140. In this case how will I be taxed, i.e. on
    [(150 -140) * 100] or [(150-100) * 100] and at what rates.

    • Venu says:

      This is from Nithin’s blog on Varsity:

      5.6 – BTST (ATST) – Is it speculative, non-speculative, or STCG?
      BTST (Buy today Sell tomorrow) or ATST (Acquire today sell tomorrow) is quite popular among equity traders. It is called BTST when you buy today and sell tomorrow without taking delivery of the stock.

      Since you are not taking delivery, should it be considered as speculative similar to intraday equity trading?

      There are both schools of thought, one which considers it to be speculative because no delivery was taken. However I come from the second school, which is to consider it as non-speculative/STCG as the exchange itself charges the security transaction tax (STT) for BTST trades similar to regular delivery based trades. A factor to consider is if such BTST trades are done just a few times in the year show it as STCG, but if done frequently it is best to show it as speculative business income.

      From: http://zerodha.com/varsity/chapter/taxation-for-traders/

  114. bss says:

    dear sir,
    I am getting conflicting views on my query….i am a salaried employee and also trading in cash and F&O.
    My details are as under:
    Salary income: Rs.15,00,,000
    Profit in equity: Rs.1,50,000
    LOSS in F&O: Rs. -2,80,000
    F&O TURNOVER : 50,00,000

    Clarification on OPTION turnover is also need to be clarified….

    A. Suppose I bought an option for Rs.12000 and sold for Rs. 20000, then profit is 8000……. Then, the turnover is 20000 or 28000 (20000+8000).

    B. Suppose I bought an option for 10000 and it expires at zero….then, loss is 10000. In this case, turnover is 10000(buy price) or 10000+10000=20000 i.e. sum of

    C. Which ITR return is applicable to me…. Further, I got some advise that since my principal source of earning is Salary, hence, I should claim the losses as Short Term Capital Loss….

    D. Do I need digital Certificate? Do the Returns need to be Audited?

    Can I file ITR2 now, i.e. before due date… and then file revised ITR as ITR4, if required. Please guide me as soon as possible.

    • Venu says:

      A. Total turnover will be the sum of favorable & unfavorable difference (8000) plus premium received on sale (20000), so total turnover would be Rs.28000.
      B. Turnover will be 0 on worthless options, so total turnover would be 10000
      C. ITR 3 you’ve to use. Income from trading futures & options on recognized exchanges (equity, commodity, & currency) is categorized under non-speculative business income as per section 43(5) of the Income Tax Act, 1961. Your losses in F&O, can’t be considered as Short term capital loss.
      D. If you’re declaring 8% profits and paying taxes, there’s no need of audit.

      • bss says:

        Sir,

        Thanks for your prompt reply….but one question is still not clear to me…..SALARY BEING THE PRINCIPAL SOURCE OF MY EARNING, CAN I SHOW THE f&o LOSS AS SHORT TERM CAPITAL LOSS……. AS BEING A SALARIED EMPLOYEE I am not supposed to indulge in business.

        • No F&O loss can’t be short term loss. There is nothing in showing business income on ITR even if you are employed.

          • bss says:

            Thanks Sir,

            A. You people have really cleared my doubts….I need to file audited ITR3 return…..and so the last date is 30.09.2017. Am I correct?

            B. And I will be able to set-off my losses in F&O in next FY, if in gains, RIGHT??

            C. Do I need digital Signatures to file the return?

            Regards,

            • Venu says:

              A. Yes, if it’s an audit case, last date is 30th September, otherwise it’s 05th August.
              B. Yes
              C. If it’s an audit case, digital signature is required.

  115. RANJU KUMARI says:

    HI DEAR I AM A HOUSE WIFE.MY INTRADAY TURN OVER 2477 WITH LOSS 2200 AND MY SHORT TERM TURN OVER 54000 WITH PROFIT 6000.PLS TELL ME WHICH FORM I HAVE TO FILL.TAX AUDIT APPLIED OR NOT.I HAVE NO OTHER INCOME SOURCE.HOW MUCH TAX SHOULD I HAVE TO PAY THOUGH I AM NOT IN TAX SLAB.MY PROFIT ONLY 6000

  116. Arvind Kumar says:

    hi NITHIN I AM A SALERY MAN AND MY SALERY INCOME 6 LACS.I START TRADING IN DEC 2016.MY SHORT TERM INCOME 15000-{DEMART IPO}-AND MY SHORT TERM LOSS 5000.I SOMETIMES DO INTRADAY TRADING AND MY INTRADAY TURN OVER 12000 AND INTRADAY LOSS 7000.MY SHORT TERM TURN OVER 3 LACS.I STILL NOT TRADING IN F&O.KINDLY TELL ME WHICH FORM SHOULD I HAVE TO FILL.TELL I AM IN TAX AUDIT OR NOT.I ALREADY FILL FORM 1 AND SHOW ONLY SALERY INCOME.I DONT KNOW MUCH ENG.KINDLY TELL ME .MY LOSS BELOW 8 PERCENT

    • Venu says:

      As per section 43(5) of the Income Tax Act, 1961, profits earned by trading equity or stocks for intraday or non-delivery is categorized under speculative business income. As such, you’ve to use ITR3.

  117. Subhankar Saha says:

    SALARY RS 273000
    F&O TURNOVER RS 28860 AND P&L RS -27180
    INTRADAY SPECULATIVE P & L RS -62000
    WHICH ITR SHOULD I FILE? DOES I NEED AUDIT IN TERMS OF MY F&O DATA?
    URGENT PLEASE NITHIN,TODAY IS LAST DAY…..

  118. dev says:

    Hi Nithin,

    I would appreciate if you can clarify few of my doubts on taxation. I have been trading through zerodha since 2016. Since last year I have been trading F&O and I have few queries regarding filling IT returns for the same. I did go through the taxation module and few of the queries in the module.
    following are the details for my IT returns for the year Apr2016-Mar2017,
    F&O loss is appx 2 Lakhs
    Brokerage and taxes from trading- appx 40k
    Income from salary for the year was nil as I was unemployed during the financial year.
    No other source of income.
    I have other deduction for LIC/Mediclaim premiums.
    Following are my queries.
    1.As per my understanding I should opt for ITR4.-My CA says it has been renamed as ITR3 now. So should I be using ITR3 for filling my returns?(since the module says ITR4 for business income/F&O income)
    2. My turnover for the year(F&O) was more than 1cr but less than 2crore. Income from trading was less than 8%/6% of the turnover(loss of 2lakhs). my income for the year was nil from salary, so it comes below the minimum taxation slab.Do I need to opt for audit?
    3.Since F&O is treated as business income do I have to maintain book of accounts?
    4. My CA gave me an excel sheet which says under Income from business- net profit us 44AD@ –% of gross turnover. I understand(but not 100%sure since I referred to income tax website to understand 44AD and it has technical jargons from accounting) that I am taking benefit under section 44AD treating my income from business as presumptive income. Is it right/ regular practice to take benefit under section 44AD if one is trading F&O?
    5. Do I have to maintain book of accounts even if I am not eligible for audit for the year apr2016-mar2017?
    6. Is there any format for book of accounts I can refer to if I decide to maintain it myself as you mentioned in the module that we can our-self maintain our book of accounts.please circulate one on our zerodha website if you can. it would be of great help to us traders.
    request you to post the reply asap, Would be grateful, you replying by tomorrow.

    Regards,
    Dev

    • 1. Yes ITR3
      2. Not required. But this is grey area, always advisable to audit.
      3. Yeah best to.
      4. Yeah, you can take benefit. Check this module: https://zerodha.com/varsity/module/markets-and-taxation/
      5. No, only in case of audit
      6. Book of accounts is essentially a simple excel sheet. Income and expenses row by row. Let me see if I can get a sample and put itup.

      • dev says:

        Hi Nithin,
        thanks for the prompt reply.
        So in my case as mentioned above for 44ad,my presumptive income would be computed at@6% of the total turnover to take advantage of 44AD. However I still can declare my actual income below it and also below the limit for tax liability i.e250000-since I have no income (from salary or whatsover). and i do not have to maintan book of accounts and audit not applicable. Is it the correct way to do it?
        I know its always better to maintain book of account, which I will do but Am I correct about whatever I have mentioned above?

        Please reply ASAP.

        Regards,
        Dev

  119. Tarun Kumar says:

    Hi Nitin,

    My name is Tarun Kumar and I am little confused about the ITR this year, because a) I am salaried and I have started regular trading from past one year or so. b) I have made losses under trading for FY 2016-17. Below are my details (trading) and further below are my questions on ITR and taxation. Request you to please help me on this as this is little urgent and extremely important.

    Trading / Income / Loss details:

    1. My gross income from salary is 8,70,000 Rs.
    2. My Total Taxable income (as per Form 16) is 6,84,600 Rs.
    3. My total Tax deducted (as per Form 16) is 63,830 Rs.
    4. My Intra-day / Speculative profit is -434.65 Rs.
    5. My Intra-day / Speculative turnover is 545.85 Rs.
    6. My Short-term profit is 174.65 Rs.
    7. My Short-term turnover is 24218.95 Rs.
    8. My Total realized profit (Options) is -55366.00 Rs.
    9. My Total turnover (Options) is 423129.50 Rs.
    10. My Total charges (including brokerages) and (for EQ and FnO) are 11585.15 Rs.

    Since I am not sure on the calculation of Total turnover and due to non-clarity on 8% calculation for audit rule and also due to the salary component and lastly, due to change in ITR form names, I am looking for advice and help on below questions / points. Please help me with this.

    a. Firstly, please confirm which ITR form to use and file.
    b. Whether or not I need audit? (please clarify using calculation)
    c. Where and how to show losses?
    d. Where to show Total charges I have paid (including brokerages and STT)?
    e. Should I show the expenses on Internet, phone and Laptop purchase?

  120. Kinshuk Chandra says:

    Hi Zerodha Team,
    I see that you are providing Tax PnL, but my CA always asks for buy and sale date of the stocks showing up in short term and long term capital gain.

    Is there a way, I can easily get that in zerodha?

    Regards,
    Kinshuk

  121. pramod says:

    Hi,

    Can anyone please help me with below query, for last financial year below are my trade transactions value:

    Equity Intraday gross profit: ~2L (-ve)
    Equity Intraday turnover: ~3.2L
    Equity Short term gross profit: 18k (-ve)
    Equity Short term turnover: ~22L

    Do I need tax audit?
    Is it compulsory to declare profit/losses of equity intraday/delivery trades in ITR. If yes, which ITR form I should have to fill (Also an IT Employee) ?
    Can I carry forward my loss in next financial years?
    Do we have any CA service/guidance available for tax filling in Zerodha?
    Thanks.

  122. zuber says:

    i am salaried person , i have invested 90,000/- in Stock market 7 years back, recently sold it @ 38000/-, and such i have lost 52000/-. i have received form16 from my company.

    in this situation i would like to know…
    1. can i book my loss ?
    2. how ?
    3. can i do it myself as i do normally from form16 data and in this case adding my loss to particular section ?

    either you can suggest better idea to save some tax amount.

    thanks in advance for quick response.

    • Yeah this is long term loss and you can show it on your ITR. But since long term gain is tax free, you can’t setoff the long term loss against any other income.

  123. Sundarams says:

    Thanks a lot Nithin for your time and efforts.

    Came to know the following from a reliable source: (Disclaimer: Cannot guarantee the genuineness)

    How does IT Department knows what we have done in markets, especially the derivative segment of F&O. How do they get the details of what we do in the market.

    Basically, the details of Securities Transaction Tax (STT) goes to IT Department. Even if you have multiple trading accounts and multiple brokers, all the STT linked to your PAN number is summed up and calculated automatically. The IT Department has this detail in their automated systems.

    The system roughly multiplies the STT by 400 times and the red alert is raised.

    For example, say your total STT paid for the year is 1800, the system calculates the turnover as 1800*400=Rs 720,000, which is the total turnover and then they look in the ITR filed by you to see if this amount tallies and whether tax is paid for this.

    So roughly showing the net profit as 40 times the amount of STT in ITR would work out, it seems.

  124. Priya says:

    Hi,
    I started trading commodity this year and I hv no other income. I made a loss of around 1,35,000. I am filling ITR 3 now with the help of your video about tax filling in your channel just to inform IT dept about my trading activities. Thanks for that video. Filling P&L is easy, but do I need to fill Balance sheet? Is it ok if I just fill P&L sheet alone?
    Waiting for ur reply.

    • Niranjan says:

      Hi Priya , I am also having same query , I did commodities this year and had loss and hence ITR-3. But if in loss Audit is must . Also from this Year only filling P&L is not enough. Balance sheet is must. I do not have expertise to fill Balance sheet and i am on business trip outside India thus cannot contact any CA.

    • If your turnover is more or if you need an audit, you will need to fill the BS also. Check this module: https://zerodha.com/varsity/module/markets-and-taxation/

      • Priya says:

        Thanks for your reply Nitin,
        As I mentioned, I traded only in commodities and I hv no other income.I assume I don’t need an audit.My turnover is 114473, my loss is 107398. I filled my losses in P&L tab of ITR3 as shown in the taxation video. My doubt is
        1. Do I need to fill BS also?
        2. Is entering the losses in P&L tab is right or I am doing it the wrong way?
        3.I think I don’t need an audit. Am I right?

      • Niranjan says:

        Hi Nithin,
        My commodities Turnover is 1.95 Lacs only . I have salary income So do i need to put this Salary income in balance sheet ? Any CA you know who charges minimal fees to Audit ?. No other Business I have 1. Income from Salary 2. FnO & MCX trading. are the two transactions. I have taken numbers from Zerodha Yearly P&L statement and its straight forward to identify Loss , profit & turnover from this statement . But Balance sheet is something I am not able to fill need some help. Which Income should be declared as Prop capital, Asset etc.

  125. Akash Sharma says:

    Hi,

    My turnover is around INR 70 lac and loss of approx. INR 1 lac (99% short term and some minor intra day)

    Do i need a tax audit ?

    Thanks,
    Akash

  126. n.khincha says:

    Sir . i am a retired person and fully involve in fo trading. i hv no other business or income source apart frm interst etc frm FD OR MF. my query is do i hv to mentain accounts of everyday trading manually too or global report frm my stock broker is enough for incomtax return.

  127. Pankaj Kumar says:

    In Tax profit and loss report, we get gross profit for intraday and short term trading separately but all charges are combined. How to know charges for intraday and short term trading separately?

  128. kanti prasad kaushik says:

    Dear Nithin Sir,
    In my tax p&l all eq loss = 9367.35 +1413.20 (total charges) = 10780.55
    Turnover =18370.65
    In my tax p&l all –FO Loss =83554.50 +53964.44 =137518.94
    Turnover =103552028.75
    From the above kindly tell me if I am supposed to get AUODIT from CA.
    An early reply please.
    With thanks and regards,
    Kanti Prasad Kaushik
    Zerodha client id RP 5879

  129. Chandramohan says:

    Dear Nithin
    I am a salaried person and having professional income (doctor) and also capital gains, filing itr4 in the previous years, not liable to audit so far.
    This year my income is as follows
    Salaries 1295000
    Professional income 91000 (receipts 182000, claimed 50% section 44ADA)
    Short term Capital gains 13000
    FNO loss 43000 (turnover 79000)
    I failed to show the losses. And did not fill Balance sheet and P&L as I claimed section 44ADA.
    I already filed ITR3.
    I want to know whether my accounts needs audit. If audit is neede, can I file revised return.
    Regards
    Chandramohan

    • Ideally you should have shown your losses and carried forward as it can be setoff against future gains. For this you would need an audit. The other option is since your F&O turnover is less, declare 8% of that turnover as profits and pay taxes on it accordingly and avoid audit. You can revise your returns now.

  130. Sumit says:

    Sir
    i have two doubts.
    1) On your website under P&L tax profit is given,Is this profit excluding charges?
    2) Is Xl file downloaded from your website is sufficient for tax filing?

  131. Saranya says:

    Hi,

    I am a housewife and I have no income.

    My husband starting trading account in my name, transferred 1.5 lakhs from his account to this one and started doing FnO trading

    After reading this blog, we calculated and he said turnover was around 6 lakhs and loss was around 50000….He had also invested Rs 50000 into an equity scrip which is still in demat….After this FnO loss, he had completely stopped trading in my account.

    His idea now is to sell this equity scrip which is 10% lower than the buy price (holding period is now close to 11.5 months) and then close the trading account or keep it idle without trading/investing.

    I have never filed IT up to previous year as I had no income…Even if income was there, it was very less in the form of taking tuition, will not cross 3000 per month, but even that has stopped…

    Also, I do not plan to work for the next few years, so there will be nothing in the name of salary for me in the next few years and since trading is also stopped, there will be no transactions at all in trading account

    Considering that I have no income for the next few years and since IT dept will have access to these trading done until now, should I go ahead and file IT….Even if I show 10% as profit of 6 lakh turnover, I would come below the tax bracket….what would happen if I do not file IT now….what would happen if I file IT now and with no income in the foreseeable future years, what should I do….

    If I file IT once now and do not file at all for the next few years with no income being the reason, what will be the IT department reaction….

    Kindly enlighten….

  132. Sundarams says:

    Thanks a lot Nithin for your efforts.

    Let us all praise Government of India for the rules and regulations and IT laws. What can be made simple and clear with a single announcement has been made tedious and stressful. After all, we are poor retailers and not rich politicians, why should they care about us.

    I have a doubt Nithin. I have subscribed to an Equity Recommendation Service pay hefty fee for a year of service. Where do I show this expense in ITR-3?

    Also, while filling out Profit and Loss account, it is now mandatory to fill Balance Sheet also. In simple terms, let us say if proprietor capital is Rs 2 Lakhs and Rs 1 Lakh is invested into equity, can it be filled into (PARTA- BS) (TAB APPLICATION OF FUNDS) (Point 2 – Investments) (b) (i) “Equity Shares, including share application money” in the ITR3 Form.

    (in my opinion, I do not want to go to a CA , I do not want him to laugh at the loss I have made neither do I want to pay him either, filling out the ITR3 is just to dodge the monitoring software at CPC. In spite of loss, I am filling out as 10% profit of turnover) (My one question is how much is the IT system efficient to calculate my exact turnover when the rules themselves are not clear)

    Thanks a lot for your efforts.

    • Advisory can be shown under other expenses. Balance sheet needs to be filled if audit required. It is best to go to a CA for this, he is like your doctor – you shouldn’t really care for what he thinks. IT department gets access to all trades done on the exchange. If your turnover is more, best to get it audited.

      • Sundarams says:

        Thanks for your reply.. My turnover comes close to 7 lakhs and loss is around 60000….But after showing 8% of it as profit and clubbing it with my salary, my income tax comes close to nil….so I had decided to show 8% as profit….

        In the video posted recently by Zerodha on how to fill out ITR-4 Form, he said that when profit and loss sheet is filled out, it is mandatory to fill out balance sheet also….otherwise, the CPC software would mark this as error and send notice….I did not know that balance sheet must be filled out only when audit is required….Please correct me if I am wrong…

        Oh My God! No respite even after suffering loss and trading in FnO….Filing IT is a big pain in the a**

        • Till your income is less than Rs 50 lacs you can fill only business balance sheet (no P&L) in case equity trading assets are investment/ stocks (DP holding) + balance with broker / bank balance.
          You can include asset linked to bank statement like mutual funds / fixed deposit so the income will be linked to class of assets owned .
          Ex: interest for FD’s , dividend for shares , rent for property.

          • Sundarams says:

            Thank you very much for the reply Nithin.

            Actually, I got more confused now.

            So I assume I have to fill out:
            P&L Sheet
            53(i) For assessee carrying on Business
            a Gross receipts 53(i)a
            b Gross profit 53(i)b
            c Expenses 53(i)c
            d Net profit 53(i)d
            and in BS
            6 In a case where regular books of account of business or profession are not maintained -furnish the following information as on 31st day of March, 2017, in respect of business or profession)
            a Amount of total sundry debtors 6a
            b Amount of total sundry creditors 6b
            c Amount of total stock-in-trade 6c
            d Amount of the cash balance 6d

  133. Niranjan says:

    Dear Nithin,

    I had Equity ( Intraday + Short term ) , FnO , MCX Commodities trading for year 16-17. I am confused between ITR3 and ITR4 forms since both has Business P/L attributes.
    I searched over google it says The old ITR-4 tax form has been renamed ITR-3 for F.Y. 16-17 (A.Y. 17-18)
    The Current ITR3 Form is to be used who have income from proprietary business or are carrying on profession. Wherein The current ITR 4 is applicable having income from a business or profession and who have opted for the presumptive income scheme as per Section 44AD ,Sec 44ADA and Section 44AE.
    Please guide which Form to fill.

  134. Yashwant says:

    Hello Nithin,

    I am a salaried person in 30% income tax slab .

    My profit is 940 (Intra Day trading) + 8000 (Equity Short term) +16500 (F&O).
    My turnover is 940 (Intra Day trading) + 370000 (Equity Short term) +30000 (F&O).

    I have read and tried to understand a lot of things from varsity. Still to clarify more below are my queries.

    1. Can I show 940 (Intra Day trading) +16500 (F&O) as business income and 8000 (Equity Short term) as short term capital gain.
    2. Can I declare myself as investor despite the income from F&O as this is my first year and going forward in coming years I will be more interested in investing longer term.

    Regards
    Yashwant

  135. Mahesh Patil says:

    Hi Nithin

    Just help me with few of these

    1) STCG i cannot deduct STT as expense from my Gross income, but rest of the expenses i can ?
    2) For INTRADAY Trades, can i deduct as an expense STT?
    3) FnO can i deduct STT as an expense as FnO income is a business income?

  136. Vikram says:

    Also how can i claim benefit of “stock advisory service” fees i have paid and can i set it off it in the same way as i claim brokerage fees in ITR2 field “expenditure wholly and exclusively in connection with transfer” ?

  137. Vikram says:

    I am Salaried person and I have show short term losses on account of sale/purchase of shares in 2012 and carry forwarded it. But I have not shown this carry forward loss while filling next subsequent ITR.

    Can I show this short term captial loss this year and set this off against short term capital gain on account of sale/purchase of shares this year?

    Also for salary person without any other income except short term capital gain on account of purchase/sell of shares , do i need to fill ITR1 or ITR2?

  138. Vinayak says:

    Hi Nitin,
    Just wanted to clarify my doubt regarding ITR filing. If my salary is less than 2.5 lakhs P.A and I have gained short term capital gains from investments, then should I show both the salary and short term capital gain in ITR OR just pay the Short term capital gain tax and show it in the tax details in ITR Form?

  139. Rinkle says:

    Dear Nithinji,

    I took loan from bank and used partial loan amount to pay social function expenses and part of amount lend to friend.

    I understood that for FNO turnover<1 CR and profit < 8% than audit is must required. and i have loss approx 40K in FNO and turnover is < 1CR. in this case Do i need to show Bank loan amount in Audit books?? i am bit confuse if Audit should be cover only expense related to FNO trading ??

    Thanks in Advance.

  140. Akash says:

    Dear Nithin

    I have a query on tax treatment of intraday charges (like STT, brokerage, Exchange charges and all other taxes) that we incur during intraday trading (speculative business income).

    Can intraday charges be used to show as expense for business income to reduce taxable income for current FY or do these charges have to be carried forward similar to intraday losses and can be set off only against speculative gains in any of the next 4 FYs

    Eg. For FY 2016 – 2017 my intraday charges are Rs.1000, intraday losses Rs. 3000 and business income is Rs.50000 so can I reduce my business income by intraday charges ie Rs.1000 to show my taxable income as Rs.49000 for FY 2016 – 2017

    I have gone through Markets and Taxation Guide but not sure on above case

    Thanks

    • Ah no, intraday charges are incidental to your intraday trades. So you need to add it to your intraday losses, carry forward and setoff against speculative gains only.

  141. Raj says:

    Hi Nithin,
    1) My Turnover is 1.4 CR and i am in losses of around 6 Lakh in F&O? Do i need a audit?(I am Least bothered about carrying them forward)
    2)Also i work as a Software Engineer Fulltime(So one of the CA’s told me that i can show F&O Losses as Short term Capital losses and no need to show it as trading as a business income, because i am in a full time job). Is it right?

    Regards

  142. Sunil Kumar says:

    Dear Nithin ji,

    Please note that i have filled my ITR3 form wiith the help of CA. Now I have only one point regarding turnover calculation;
    My Short term profit 7000 and sales value 52,000
    My long term profit 13,000 and sales value 45.600
    My equity intraday profit is in negative -7000 while sale value is 34lakh and turnover is 124,000 (add positive and negative value)
    My F&o loss is -3,45,000 against turonver 8,45,000 (positive and negative value)

    I have defined short term and long term in investment so i have not consider it in turnover calculation.
    For turnover calculation i have add intraday positive and negative value but My CA told that total sales value shall be consider for intrday. Please clear the same

    As per calculation, turnover is —1,24000+845,000=9,69000
    As per my CA, Turnover is–34,00000+845000=4245000

    Which one is correct please clear. Also note that i have not consider sales value of short term and long term in turnover because it is showing as investment.

    Please give your opinion.

    Thanks,
    Sunil

  143. chandru mehta says:

    Dear Nitin

    I have recd a notice from Income Tax which says

    limited scrutiny whether the investment and income related to securities transcaction are duly disclosed.

    My actual invstement in shares is Rs 1.8 lakhs , the balance was Intraday trading around 12 crores turnover .
    What do i evidence information do i need to provide to them to convince them

    a) P& L accounts file
    b)Variable time PNL or any other documents that you suggest .
    c) What footnotes do i mention.

  144. Y SRINIVAS REDDY says:

    Dear Nitin,

    Greeting for the day, first let me appreciate for putting your efforts in clarifying all the doubts..Good initiative…Thanks.

    Request you to clarify my below doubts as well.

    1) I am having continuous F&O losses from the FY 2014-15 (2.77 Lakh), 2015-16 (6.03 Lakh) and 2016-17 (1.40 Lakh). I am confident of closing in profits from the FY 2017-18 on wards. I am salaried person and every year i have been filing returns regular thorough ITR-1 only. I have not declared my F&O losses for FY 2014-15 & 2015-16 in IT Return.

    2) Now, can I include the 2014-15 , 2015-16 losses in FY 2016-17 or not. ITR -1 returns for 2014-15 and 2015-16 FY is filed with in due date. If not can i revise the returns now for 2014-15 and 2015-16 inclding F&O losses.. What is way out.. because i am confident of making profits in FY 2017-18 on wards.

    3) Since i am salaried person and F&O trader which ITR form to be used for 2016-17 FY..

    Thanks & regards
    Srinivas Reddy Y — Zerodha Customer

  145. Mahak says:

    Hey!
    i have a doubt that if I have loss while trading in F&O, which means i am declaring profit less than 8% which means would get covered under audit..
    so is it necessary for me to get my transactions audited ?? (though my transactions are not of huge amount)

  146. gautam says:

    Hi Nithin,

    You really very well explained things!

    But i still have 1 doubt,

    1)I have 7 lakhs loss in options and 1 lakh loss in future in FY 2016-17.Can i carry forward this losses and setlle it off against the profits i make in the coming years in cash equity segment or is it like i can settle this losses with the profits in FNO only?

    2) According to my turnover, i need audit also. which ITR form do i need to fill?

    Regards
    Gautam

  147. SIMON says:

    Hi Nitin
    I am a NRE and I do trading in futures.I am into loss.do I still have to file income tax as I got a letter from income tax to file my returns.I did it online as they provided me the link and I filled it up saying than I am an Nre.AM I right on my path
    Thanks
    Simon

  148. Vijay says:

    Hi Nitin,
    I had loss of Rs.26000 in which Rs.25400 is in intraday and around Rs.600 in short term equity.
    My gross income from salary is 2.26 lks for FY16-17.
    which ITR i have to file ? and is there anyway i can avoid audit as my profit is less than 8% of turnover which is around 47500. Please suggest suitable solution as soon as possible.

  149. Sunil Kumar says:

    Dear Nithin ji,

    ITR-1 & ITR-4 are showing only in income tax website in “file online return” section. How I get ITR-3 form.. Is ITR-3 is sufficient or both ITR-1 & 3 are required to fill tax. Also note that you have upload one Computation sheet for complete calculation. How can be get computation sheet in online filing. Please brief me about online filing process.

    Thanks,
    SUNIL

  150. Sunil Kumar says:

    Hello Nithin ji,

    I am full time trader in equity & future derivative. My broker had submitted single profit &loss sheet for equity. They have not defined short term and intraday P&L. Can i consider all equity as a short term profit & loss.
    Also tell me about turnover, they had submitted script wise consolidated turnover for F&O and not given trade wise turnover. can income tax dept raise any issue regarding turnover in near future. As per my opinion, for exact turnover calculation, a lot of calculation required. Is there any problem possible for turnover.

    Please share some sample pics of filled ITR4 form so that we can easily file return. I have no other income and my f&o loss is 5lakh..which form i can fill.

    Also confirm that is account book & balance sheet mandatory for F&O Trader because CA demand huge amount for balance sheet.

    Thanks,
    Sunil Kumar

  151. Puja Sharma says:

    Dear Sir,

    Please note that I am doing trading mostly in F&O Segment. My equity trading is very less. I have no other income and doing trading full time in f&o segment. My equity profit is 7,000 in short term and 8000 in long term while my F&O loss is 3 Lakh. My F&O Turnover is 9 Lakh. I have some following query:-

    1) Last time I was working and filed Income tax return easily by using form 16. Now this year I have started trading full time and F&O segment is speculative business so can i file tax return without CA. Can I file tax return directly by website.

    2) Also confirm, is tax audit applicable for me because my loss is below 8% of turnover but I have no tax liability.

    Equity Profit short term -7000
    Equity Profit long term -8000
    F&O Loss-3 lakh
    F&O turnover-9 lakh
    FD Interest-20,000

    Please confirm, Can I file tax directly without CA. If yes then which form is applicable for Speculative income. Please guide. I login income tax website but little confuse about equity and f&o tax filing. Please share some filled sample form for short term, long term and Speculative business tax filing.

    Thanks in advance.

    Thanks & Regards,
    Puja Sharma

  152. Vishal says:

    Hi Team,
    For showing capital gain,i need to put purchase and sell date at H&R block site.
    But i didn’t received them from Zerodha.

    Can i put total value for sell and buy their? As my calculation report is matches with them after putting these (sum value for all shares) values.

    Waiting for reply.

  153. M K says:

    Dear Sir,

    Please help me how to get the audit done and charges involved in it.

    As a salaried person of fall in income tax slab,which form should I use for ITR, although I have huge F&O losses to audit & to file???

    Thanking you,

  154. Apoorv says:

    Since income from F&O is treated as Business Income, what expenses can I use as deductions in income tax as a salaried employee trading options from my own account?

  155. Udit says:

    I had a few queries regarding ITR Filing.

    1. I work in Govt Sector. Last year I started online trading with Zerodha and had traded in CPSE ETF , Punj Lloyd etc and got some profits which are partly kept in my demat account and partly I transferred in my bank account. Kindly guide me which ITR (1, 3 OR 4 ) do I need to file and also guide the stepwise procedure to do the same.

    2. Also I have got Form 16 from my employer but interest proceeds which I am getting on my FDs IN BANK ACCOUNTS, How do I need to declare it.?

    3. I also started investing in mutual funds since last December, but havent redeemed any of them’. Do I need to declare anything regarding that during ITR Filing.

    4. I, last year purchased CPSE ETF (index related to Navratnas like REC , CONCOR ) from Zerodha and then sold it. But it is not showing anything regarding this investment in my Profit and Loss Report for last financial year I downloaded from Q Back office from Zerodha.I spoke to Zerodha helpline .They said the trading done for CPSE ETF is not included in the P & L report.Now What needs to be done in this regard and how to file tax for that.

  156. Harnish says:

    Hi Nithin,

    This post seems to be very old now so is there anything that you think would have changed over time? Can you please update this post or highlight the changes if possible?

  157. suresh says:

    Hi Nitin,

    I Have traded commodities in MCX with turnover of 459200 and incurred losses of 175000 and no other income.

    Nitin could you please help me with the below points.

    1.if i need to go to for Tax Audit.
    2.For tax filing can i go as Short term capital loss declared in ITR-2 .

    Thank you in Advance.

  158. debabrata says:

    Hi nitin,
    My turn over is below 1 cr and I have a loss of 2 lakhs. do I still need a tax audit as my profit is less that 8 percent?

  159. Deepak Malkani says:

    Hi Nithin, I tried my hand on Nifty Options in the month of March 2017 with a turnover of approx 30,000 and loss of 17,000. Is it mandatory for me to file ITR-4 and get the accounts audited (as profit is less than 8%) OR can I just include this with my intra-day transactions and file ITR-2? I will obviously not carry over this loss. Appreciate your advice.

  160. Rohtash Singh says:

    Ur post r very useful. I have two doubts.1. Can interest charged by my broker on delayed payment for f&o margains. This interests paid by me can be treated as expenses.2. Trading in f&o be shown as business. Which types of expenses can claim as rebate from profit earned from f&o. I have no other sources of income. Please give ur value able guidance. Many thanks in advance.

  161. Mahendra says:

    Hi Nithin,

    Thanks for such an informative article. Below is my query.

    I am investor for last 10 year mostly traded with time horizon more than 2 years. From Jan (2017 ) this year started derivative trading. For FY 16-17 return perspective

    a) as I am involved in derivative trading, should I consider myself as trader?
    b) I have long term profit ( for example 20,000 k for securities bought in 2014 and sold in 2016) and net loss in F&O of RS 11,000. I have few shares in my DMAT account more than 3 years.
    Do I need to show as RS 11,000 as losses from trading OR RS 9000 ( RS 20,000- 11000) as profit.

    Can you please help on these points?

  162. Topper says:

    For F&O (Equity, Currency, Commodity) — absolute sum of settlement profits & losses for F&O) per scrip and the sell side value of option contracts
    How to calculate the sell side value of options contract ? Is it Premium X Quantity or is it Total value of the Nifty contract

  163. Sreekes says:

    I have close to 35000 from Equity selling which I have purchased in 2015 sold in Feb 2017.

    I am at 20 % tax slab on my salary, where I need to included this equity profit in my ITR, which ITR form I have to use?

  164. Lalatendu Panda says:

    Why Zerodha doesn’t provide tax report as required to fill table f of Schedule CG.

  165. Amit Kaushik says:

    Hi Nitin,

    Thanks for putting in effort and document such a nice and informative article. Though it solved many doubts but still there are doubts left.
    I am an active trader in F&O and Equity since 2014 and i have been incurring an overall losses every year until this year. I have never filled ITR for my profit / losses from trading until now but now i want to showcase all my profits and losses from trading along with my salary in current year ITR .
    I am not clear on how to calculate my overall benefit %age but my overall turnover is < 1 crore.

    As i self file my ITR, I am looking for help for:
    – Identifying how to show case losses for past few years from trading.
    – How to report expenses used for trading purpose.
    – What documents to submit.

    Can you help or point me to the right person who can help ?

  166. Trader cum investor says:

    Hello Nitin
    Thanks for all of your hardwork and your team efforts. This knowledge sharing is beyond the words.

    I have following queries:

    1. I have been trading in the account of my mother name and I am transferring money to my mom account from my bank account. Wtever loss or profit from trading, How should I go for efilling? Should I declare loss and profit in my mom e-file or should i declare it in my name by clubbing of income. I have transferrd lakhs of money to my mom account.
    2. I am having intraday loss and short term loss both in trading account. As turnover is less than 2 cr, by having a intraday loss straight away means it is less than the 8% of turnover. Should I have to go for audit? Can I show it as short term capital gain all of the losses?
    3. I have heard from one of CA who says that Turnover for audit is only intraday turnover, not the short term delivery turnover? Is this correct?
    4. Why income tax has created such a law which says that turnover less than 2 cr and profit is less than 8 % of turnover. 90% of market players incur loss and with this law, all are coming under tax audit. Am I interpreting it correct? Because loss is like profit = 0 which is always less than 8% of turnover

  167. Sajeesh says:

    Hi Nitin,

    I have been trading in F&O as well as long term investing for some years. I did not have clarity on these rules previously so i did not declare the losses incurred from my F&O trade while filing returns all these previous years. Now, is there a way to re-file the returns of previous 2-3 years to show these losses so that i could get the carry forward advantage from the year when i start making profits ?

    Another question – I have some long term capital gains as well in addition to F&O profits/losses. I assume these 2 items should be categorized separately while filing return (ITR3 i guess) . Or, will i be able to sum this up while declaring

    Thanks
    Sajeesh
    9447125297

  168. Sachin says:

    Hi Sir,

    My total turnover is Rs 53813/- and total profit is -32313. Please do let me know if I have to get the audit done?

    I am bit confused with this line.
    If turnover < ₹1 crore and profitability is less than 8% of turnover (Section 44 AB)

    Thanks
    Sachin

  169. Rahul says:

    I am a psu employee (salaried) and heavily do intraday trading and all the capital gain is short capital gain but not a huge amount. So can I declare my self as trader even after being a PSU employee.

  170. Senkguttuvan says:

    Dear Sir, Could you make the Tax P&L statement of zerodha in Q, the final one that we can use for calculating profit/loss and use it as reference for filing without requiring CA. Also i would like to know why IPO gains/losses realised on the listing day are not reflecting in profit/loss statement anywhere in zerodha’s records. Other than that we get all the data pertaining to Tax Filing in P&L statement itself.

    • For IPO stock, if you can go to holdings and look at discrepant holdings, you will be able to add buy price for the IPO stock. Once done, it should show up. We are completely revamping Q. The new one will have everything.

  171. chetan says:

    Dear Nitin,

    PL inform last date to file returns in case of audit in case of individual who wants carry forward losses

    Trading as business ( no salary income)

  172. Debu says:

    My statement shows

    Brokerage 556.20
    Turnover charges 520.46
    STT 2002.00
    Service tax 150.74
    Stamp duty 320.28
    SEBI charges 32.05
    Total charges 3592.46

    So filing return should not consider STT as expenses and the rest should be added up against trading expenses. Am i right?? or only trading charges can be shown as expenses?? please clarify. Thanks

  173. Shiju says:

    I’ve noticed that the TAX P&L statement provided in Q portal is incorrect. Whom do I contact for getting it corrected? I can explain them in detail as to what is triggering incorrect numbers. Also which file should I give it to CA for auditing?

  174. Sunil Kumar says:

    Nitin Ji,

    First of all thanks for your reply. I also want to know maintain of account book in case of F&O is mandatory. If i will maintain account book then audit will also applicable to verify all the entry.

    As per above mentioned detail, Can I go direct e filling without audit and account book. I have no other income and have loss 3.5 lakh so can i fill direct ITR4 with carry forward option. I talked to one CA and his charge around 30,000 with audit and account book. I am already in loss and don’t want extra burden of auditing and account book maintenance.

    Can I filling e-return directly. I there any problem.

    Thanks,
    Suneel Kumar

  175. Sunil Kumar says:

    Hello Nitin Ji,

    I am regular trader since august 2016. I am generally trading in F&O Segment. I am almost 70% aware about return filling but i have some points, please clarify;
    1) My F&O turnover is apprx 10 lakh for 2016-17. Turnover sheet received from my broker. My total loss is 3.5 lakh and i have no extra income. Now please clarify, audit is required in my case because as per rule, if profit is less than 8% then audit is required. As per my turnover, my profit is below 8%.
    2) Some friends told me that IT department will send notice incase of return filling without audit because they told me IT dept has software which detect automatically profit or loss below 8% of turnover and then generate alert. On that basis, IT will send notice without checking it manually.
    3) Please tell me approx charges of audit. Individual trader account is not like any company account so what will be the reasonable charges for audit.

    Thanks in advance.

    Regards,
    Sunil Kumar

    • 1. Since your total income is not taxable and turnover less than 1crore, not required.
      2. Notices are sent when trading as a business is not declared on ITR.
      3. I think varies between Rs 5000 to Rs 20000.

      Check this: https://zerodha.com/varsity/module/markets-and-taxation/

      • Sunil Kumar says:

        Dear Nithin ji,

        I have discussed to one of CA regarding Audit incase of loss in F&O. He has informed that in 2016, IT dept sent notice to everyone who has profit below 8% of turnover. He has given example of one client..
        Client profit was 20,000 and turnover was 6lakh and no other income . Every time IT Dept rejected return and at last, they filled return with 8% profit and after that it has accepted the same. Please explain your view because i am submitting my final return.
        My F&O Loss is -3.5 lakh against 8lakh turnover and i am not going for audit beacuse i have no tax laibilty.

        My intraday loss is -8100 in equity. will equity turnover add in F&O turnover. Intraday turnover is applicable or not.

        Thanks,
        Sunil

  176. Clara says:

    Hi,
    I am trading in commodity and currency market from May 2016 to till date and have made a loss of Rs.1,07,392, the turnover is Rs.1,14,472. I have no other additional income. Do I have to declare it to the tax department? If so,
    1. Which ITR form I have to fill?
    2. Do I need an audit? or consult a CA professional?
    3.Can I just fill the form on the income tax website or is there any other procedure I have left out?
    4.Will there be any problem if I don’t declare the losses to IT department?I am least bothered about the advantage that I can carry forward the loss for 8 years. If I won’t face any problem, then I can just skip declaring the losses to IT dept.

    • 1. ITR3 from this year.
      2. Not required
      3. Yes you can, but since ITR3 is a little complex, best to use help of a CA
      4. If you don’t declare, there is a chance of getting notice asking why you didn’t declare. IT dept won’t get to know if you have made profits or losses, you will have to then go explain. To avoid this, best to declare yourself.

  177. Raj says:

    Hi,

    In the FY 2016-2017, I did some intraday transactions not realising that these could be potentially considered as business income. I made a small profit too of around Rs.14,000. Most of my portfolio is as an investor and was mostly loss since I was a learning period from me. Now does this mean that I must file ITR3 even though I do not do any business or can I show this small intraday profit elsewhere and not under income from profits and gains from business or profession? I am worried here that lack of knowledge on tax treatment of intraday profits may have landed me in soup as firstly I may be required to file a return meant for business and secondly, in future, it may be considered that I have kind of declared myself as trader when that is not the case.

    • Raj says:

      One more query in addition to my earlier one. If I need to file ITR3 only for intraday profits with non-intraday transactions being noted from an investment perspective, does that mean that for future years also, I have to use ITR3 and treated as trader even though that was never my intention to be a trader and also if I do not do any intraday or commodities or futures? My main work is farming and interests from fixed deposits. I have recently retired from employment.

      • In future you can switch back to ITR2.

        • Raj says:

          Thanks Nitin. Unsure if you saw the main query too. Could you share your comments please vis-a-vis “Now does this mean that I must file ITR3 even though I do not do any business or can I show this small intraday profit elsewhere and not under income from profits and gains from business or profession?” Or can it be added under Short Term Capital Gains itself wherein the total loss already declared comes down by Rs.14000? Further, I noticed that even ITR2 has a section for “Profits and gains from business or profession”. When is this to be used for and can it not be used for declaring intra-day profits through ITR2 itself? Sorry for so many questions. Really, the government has to stop this torture of the middle class who are dabbling in equities and are suffering from such ambiguity and insensitive provisions of the Income Tax Law. I understand that sometime back, there was a petition from Zerodha to the Government. Perhaps you should re-open the petition. In any case, I am drafting a letter and propose to send it to the Honourable PM.

          • hmm.. ideally you should use ITR3 and show intraday as speculative business. But I know people who would show it as STCG on ITR2. Best to speak to a CA. In ITR2, schedule BP is only for a person who is a partner in a firm and receives remuneration/interest.

            • Raj says:

              Thank you Nitin both for the knowledge and patience. I know you are a busy man. Despite that taking time for us is simply extraordinary! The CAs here are themselves confused but will try and see how best to proceed. Thanks once again. Do let me know in case you restart the petition. I would love to contribute to that.

  178. Shubham Agarwal says:

    Hello Sir,

    I am new to the world of stock market and have a doubt. I am a student and as of now I am not earning any income from any source whatsoever. I have started trading and have bought shares of less than Rs. 2000 as of now. I just wanted to know that is there any tax liability on me as an individual investor since my income is less than Rs.2.5 lakh as of now?
    And if no, am I even required to file an ITR as of now and what will be the income level when I have to start filing an ITR?

  179. Afzal says:

    I don’t want more explanation.
    They are asking for”Statement of trading account/ demat account in case of shares”
    From do I have to download this document

  180. Afzal says:

    Can you please help me with taxation procedures.
    I am trading only in equities. How to file ITR. What are the documents that I have submit for this.
    Actually I have contacted tradetax for this procedure. But no response from their side. Please help me with the details.

  181. KANCHAN POTDAR says:

    Hi, Nitin sir,
    I am a housewife (Age- 36) .I do shares trading through zerodha. The report in zerodha’s online tax portal , it shows in FY 2016-17, I have to pay tax of INR 4072 ( Equity = 1052 and F&O= 3020) .I am doing this trading through my Bank of Maharashtra account ( I am a sole account holder) . As i am a housewife, i have no income. My Husband is depositing money in this Bank account.
    Please guide me whether i am liable for tax and how to pay the tax ? and file the return ?
    Please reply.

  182. Chetan says:

    I am salaried person and I made loss in previous 2-3 years but did not show that loss during the filing of income tax.
    Only thing, I can think of is, I am loosing that carry forward loss benefit if I didn’t show.
    Will there be any problem ?
    Also can I go back and update previous file return to show losses ??

    • If you file the losses after the last date, you lose the benefit of setting it off against profits in the future. The only possible issue is, you could get a notice asking why you didn’t declare trading losses. Which you can explain.

  183. Shiv says:

    Dear sir,
    I am a investor since 2012 and made some profit though i have not booked . i open zerodha account and start F&O in jan 2017 in starting period i made some profit and my daily turn over crosses 60 laks as i do MIS some time it crosses 1 crore too. but now because of some wrong trade i am in net loss of 1.3 lakhs and i received a message of TDS Deducted approx 68 k . i want to know can this TDS be claimed back as i have not made net profit , or some other taxes i need to pay as if it comes to turn over it would me much more because of F&O MIS trading ,if yes then how to do this through ITR

    • Venu says:

      Who have you received the message from? Brokers don’t deduct TDS. Do you have another business for which you receive payments against which TDS may have been deducted? Trading Income has to be self declared; nobody would deduct TDS for it.

  184. Yogender says:

    Can gateway fees that I pay for NPS (National Pension Scheme) Tier 2 be deductible from short term capital gains on debt funds.

  185. Yogender says:

    Are any of the charges that I pay to Zerodha (1) Cash Transfer (2) COIN account fees (3) Annual Demat charges (4) Zerodha Account Opening Fees deductible from Short Term Gains that I make from equity funds, or from my taxable salary income.

    • Akshay.A says:

      Hi Yogender,
      Any amount you pay to acquire or sell can be considered under the STCG deductions.
      You can refer here

      • Yogender says:

        Thanks Akshay, please specifically clarify for all the 4 kind of charges that I have mentioned that I pay to Zerodha. Which of these can be claimed as deductions.

  186. Vijay says:

    Sir , I want to file IT returns with your expert , well in advance , don’t want to wait up to july , as I am a state govt employee, kindly do the needful immediately

  187. Thirumal kumar madhavan says:

    Dear Sir,
    I need a clarification on the compliance required by IT department regarding derivative trading.
    I do not “write” (sell) options, but have bought and squared my options positions.
    The query is as under:
    “STT-04 Sale of option in securities(derivative) in a recognized stock exchange.
    STT-05 Sale of futures (derivative) in a recognized stock exchange.”

    Does the word “Sale” in this query refers to “Writing of option” or “Squaring of option that I hold(before expiry)”.
    Regards,
    Thirumal

  188. MAHESH GUPTA says:

    I am trading in F&O, Commodities & Delivery segment. Can turnover of delivery is also club with F&O or I have to show separately short term profit from delivery & tax @ 15%.

    In preparation of trading account what should be shown as turnover of purchase. I have loss of Rs.500000/- in FY 2016-17 & turnover is Rs.900000/- (Profit 200000/- & Loss 700000/-), so we have to show sale is 900000, purchase is 1400000/- & loss is 500000/-.

    Opening stock 0 Sale 900000
    Purchase 1400000 Gross Loss 500000

    Like this we have to show in trading accounts. Please suggest.

  189. Bosco Carvalho says:

    Sir,

    If I have sold the stock in F & O first in FY 2016-17 and purchased it later in the FY 2017-18. So will the sale price will be considered while calculating the Turnover for the Future and Options

  190. Santosh Iyer says:

    Dear Sir,

    I regularly indulge in F&O Trading.  I have incurred huge losses for fin year 2016-2017 and I intend the carry forward this loss in my Income Tax Return.
    My turnover (sum of profits & losses on each transaction) for the fin year 2016-2017 is Rs 1.5 crs & loss is Rs 35 lacs.
    I want your views whether as per Income Tax rules, I need to get TAX AUDIT done for the above.
    I need your expert views to double check on this Income tax provision.

    rgds,

    Santosh Iyer

  191. Shiv says:

    Dear Nitin,
    I am a PSU employee & details of profit/loss incurred by me in FY16-17 is as follows:
    Intraday profit: 80,000 Intraday turnover: 1,60,000
    Short term loss:4,00,000 Short term turnover: 2,00,00,000
    F&O profit: 6,00,000 F&O turnover: 8,00,000

    a) Can I declare myself only an investor(not a trader) in this case? If yes, then how shall the tax be calculated?
    b) Can I declare myself an investor for short term loss and trader in F&O segment?
    c) If I declare all the three profits/loss under business income, do I have to pay 30% taxes(income>10L)
    over 80,000-4,00,000+6,00,000 i.e. 2,80,000
    d) If I declare myself as a trader/investor this year, is it possible to switch the stance to investor/trader in the later years?

    Regards

  192. PRASOON KUMAR GUPTA says:

    Hello Nitin,
    I am zerodha client and trading regularly in F&O and Equity
    FOR FY16-17, as per Q
    For F&O
    My gross profit is: -5lacs(approx)
    Turnover: 12lacs(approx)
    For Equity
    My gross Profit: -9k
    turnover: 17k
    i am confused, how do i calculate whether i need tax audit or not, since my gross profit is negative.
    ALSO SPECIAL REQUEST TO YOU, CAN YOU PLEASE MENTION IN ZERODHA GENERATED TAX REPORT THAT WHETHER ANY CLIENT NEED TAX AUDIT OR NOT(BY CALCULATING TURNOVER AND ALL), THIS WOULD BE VERY BENEFICIAL FOR ALL OF YOUR CLIENTS.

  193. M S says:

    Sir,
    status-Business income
    Realised & Unrealised profits were to show in trading account or P&L .
    Turnover of fno & options, intraday stocks & short term delivery trades where to show & How to show- in trading or P&L, How it will match with net figure of profit or loss ie. reconciliation of all statements as per Q.zerodha back office…..which will make things simple & self explanatory. please explain in detail with presentation.
    Thanks for your detailed statements to clients ..its unique & perfect system….with great value to clients.

  194. amar says:

    Hi Nitin,

    first of all, i would like to thank you for your efforts to simplify the taxation process for common people. though i have lot of queries which i will post time and again. i have been trying to get the P&L statement for the past financial years on Q-back office but i am not able to get it. Need help on that.

  195. Debashis says:

    Hi Nithin,

    My query is regarding taxation of long term capital gain on debt mutual funds. As I am student in the current financial year, I do not have any earning from salary. However I have earning from mutual funds. My doubt is that if my total short term plus long term capital gains is less than 2.5L , should I still have to pay 20% tax on my long term capital gain of debt funds? Should I still pay 15% tax on my short term capital gain of equity funds? Thanks.

  196. Prakash says:

    Hi,

    I would like to know if short term and long term capital gain statements are readily available on Zerodha’s site. Also, for how may FYs these statements are available on site?

    If statements are not available on few clicks, what all details will be available on Zerodha’s site and how easy it will be to calculate it and how much time will it consume?

    Thanks

  197. Charu says:

    Hi Nithin,
    I have some confusion about the term “TURNOVER”
    I am posting my F&O trades on 31.03.17
    (i) Bought 3 lots APRIL AMBUJACEM (Lot size 2500) @ 236 and sold @ 237
    Buy value = 7500 x 236 = 1770000, Sell value = 7500 x 237 = 1777500, Profit = 7500
    (ii) Sold 2 lots APRIL BHARTIARTL (Lot size 1700) @ 344 and bought @ 345
    Sell value = 3400 x 344 = 1169600, Buy value = 3400 x 345 = 1173000, Loss = 3400
    My net profit for this day is : 7500-3400 = 4100
    What will be my turnover for this day ?

    • Everyone has different take on it, but the most conservative of calculating, 7500 + 3400 = 10,900. You could also use your way of calculating, because that is the final credit/debit to the ledger.

  198. Sundar says:

    Thanks Nithin for your time

    I have a query. Analyzing from the client base of Zerodha, do traders (retails especially) really make any profit by trading in F&O. Roughly, how much percentage of people succeed….I have a feeling it might be less than 10%.

  199. bond says:

    i am trading from north east nagaland please tell me my tax liablity

  200. Sundar says:

    Hi Nithin,

    I am a Zerodha client. Thanks a lot for your initiative

    My salary and other interest income is Rs 5.3 lakhs (Rs 5,30,000) Deductions are HRA Rs 50000, 80C Rs 160000

    From Zerodha Q:
    EQUITY: (Short Term Gross Profit is) Rs 13,908 (Short Term Turnover is) Rs 165827 (Total Charges is) Rs 905

    F&O: (Total Gross Loss) -6,725 (Total Turnover) Rs 4,34,256 (Total Charges is) Rs 6,313

    I have made a loss of Rs 6725 in F&O and Profit of Rs 13908 in Equity Short-Term.

    What is my turnover, should I take it only from F&O or add Equity Turnover to it….Is it Rs 434256 or Rs 600085 (434256 plus 165827)

    I do not want to go for Audit (Does this make sense?) and would like to show 8% as profit and pay the damn tax….Now, let us say, the turnover is Rs 6 lakhs, the 8% comes to Rs 48000…The Expenses are STT other charges Rs 7218, Net Bill Rs 15600 (1300*12), Computer Depreciation Rs 5000, Total around Rs 28000. Now, this Rs 28000 gets deducted from Turnver Rs 6 lakhs, Rs 5.72 lakhs, and 8% of this is 45760, am I right here..

    So Total Income 530000+45760=575760. Net Taxable after all 80c and standard deduction comes to Rs 115670, of which Tax liability is Rs 11567

    ALSO PLEASE KINDLY ORGANIZE A SESSION WHERE TO FILL IN ALL THESE DETAILS LIKE TURNOVER, PROFIT, EXPENSES ETC. IN ITR-4

    Thanks a lot

    • Show only F&O trading as business. Equity you can show as short term capital gain (@15% tax). Btw, we have taken a conservative approach to calculate turnover, you can be aggressive and reduce turnover even further. But you are right about the other bits. Check this calendar, we have a webinar on filing ITR on APril 6th https://zerodha.com/educate/

  201. Pratap says:

    Hello Nithin, have a query on RGESS. My demat account with zerodha is not RGESS compliant. But can i purchase some RGESS based MFs through my account to claim the deduction?

  202. Girish Sahani says:

    Hi Nithin,

    You’ve mentioned:
    “Long term capital loss from shares where STT is paid cannot be adjusted against any long or short term capital gain from any source.
    An interesting thing to note is that if you do the same transaction without stock exchange( off the market transaction), i.e transfer of shares with demat slip, you can get your long term capital loss set off against long term capital gain of other asset.”

    1. If i bought a listed stock from NSE and paid STT, transfer/sell it off-market after 1 year with a loss, can i set off this loss against long term capital gain of other listed shares (gain and loss are in the same FY) ?
    2. Can i transfer/sell it to a family member (not as gift)?
    3. Can you please share the process for above.

    Thanks!!

    • 1. Hmm.. long term capital gain has no tax to pay, so no point setting off.
      2. Yes
      3. You can ask for DIS slip from the broker, mention the dp ID of your family member, fill the stock details and submit it to the broker where you have demat.

  203. Merin says:

    Nithin, why do we follow the policy of FIFO for ST capital gain. Say for example I bought SBI on April 1 at Rs.250 ,100 quantity. And say on december I bought 10 more SBI and sold 10 on January. Ideally it should be negated with the last 10 SBI i bought na..Is RBI mandating like that? According to me, it shld happen in FILO. Can you please clarify.

  204. Rahul says:

    Hi,
    I have a salary account wherein I earn else a lakh per anum. I have a some short term capital gains from delivery and Intraday markets.
    Curious to know whether such capital gains are liable for tax at 15%, even though I don’t fall under normal tax slab and pay no taxes on any other income??

    • Upto 2.5lks you are exempt from any taxes. After that you have to pay 15%. So if you have 1lk income and 1.5lks in STCG, no need of taxes on STCG.

      • Raj says:

        Further to question above, if let us say income is not within the basic income slab, then do we still incur tax @15% on intraday and short term equities? If so, then is it possible to use ITR2 rather than ITR3 since intraday was not meant as business and only 12k profit? Thanks.

  205. Ramesh Nukala says:

    Hi Nithin,

    I am salaried employee and my taxable salary income is 5 lakhs. I made a loss of 10,000 in options trading. The profit/loss is less than 8% of turnover. I have the following questions.

    1. Which ITR form should I use to file returns?
    2. How can I carry forward the loss?
    3. Do I need of auditing?

    Thanks,
    Ramesh Nukala

  206. Merin says:

    Hi Nithin,
    I have been trading from 2013 but filed ITR1 only for my salaried income as I was unaware of the tax procedure. Now is there a way in which I can revise the tax filed for assessment year FY14, FY15 and FY16. I am a client of Zerodha

    • FY 14-15 won’t be possible to revise. FY 15-16, if you have filed the returns within time, you can revise now. FY 16-17, you will have to file it this year anyways.

  207. Devang says:

    Hi Nitin,
    This is really an excellent document.
    I started trading in Zerodha Account exactly from 1st April 2016.
    This is just to make sure whatever report is generated will be from single DMAT account and that will be from Zerodha only.
    Now, In this fiscal year from the duration of 1st April 2016 – till date (24 Mar 2017), my total P&L statement comes out to be -ve 10.2 L in which 1.2 L loss is in Futures and 8.8 L Loss is in Options.
    When I download the P&L report from Q Zerodha, It gives me total TURNOVER value as 1.14 Cr.
    Total brokerage I have paid is : 39 K out of which 4.8 K goes in STT and 4.5 K goes in Service Tax.
    Now, Overall I have made a loss of 10.2 Lks for this trading year, and my Turnover as per calculations is coming to be 1.14 Cr.
    I understand this is a Contract Turnover and not the Settlement Turnover.
    Overall P&L is coming out to be LOSS 10.2 Lks

    1. Do I need to maintain Book of Accounts? – I think YES, because My contract turnover is above 1 Cr.
    As far as I understand : this Turnover which is mentioned in Report : is Contract Turnover and is only for the sole purpose if you need to maintain book of accounts. Please correct me if i am wrong.
    2. Can I carry forward this loss of 10.2 Lks for next upcoming 8 years ?
    3. In the current year, can i deduct any other income like Rent I am receiving + Interest from FD’s ?? Lets say this amount is 3.5 L > Can i deduct 3.2 L from 10.2 Lks and carry forward the loss of ( 10.2 – 3.2 = 7 Lks) for next 8 yrs ?
    4. If I can carry forward the loss of 7 Lks for next 8 years, And I make a profit of 7 Lks in next year : Can I consider my total P & L additional Income from F&O will be ZERO ?

    Thanks
    Devang

  208. Harsh Jain says:

    Dear Sir,

    One more question is that i also have some physical shares purchased with the broker.

    In the broker statement, it is showing the value of my shares as per the market rate.

    How shall i treat this in my books to tally with the brokers books?

    Thank You.

  209. Harsh Jain says:

    Dear Sir,

    I deal in futures and options, mostly in options. I understand the provisions very well. There is one problem only that my trading account statement which i received from my broker is not matching with my books.

    There are some entries in my broker statement like transfer to NSE/F&O or transfer from BSE/Cash which i am not able to understand and track.

    Is there any other account statement which shall be asked from the broker?

    Can you please tell how many accounts are maintained with the broker?

    Can you please tell which account statements shall i ask from my broker?

    Hoping for your early reply.

    Thank You.

    • Harsh what you can do is, look at all funds transferred into the trading all funds withdrawn from trading, all stocks purchased, all P&L, any options premium that is currently open. This is enough to reconcile. You can ask for the ledger from broker to see all funds transferred in and out.

  210. chetan says:

    hi nitin,

    My turnover ==4 lakhs ( f&o,STCG,intraday equity) full time trader no salary

    combined losses=== 80 ,000 rs

    Do I require audit to carry forward losses

    • Hmm.. yeah.. Another way is since turnover is so less you can declare a profit of say 8% of your turnover which is 32k. Since 32k is within the IT slab ,u have no tax to pay and you can avoid audit. But by doing this you will not be able to carry forward the loss. Check the taxation module here: http://zerodha.com/varsity/

    • Harsh Jain says:

      There is no requirement of audit as the turnover is only Rs.4 Lakhs but you will need to maintain books of accounts for the purpose of carry forward of loss.

  211. mathew jacob says:

    If I have a separate partnership firm dealing with other business but not very active can I combine my share income using ITR3

  212. Aman says:

    In Q back office, short term turnover shown is on the sell side. For tax audit purposes, is this turnover relevant? As I have read above section thoroughly, I can see for tax purposes, turnover is the sum of settlement of profit and loss. In Q back office, where can I get to know that?

  213. Omkar says:

    8 th march 17 live session on youtube on taxation i heard ,
    It was quite informative Mr kamath
    My small querry is
    should profits or losses made while trading commodities and cds futures contracts be clubbed together with equity Non speculative businesses income

  214. Ashish says:

    Hi Nitin,

    Though I have Zerodha account since 2014, I have got realized profits in this year :).. so need your advice.

    I am a salaried person, I checked Kite->Reports-Tax P&L and it shows

    Realised short term profit= X Rs.
    Intraday profit = Y Rs.

    Didn’t get any details on charges cut (so that I can deduct from above) but say they are Z Rs.

    I am write, Total amount (X + Y – Z) = A Rs. is what I have to add as my taxable income and deduct as per individual slabs. Am I missing something ?

    Thanks in advance.

  215. SUNIL says:

    One more Q. If we have loss of 5 lakhs in last year and we paid STT n brokarage around 1lakh, then next year we gain 10 lakh and we paid STT n braogarage around 1.5 lakh.
    a) First year we need not to pay any tax is it right?
    b) Second year shall we able to deduct first years STT and second year STT as expenses or only able to deduct second year STT?

    Thanks

  216. SUNIL says:

    Sir in trading income shall we deduct STT n Brokerage charge along with internet bill, computer depreciation etc

  217. digbijay says:

    hello sir,
    i have a doubt that my income is less than 2lacs and no other incomes. i am trader and i buy some stock as cnc and sold it before one year many times and have 30000 profit , and also i have done intraday trading and profits of 20000 , so my question is that if i am not coming in the income tax slab why i give stcg tax 15% of 30000 and why i have to file tax return file.is the STCG tax is different from income tax and bound to pay or not , if yes then how i will pay the tax. my turn over is less than i crore.

  218. chetan says:

    Hello ,

    I trade actively intra day equity,f&o,long term,short term turnover less than 1 cr no salary income

    Can i use ITR-4S

    If income less than 2.5 l +profit less than 8% do I need audit

    thanks
    chetan

  219. Joe says:

    Thank you very much sir for your guidance

    As i have not filed tax yet is it possible that i can file old taxes( back three years)

    Joe

  220. Joe says:

    JOE

    February 8, 2017 at 9:47 am
    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

    Thanking you for your earlier advices thank you
    joe

  221. Bhushan says:

    Hello Nithin,

    A big thanks to you and your team @ Zerodha for this initiative.

    My income sources are –
    i) Interest income from Fixed Deposit (FD) & Recurring Deposits (RD)
    ii) Short Term Capital Gain (STCG) from Equity (Not intraday). I buy equity stocks through Zerodha after paying STT etc. and keep it for days or months but less than 1 year and sell it after making some desired profits
    iii) Long Term Capital Gain (LTCG) from the stocks purchases through Zerodha after paying STT etc. and keeping for more than 1 Year (365 days)

    I would like your kind help to know the following; in case of my income from all the three sources mentioned above goes beyond 2.5 Lakhs –
    a) How the taxation will work for me for the gains from all the three sources?
    b) Can I declare myself as Investor as I am not doing any Intraday, F&O, BTST etc?
    c) Which ITR form to be used?

    Thanks,
    Bhushan

  222. Trader cum investor says:

    Dear Nithin,

    I have great experience while doing trading on zerodha, you and your team have made really a wonderful thing.

    Although I am in loss this year, and I learned a lot also from which I will definitely cover my loss in next financial year

    Sir, some things I want to get clear :

    1. I am having account with zerodha on my mom name. And I am transferring money to my mom saving account and then to zerodha. As money is transferred from my account on which I am already paying taxes as this income is from my service income…so is this right way??? is anything wrong in doing trading on my mom account?

    2. I am having Intraday loss of 4lk and Short term loss of 1lk. And brokerage charges are 1lk. Does in next financial year, Short term gainif any (lets assume 4lk) can be net off against this intraday loss of current year??

    3. Sir, can I get support on my zerodha account through customer care on these above details ….taxation support??? what losses can set off against??

    • 1. Gift to mother is not taxable.
      2. Short term equity trading can be shown as either capital gains or non-speculative business income. Intraday equity trading is considered speculative business. Non speculative losses can be setoff against speculative gains, but not vice versa. Yes you can carry forward the losses, but only non-spec losses be setoff against spec gains.
      3. Hmmm. unfortunately we don’t have qualified support for this. I’d suggest you to go through this module: http://zerodha.com/varsity/module/markets-and-taxation/. You can try speaking to taxiq.in or cleartax.com and refer that you are a Zerodha client.

  223. Joe says:

    Thankyou very much dear Nithin sir, if i transefer the money does any tax liability on principal amount or only on interest

  224. Nisha Agarwal says:

    Dear Nithin sir,
    kindly modifies one thing in tax pl section. pls show dates in short term and long term gain cases and pls also bifurcate charges into short term and intraday trades as we have to show dates of transaction in itr and also have to take deduction of charges separately.

  225. Joe says:

    Hi
    Thank you Team for valuable advices given here. I was in Dubai for three years and now i have returned to india permanatly i have a NRI acount what shoul i do now and what will be my tax liablity now if i transfer amount to normal SB account

    • Joe, you can open a normal resident account, but you will have to first open a SB account. If it is your own money, there is no tax liability to transfer form one bank to another bank.

  226. Nisha Agarwal says:

    Dear Nitin,
    pls provide date also in short term and long term gain trades in your tax pl report as we required to fill purchase and sell date in income tax return form. and pls also bifercate charges in intraday and short term trades as we have facing difficulty to deduct from profits.

    • hmm.. dates on P&L is not really possible right? What if you have bought same stock multiple times on different dates? We show the short term and long term gains separately. You can download the tradebook for dates.

  227. KJ says:

    Hi,
    In ITR 4s form in NOB BP (Nature of Business) section, there is no option to mention Trader in stock market. What do i choose in the drop down or do i have to enter details somewhere else.

    Regards.

  228. AKN says:

    Dear Sir,
    Good Day and wish you a happy new year..
    I am an NRE and I am doing trading in Equity and FNO through my wife’s resident account.I have started to do this around 5-6 years back and till the time did not make any single profits on my trading life and I did not make any tax returns files aswell..Earlier I had used to do with some other broker and around year back moved to zerodha.Normally I am transferring some funds from my NRE account to my wife resident account from there transferring to trading account with Zerodha.On a yearly basis around 8-10 lakh transferred to her normal account and from there transferred to my trading account with Zerodha and doing the trades in intraday/FNO and whatever.Till the time there is not any profits I make and hence I did not make any tax returns..Also recently I have got some memo for non filing the taxes aswell.Would like to know how to proceed further?Also now my worry is that is there any issues/difficulties for the amount which I have transferred to her normal account from my NRE accounts to do the trade?Is this amount taxable or how can I mention the sources of this fund?Also would like to know any issues for doing trading/investment using this same method in future, that is using my wife’s resident status account and the resident account with zerodha?Is there any limitations and mistakes that I am making?
    Also help me out to do the tax return and which all years return can I submit now?Overall I am in a big loss of my last five years trading life roughly can say around 20 lakh plus loss in last five years trading life..Now would like to know the details on this-I know its quite big story and questions though really would like to get the clarifications on this and waiting for the same..Any more details if i missed out to provide me a solution,pls let me know…

    • Venu says:

      Hi,
      It’s best you consult a Chartered Accountant who will help you determine your turnover and help you file belated returns. The Source of funds could be ‘Gift from Husband’. You’ll have to draft a suitable reply to the notice you’ve received, giving appropriate reasons for not filing returns. Since you’re stating that you’ve made losses, you could state that since your Income was below taxable limits, you haven’t filed, but again that’ll have to be validated by a CA after considering turnovers. You can file returns for 14-15 and 15-16 before March 31st, but you won’t be able to carry forward losses of those years.

      • AKN says:

        Thanks Mr.Venu.
        Is there any limit for giving amount or transferring amount to spouse account?And I hope need to pay tax if i generate any income/profit from the gifted amount and no need to pay tax for gifted amount. Clarify pls.
        Thanks.

  229. Thakkerjg says:

    I am NRI and my trading under NRE PIS. if my income is less then 2.5 lakh for stcg Can I get refund of STCG deducted at source if i file the return

    Thanks

  230. Dharmendra Singh Negi says:

    Sir i have a query. E.g. i bought 10 Shares of Reliance @ 100 and 5 sold 5 shares @ 120 and remaining 5 shares put on Normal i.e. 5 days grated by Stock Broker also known as BTST/STBT and sold remaining 5 shares after 4 days @ 130 (Brokerage is different on intraday & BTST Call) and i got a Contract Note in which all the charges are charged by the broker. So i want to ask the accouting treatment of above querry. Whether BTST will be considered as Intraday Trading or Delivery Based Trading?

    • Venu says:

      5.6 – BTST (ATST) – Is it speculative, non-speculative, or STCG?
      BTST (Buy today Sell tomorrow) or ATST (Acquire today sell tomorrow) is quite popular among equity traders. It is called BTST when you buy today and sell tomorrow without taking delivery of the stock.

      Since you are not taking delivery, should it be considered as speculative similar to intraday equity trading?

      There are both schools of thought, one which considers it to be speculative because no delivery was taken. However I come from the second school, which is to consider it as non-speculative/STCG as the exchange itself charges the security transaction tax (STT) for BTST trades similar to regular delivery based trades. A factor to consider is if such BTST trades are done just a few times in the year show it as STCG, but if done frequently it is best to show it as speculative business income.

      From: http://zerodha.com/varsity/chapter/taxation-for-traders/

  231. Amit Nigam says:

    Dear Sir,

    What if I am not a salaried person and do only trading in F&O and make some profits either buying or selling on the same day or buying / selling today and selling / buying the same next day or two days later or may be three days later.

    What taxes will I have to pay on my profits. Would it be STCG of 15% on gains or would it be according to my income tax slab and I will have to pay accordingly.

    Thank You

  232. Rajesh Mahajan says:

    Thanks.

  233. Rajesh Mahajan says:

    Hello,
    If intraday equity trading is considered to be speculative,
    What about intraday F&O Trading?

  234. Guru says:

    Hi Nitin,

    Please clarify my following query.
    My total turnover for financial year 2015-16 is 16 lakh and my loss is around 3.5 lakh. I missed the September-30 deadline and now it is already too late to declare in ITR-4.I don’t want to do an audit now since i cannot carry forward the loss and also to be frank it is very painful to pay around 10k for audit when i have not made a penny profit

    1.What will be the max punishment/penalty for not declaring my trading loss in ITR4 but only declaring my salary in ITR1.What usually happens in practice.Is there any possibility of me going to jail?
    2.Will my accounts be under close scrutiny if Income tax radar falls once on my PAN number

    Thanks in advance

    • Hey Guru,

      1. There is no jail and all u have to worry about. 🙂 You haven’t evaded paying taxes, so nothing bad can happen. If in case your file gets called for scrutiny, you will have to visit the ITO and tell him why you didn’t file ITR4. Probably tell him since you had losses and no taxes to pay, hence you decided against. But you can still file delayed returns, you will not get benefit of carry forwarding the loss.
      2. No, nothing like that.

  235. Bahadur says:

    Sir,
    I am an Employee in police dept. of state govt. I want invest & short term trading in equity market.
    can i do this because i am a govt. employee ? and if I can do this …..so which ITR is applicable for me?
    Thanks

  236. PANKAJ JAIN says:

    ITR FILE KERNA HAI OR MUJHE JANKARI CHIYE KI TRADING SE related JO BHI EXP HOGA VO PROFIT ME ( – ) KIYA JA SEKTA HAY OR LOSS HO TO CAPITAL LOSS ME DIKHA SEKTE HAY OR TRADING SE RELATED JITA BHI EXP HOGA VO SAB CAPITAL LOSS MANA JYEGA YA NAHI FOR LIKE DP CHARGE , DELAYEDPAYMENT, INTREST ,ACCOUNT OPININ CHARGE ETC
    PLEASE HELP ME PLEASE QUICKLY

    OR AAPLA 60 DAY CHALANGE MAY JO BROKERAGE REFUND NILTA HAY USPER HI TAX DENA HAY OR NAHI PLEASE HELP ME
    DP3640

  237. Vinod Kulkarni says:

    Hello,

    I have 2 questions: I usually do the BTST or Intraday
    1. If my turnover is for the financial year is more than 1CR and my profit is around 1LKS, can I need to do audit with CA? and how much tax I need to pay?
    2. If my turnover is for the financial year is less then 1CR and my profit is around 70,000 can i need to do audit with CA? and how much tax I need to pay?

    • If you are showing as capital gains no audit, if as business income, yeah audit applicable if turnover more than Rs 2 crores (from this year).
      Short term capital gain is 15% flat, if showing as business income according to the tax slab you fall in. Taxes is only on profits. CA audit fees could start from 6500 onwards. Suggest you to read the taxation module here: http://zerodha.com/varsity/

  238. veer says:

    Sir,
    I trade in share market with my Pocket Savings. If My Short term Capital Gain from share trading is 50000 Rs. and no other income…..so pls suggest that Tax slab is applicable for mine….because my Short term Capital Gain amount is lower from Tax Exemption Slab..which is 2,50,000 rs.
    Pls suggest . thanks for advance….

  239. Chintan says:

    I have booked 89000 losses in share market last year (FY-15-16) and now stop doing trading in shares. Is it required show in file return? My salary income is 198000/yr and side buss. Income is 35000/ye. I am also paying around 51000/yr in LIC.

  240. Pooja Dodia says:

    Hi Team,

    Thanks for providing such a nice article on Tax.

    Based on the above article, I have one query with regards to total gross Income. Just want to confirm that it should be less than 2.5lac or 2lac (Trading + Salary or other business)

    “Also note that if your total gross total income (trading + Salary or other business) is lesser than Rs 2lks, you don’t need an audit even if your profit is less than 8% of your turnover or if turnover for the year is > ₹1 crore”

  241. Krishna says:

    Dear Nitin,

    I look forward for your reply on two things :-

    1. I have got my demat and trading account with zerodha for 3 months now. I have transferred shares into my zerodha account through off market transaction. The buying price for the discrepant stocks have been entered wrongly, and the Q back office doesnt give a provision to correct it. I got response from zerodha support that nothing can be done until a software change is rolled out. There are no timelines on this. Its a pain in the neck, my PnL looks completely screwed up.

    2. When can we expect buy back orders to be submitted online ? I was told that we need to fill up the tender forms, scan and send to your team. This manual process adds to our woes, and your operational costs. Any timelines for 100% automation for buy backs ?

    • 1. Krishna, none of the brokers typically give this feature. We have, the issue is that holding value etc is calculated based on what is entered the first time and cached. Going back in time to correct it would mean, us having to calculate the holdings file for all the days. It is extremely painful, atleast in the current setup. By december we are launching our all reporting tool, we have accomodate an option for people to change this on the fly.
      2. We should have this with the new reporting tool

      • Krishna says:

        Thanks a lot, Nithin. I will eargerly look forward a correction mechanism, in december 2016.

        Appreciate you for replying me.

  242. Abdul Haseeb AT says:

    Hi Zerodha,
    I am new to stock market ,I have one doubt .
    I am an NRI ,if my short term (less than 1 year) trading income is less than 2.5 lakhs ,do i need to pay
    any income tax ?

    Thank you

  243. Shyamal says:

    Dear Nitin,
    As I am planing to have another D-mat cum trading account with your company, just a few simple queries.
    1. I already have one with Axisdirect which 3-in-one Account connected to my savings Bank account . Do I have to close that D mat account.
    2. Account that I am going to open with you, can that be connected to my existing Standard Chartered Bank Savings Account which is my Salary account.

    Regards,
    Shyamal

  244. Shyamal says:

    Dear Nitin,

    I have made a purchase of Aban Offshore Limited(E-Margin Product) of 225 @ Rs.285/Share by utilizing Rs.19238.18 from my account on 25.10.2016 and Trade Bill Shows the following.
    Purchase -64127.25
    Sale 0.00
    Brokerage -160.33
    Security Transaction Tax -64.00
    Sebi Turnover Tax -0.14
    Turnover Tax -2.09
    Service Tax (Including education cess) -24.05
    Stamp Duty -11.56
    Other Charges -0.31
    Amount Payable -64389.73

    My query is:
    If I had the account with your Company Zerodha, how would the Bill Look like ?
    Please correct me if I am wrong: In your case the Brokerage of Rs. 160.33( 0.25% of Rs.64127.25) would be ZERO.

    Regards,
    Shyamal

  245. Shyamal says:

    Dear Nitin,

    I have a 3-in one Account ( Savings-D-Mat-Trading) with Axisdirect. As I am an active trader both in Equity and F&O my total traded value in 2016-17 is going to be around 70 to 90 Lac. D-mat account which was given to me at the time of opening the account, I was told (NOW) that has Trading limit of only Rs.12.50 Lac with a validity period of 7 Years.
    Bank sales official is insisting that I should not trade any more in this account as further trading could lead to some undesired implications from SEBI and he is insisting that I should open another account ( Premium Package costing around Rs.1.45 Lac) in my wife’s name and trade. This account will have the facility of No validity time period and unlimited trading value.
    My question are:
    1. Is he misleading me and becoming a smart Sales Man to sale his Premium Package ?
    2. What kind undesired implications from SEBI he was talking about ?
    3. What kind of D-Mat Account should one have to carry out high value trading ? My trading value in 2017-18, I estimate to be around 1.5 to 2.00 Crore. With the existing account can I trade this kind of value transactions.

    Regards,
    Shyamal.

    • 1. Yep, he is absolutely misleading you. You should probably complain about him to his superiors.
      2. Nothing as such. You are free to trade as much as you want.
      3. There is no limit on trading that SEBI or any other regulator has set.

      You should probably just open an account with us: https://zerodha.com/. We charge zero brokerage on investments and Rs 20/trade on F&O. You will save a lot of money.

  246. Neil Dsouza says:

    Hi Nitin,

    Need your assistance on the below :

    I have salary income and profits in F&O positional trades for the financial year FY16-FY17. From the above chain of questions & replies, I understand I have to file ITR4.

    When I spoke to a Chartered Accountant, he advised me to file ITR2 as I have salary income and to show the F&O profits as speculative income under the heading Income from Other Sources. He further states that If I had no salary income only then it would be justified to file ITR4 and show F&O positional profits as Business Income

    Question – Could you please share a link to any CBDT circular or Income Tax Directive stating that it is ITR4 that I need to file as I have F&0 profits in positional trades besides Salary income so that I can show proof to my C.A.

  247. MAHESH JAIN says:

    Dear Sir,

    Me & my 5 friends are going to start a share trading business , all 6 members are ready to invest equal amount , Is their any possibility to open a company or can we do business through partnership firm , how can we do accounting process , is this is legal or not
    can u please guide me

    Regards
    Mahesh

    • Mahesh, you all can start a partnership or pvt ltd to run a business. As a business you can also trade stocks, but you can’t without license go out and raise funds for trading. Accounting process and all is just like a normal business.

  248. Roy says:

    You guys have a great system which makes tax reporting hassle-free. However, there is one flaw/short fall in the current system. Shares acquired through an IPO and the subsequent short-term profit/loss made from the sale is not getting captured in the system. If you could get your system to use the IPO issue price as the ‘purchase price’ of the stocks allotted in an IPO , then I feel this problem could be solved easily.

    • Roy, all shares credited through IPO shows up as discrepant quantity on your holdings page on Q. You can manually enter the IPO price and this issue will get sorted on its own.

      • Vaibhav says:

        Hi Nitin,

        If shares allotted by IPO are already sold without manually entered the issue price then Do we have any option to add it into P/L Report?
        Please let us know, it will be really helpful.

      • MNK says:

        Hi,

        Already entered discrepant quantity on your holdings page on Q for few IPO but it none of them reflect in P&L.

  249. thaledder says:

    Dear Sir,
    I am salaried individual and trader. I mostly trade in commodity and my salary is less than Rs.2.5lks p.a. I also have I.T. exemption certificate u/s 10(26). My question is if my annual turnover is < 1 crore and profit is Rs.5 lks.
    1) Do I need to pay taxes?
    2) Do I need to file ITR? (If yes, which ITR form is best suit for me?)
    2) Do I need to get audited from CA?

    Thanks

  250. Animesh says:

    Hi Sir,

    Our Employer (bank) started mandatory deduction from my salary towards NPS subscription, from 01.04.2012, and made an equal contribution towards the same. Entire amount was being deposited in a separate account of our organization (bank) since then. However, I got my NPS account opened in April 2015. Entire corpus of funds was transferred to this NPS account in April / may 2015. Since our employer issues Form 16 for previous FY by end of May of that calendar year, NPS subscription amount (my and employer contribution) for FY 2014-15 was mentioned in my Form 16 (that I received in may 2015) for FY 2014-15, on the basis of which I could claim tax refund for FY 2014-15.

    I just want to know, whether I can claim tax refund now, for NPS subscription amount deposited by me and my employer for the period from 01.04.2012 to 31.03.2014, i.e., for period prior to FY in which NPS account was opened but deductions towards the same were made, while filing my IT return for FY 2015-16?? or that investment has gone waste from tax saving point of view…

  251. Devan says:

    Hi,
    I have salary income as well as doing F&O part-time. Last year I made some loss in F&O, hence I filled only ITR-1 before the due date for FY2015-2016. Now I realize that I need to show the losses then only I can carry-forward in future.
    Is it possible to revise the ITR-1 to ITR-4 now?, as I filled ITR-1 before the due date.

  252. Sanjay Arora says:

    Can you show accounting entry of a share transaction & a futures transaction? My main concern is that in turnover calculation you use any gain/loss value as turnover so does that mean it replaces purchase/sale value in accounting entry? My concern is trading as business.

  253. Devan says:

    Hi,
    I do trade in F&O on my demat account. I use the laptop which is on my wife’s name.
    Can I show laptop depreciation, electricity bill and broadband charges as expenses in my PL statement, as these bills are in the name of my wife?

  254. Tushar says:

    Hi Nithin,
    I have query on shares received through ESOP, I received the shares at face value, so my question is,
    1. Will the difference between Face Value and CMP be considered as profit
    2.Do i need to hold this for one year to save tax (short term capital gains)
    3. What if i gift these shares within a year to my spouse, will it be considered under short term capital gains

    • 1. Not face value, but the value at which these were allotted to you. If they were allotted at face value, then you CMP-value is your profit.
      2. Yes.
      3. You can gift, your holding period will be considered for her as well. For the transfer there is no gain, but she will have to wait for 1 year to get the LTCG benefit.

      • Sanjay Arora says:

        Gift to spouse may have tax implications to the extent of income from the isset. Check with CA first. Income to wife may be added back to husband if husband slab is higher. LTCG may have different implications.

  255. DM0495 says:

    Hello Nitin,

    my CA is asking for “Global Positioning Report ‘”, what is this report , pls help in this regard.

  256. MEENA says:

    Just appreciating your work Nitin, great work man. Glad to be among the best.

  257. MEENA says:

    I am a professional with income below 2.5 lacs in previous year and also around 4.5k of STCG in my previous year, according to this blog of yours an investor is supposed to file ITR 1 or ITR 2 but as a professional I can’t use those forms. What am i supposed to do then? Also the blog says 15% flat for investor on STCG, does it mean that even if my income is less than 2.5 lacs(professional+trading) still I am supposed to pay 15% on that STCG?

  258. RAHUL TYAGI says:

    Hello,

    Could you please tell me regarding the taxes on long term capital gain in F&O (Derivatives segment),
    suppose if Today i sell nifty 9000 CE or PE Dec 2017 (15 months period). Still i would be liable to pay taxes on
    gaining amount.

    Regards
    Rahul Tyagi

  259. Arun says:

    Hey Nithin,

    1st of all your write up and detailing was clear. But the auditors confuse as much as they can. Let me give a brief of my situation . Can you guide me

    My business profit was Rs. 792551 for the year 2015-2016 (AY 2016-2017)

    My Short Term Capital loss is -1651813 for the year 2015-2016 (AY 2016-2017) – F&O Equity and Intra day F& O ( only futures trading)

    Can I set of this loss to my profit and not pay tax . Will file it either ways
    My Auditor says there could be Litigation and he does not suggest the same

    • F&O loss is business loss you can definitey set off. Intraday equity trading (speculative business) and short term capital loss can’t be setoff. Suggest you to go through this.

      • Arun says:

        Hey Nithin,

        Spoke to my auditor Nithin.

        He had set of my last year F&O loss as a Capital Loss instead of a Business Loss

        He says this year we cannot change the same. Any idea and circular reference to this.

        Regards,

        Arun Christe

        • Arun says:

          also one last thing what about F&O Intra day. It can be considered as a Business loss

          • If you have already shown this as a capital loss, guess nothing much can be done now. yes intraday F&o can be shown as business income/loss

            • Arun says:

              Nithin,

              No I had showed the Capital loss last year FY2014-2015 for -1300000

              This FY 2015-2016 i have a loss of -1600000

              My auditor has filed for 2014-2015 as capital loss ( he dint file as business loss as there was no clarity from the department)

              for fy 2015-2016 can i show the -1600000 loss as Business loss

              as there has been a circulation clearing the assumption process only on Feb 29 2016

  260. Animesh says:

    Dear Sir,

    I am a salaried trader who used to trade in Intraday Equity and F&O segment.

    My salary as per Form 16 for FY 2014-15 is 9.2 lakhs.

    I did not file ITR for FY 2014-15 as on date and have received a letter 4 days ago from ITO asking for the following information:

    1. You have paid STT in last few years. Please let us know whether you have filed ITR for last three years or not. If yes, please present before us the copy of ITR along with computation.
    2. Whether the above mentioned trade transactions have been considered by you while filing your ITR.
    3. Please furnish the related documents before ITO for verification.

    I want to let you know that my total trade turnover w.r.t. equity intraday and F&O is less than one crore for FY 2014-15. However total loss for FY 2014-15 is Rs. 1.79 lakh, i.e., profit is less than 8% on turnover. Since return is going to be filed after due date, loss cannot be carried forward, and I don’t even want to do the same as I have stopped trading.

    I wanted to know:
    1. whether I have to undergo tax audit for the same?
    2. Whether am I supposed to fill form 4 while filing return or only form 1 will suffice?
    3. As per form 16, i am eligible for IT refund of around 25000/-, owning to interest paid on HL and Life insurance policy. Should i claim the same or leave it due to these complications?

    Request your kind guidance in this regard…

    Thanks
    Animesh

    • Animesh says:

      Noteworthy to mention, What i received is just a letter from ITO and not a notice..

    • You will have to firstly explain to the ITO that you hadn’t filed because you had made losses. Maybe attach yoru P&L statement and ledger details to show this. Once you have done this, if the ITO asks you to revise the return, then yeah you will need to use ITR4. Audit, hmm.. maybe you could just ask the ITO. I think you should apply for IT refund, you have actually let go of Rs 1.8lks of losses which you could have easily carried forward.

  261. Nikhil m says:

    Hi nitin,
    Im having a query regarding the costs to be deducted while calculating the capital gains arriving out of both long term and short term.
    Which of the following can be deduted while calcuting capital gains:
    1. Brokerage
    2. Service tax
    3. Statutory and other charges
    The statutory and other charges are included in the contract note and are defined as Statutory and Other charges represents a consolidated charge towards providing various value-added services such as Trade Confirmation SMS, electronic account access, portfolio tracker, access to research reports,
    market news SMS and towards defraying Member’s Statutory/Regulatory liability for the clients’ trades.

    Thanks alot nitin.

    • Nikhil, if it is capital gain, you can’t really show this as a cost. But what you can is to show all of these (excluding STT) as part of your acquisition price. So your buying price automatically goes up.

      • Nikhil m says:

        I was more concerned regarding whether the statutory and other charges can be deducted which you say can be deducted.
        Thanks alot nithin your a great helping hand.
        Look forward to join zerodha.

  262. SALIM SHAIKH says:

    Hi Nitin,
    I am an NRI aged 65 and I buy shares more than 6 lakhs pa which is from my nri funds & always buy shares for long term(i.e. for more than a yr) & don’t have any other income in India. Do I need to file income tax ? bcz I am buying shares more than 6 lakhs pa which is above the taxable limit. But the funds are from nre account which as per my knowledge in non taxable. Kindly resolve my confusion

    • If you are just buying stocks, there is no income, hence no tax to be paid and hence no need of filing income tax. If you sell the shares tomorrow for a profit for which you have taxes to pay, you will then need to file ITR

  263. Vigneshraja says:

    Hi,

    I am new to trading. I have a query on the taxation part.

    I have cited a situation below. Could you please help me out on the taxation part.

    Consider I have done intraday trading for 2 days only. I have done trades with 2 stocks (X & Y) only.

    Stock X : Profit Rs. 3000
    (day 1 – Profit Rs. 5000, day 2 – Loss Rs. 2000)
    Stock Y : Loss Rs. 1000
    (day 1 – Loss Rs. 3000, day 2 – Profit Rs. 2000)

    As per Tax P&L summary – Intraday turnover is Rs. 4000 & Intraday profit is Rs. 2000

    Charges are Rs. 500

    Now which is correct for calculating my tax due,

    A. Tax to be calculated for Rs. 2000 minus charges & it is as per my tax slab

    (or)

    B. Loss can be shown as Rs. 5500 [(sum of loss from stock X, day 2 & loss from stock Y, day 1) + charges Rs. 500] and I can carry forward the net loss of Rs. 3500 ( Total loss Rs. 5500 minus Rs. 2000 intraday profit) to next year with net tax outgo Zero for this year.

    If it is different from these two, please educate me.

    Thanks
    Vignesh

  264. Sumit says:

    An astrologer has asked me to trade in my brother’s name/account. So I trade in his account. But in doing so all money is going to his account and I am not rewarded in any way. Please suggest some tax effective ideas to transfer the profits to my bank account. Thanks, Sumit

  265. Santhosh says:

    Hi

    In the FY 2015-16 my turnover was 93 lakhs and had incurred a loss of 3 lakhs. My total income for the year was just 70000/-. Do I need to file ITR? Also audit is required or
    not

  266. Santhosh says:

    Sir,

    In the FY 2015-2016 my Fno and Intraday Turnover (as per Zerodha)comes to 93 lakhs. And i have incurred a total loss of 3 lakh plus. My only other income which I got as Mutual Fund brokerage comes to Rs. 70000/- (Seventy Thousand only). Do I need to file the ITR? If yes does Audit is required?

  267. KALPESH SHAH says:

    Sir i loss in F & O in f.y. 2015-2016 Rs 25 lac and same year i earn 35 lac in long term capital gain (by sale of property)
    so please tell me can f&o loss adjust against capital gain?

  268. Sachin says:

    Sir,
    Thanks a lot for such a wonderful blog. Solved so many puzzles.

    I am a PSU salaried employee. I incurred F&O loss in 2010-11 & reported the same as business loss (in ITR 4) which have been carried forward year after year. Now, after reading your blog I came to know that rental income & FD interest income can also be adjusted against F&O loss, which I hv not claimed. Instead, I have been paying income tax for these incomes without adjusting.

    1. Can I revise all my ITRs since 2010-11 with Rental & Ineterst income adjusted against F&O loss.
    2. If not, can I adjust these incomes from carried forward F&O loss in this years (AS 2016-17) ITR. (I hv already submitted ITR but hv not sent ITRV)
    3. Someone told me that business loss can only be adjusted against same year’s Rental & interest incomes. That means previous year’s business losses can not be used to adjust current year’s other sources incomes. is it correct?

    Thanks in Advance.

  269. Sandal Vatsa says:

    Hi Nithin,

    I had posted some specific queries earlier. Hope you’ve gone through that. It would be nice of you to be answering 2 more queries (with the same scenario, trading in commodities).

    1. Turnover, as you mentioned in your post is the yearly sum of all profits and losses of all the scrips.
    Is this profit calculated after deducting the brokerage and transaction taxes etc.?
    In case of loss, will these brokerages and other transaction charges, CTT etc. will be added to the loss?

    2. In your post, you’ve mentioned that If turnover is < ₹1 crore and profitability is less than 8% of turnover, one needs his books to be audited.
    Now, how is this Turnover different from the Profitability?
    Suppose, one has made a sum profit of Rs. 1 Crore (by adding all the profits and losses) in a financial year and his initial capital investment was also 1 Crore, What is the Turnover and the Profitability? And whether he needs his books to be audited?

    Thank you to have been patient enough.

    • Venu says:

      1. There’s no maximum limit as such. As long as you’re able to justify the funds that you’re bringing in is earned through legal sources(if required by any authority), you’re free to trade without any limitations.
      2. That’s an internal arrangement that you’ll have to have with the consultant. As a brokerage firm, our relationship would be limited to you being our client and your account details would be shared only with you. Yes, consultant fee/salary can be considered as an expense from the profits you make.
      3. You can legalize the agreement by having it on a Stamp paper, stamped with appropriate values as per the relevant State’s act. It’s best to consult a lawyer for this.
      4. The Income tax slabs would remain same.
      5. Again, the Income tax slabs remain same.
      6. If you’re trading for yourself, you can do it as an Individual. This would save you the costs and compliance required for a newer entity (partnership,company etc.)

    • Venu says:

      1. No, you’ve to exclude brokerage and other taxes while computing turnover. It’s only the absolute sum of all profits and losses.
      2. Profit is actual profits, without considering any losses.

      • Sandal Vatsa says:

        Hi Venu,

        Thanks to have replied promptly. One thing is still little confusing. Please guide me clearly regarding Turnover and Profitability (less than 8% thing).

        For example, total profit in a year is Rs. 90 lakhs and total loss in the same year is Rs. 30 lakhs; the absolute sum of all profits and losses are Rs. 60 lakhs, which I understand is called Turnover. Now, this turnover is less than 1 Crore. Tell me what is the profitability here.

        Please tell me the same if total profit in a year is Rs. 30 Lakhs and total loss in the same year is Rs. 90 lakhs, what is the turnover and what is the profitability and whether in which case the books are supposed to be audited.

        Thanks.

        • Venu says:

          If your profit is 90 lacs and loss is 30 lacs, your turnover will be 1.2 crores (90+30). You can’t net off losses against profits to compute turnover.
          You’ll net off to compute the actual profit which in the above case will be Rs.60 lacs.

          • Sandal Vatsa says:

            Thank you.

            As per this, if my net profit in a year is 60 lakhs and net loss in the same year is 30 lakhs, my turnover will be 90 lakhs which is less than 1 crore and since the net profit is 60 lakhs which is more than 8% of 90 lakhs (turnover), I don’t need to get my books audited. Hope I am understanding it right this time.

            But if my net profit in a year is 50 lakhs and net loss in the same year is 45 lakhs, I need to get my book audited. Or if my net profit is 40 lakhs and net loss is 55 lakhs, I do need to get my audited. Right?

            • Venu says:

              In first case, your net profit will be 30 lacs (for computing 8%) and not 60 lakhs as you’ve said. Since it’s still > 8%, no audit required.

              But if my net profit in a year is 50 lakhs and net loss in the same year is 45 lakhs, I need to get my book audited. Or if my net profit is 40 lakhs and net loss is 55 lakhs, I do need to get my audited. Right? Yes

  270. Sandal Vatsa says:

    Hi Nithin,

    I appreciate your in-depth knowledge and efforts to make it this simple. I have some queries for a specific situation though, would love to get it answered.

    1. What is the maximum tab of money for someone to use for trading in commodity (MCX), if any. Precisely, what i want to know is that, suppose someone wants to use Rs. 1 Crore for trading in commodity, can he do it in one go? What are the compliance required?

    2. If that person hires a consultant to guide him in doing the trades in order to make more profits, can that consultant be kept on the basis of being paid a share in his profit?
    If yes, is there any upper tab for the profit share?
    If not on profit sharing basis, can the consultant’s salary be showed in the expenses and hence adjusted in the profits?
    If yes, is there any upper tab of salary that should be given to any consultant who guides you in doing trades?

    3. What are the documents needed to be prepared for legalising this agreement of a client for having a consultant?

    4. What kind of income tax slab would apply on the earning/salary/profit-share of that consultant, if it’s any different from the normal Tax slab that is mentioned in your article?

    5. What kind of income tax slab would apply on the profits of the client if profits are huge (may be more than a crore or so), if it’s any different from the normal Tax slab that is mentioned in your article?

    6. Understanding this precise scenario, whether one should go ahead as an individual or as a company or as a partnership firm (partnership between the client and the consultant) in order to save taxes?

    Hope to be answered specifically for my queries.

    Thanks.

  271. RAJINDER SETH says:

    SIR I INVESTED IN EQUITY MF AS PER DETAIL BELOW

    NOV 14 INVESTED 200000 WITH NAV 35.48

    SIP OF 5000 FROM DEC 14 TO SEP 15 = 50000 ( WITH DIFF. NAVS )

    REDEEMED FULL ON OCT 15 WITH NAV 35.50 AMOUNTING TO 246170 ( LOSS OF 3830)

    IS THERE ANY TAX ON THIS.

  272. Renuka says:

    Sir,
    I am senior citizen
    I am throghly studying your blogs from last 3 months
    As I Read The Blogs, more and more
    I get frightened whether to enter the trading or not
    specially with regards ITR 4, and its compliance
    I Studied the Q
    But unable to understand how to use
    the information for book -keeping
    can get I explanation of use of items related to
    tax purpose
    You explained to me I can represent myself at the same time
    as
    Investor as well as Trader
    If I start Trading
    ( I want enter first day trading, long and short term gains in equity only, when ideas will be clear I may go for Derivatives)
    1-how my the value of more than 10 year old holding
    and also my holding at 31st March, the end of financial year
    appear in balance sheet
    2- Is there there any facility in your
    system
    to import data for automatic accounting
    of Buy and sale value, and related expenses entries
    3- which software I can use in sync with
    your system
    AND / OR
    Suggest how I go about to record accounting all types entries of expenditure like brokerage STT etc
    I feel now my enquiry is getting long
    so sorry
    please help as you can
    THANKS IN ADVANSE
    RENUKA

  273. ajay kumar says:

    hi,,

    in 2012-2013 my loss arount in commodities is 400000
    and in 2013-2014 my loss is around 420000
    which my ca is carry forward…..
    is commodities loss i will cover in 8years from my future profit….
    —in 2016 i recieved notice from income tax for heavy transaction in my saving account….around(3 lac)
    this is for 2013 -2014 itr
    i have not knowledge more in income tax…
    my ca not filled my 2015-2016…
    and 2016-2017(he said first close the casw which will close on dec)
    will 2015-2016 or 2016-2017 loss also included in my previous loss of (2012,2013)—-last date is over….

    please…clear me this….

    also mail me

  274. DIPYAMAN SINHA says:

    Hi,
    I have recently started trading on Zerodha. My problem is that I am a Research Scholar and I receive monthly scholarship(25k). The terms of scholarship states that I cannot receive salary, emoluments and any other scholarship but is very unclear about income from shares and alike. I am not a day trader and I make investmnts in the mid-long term scale. Can you elaborate on my tax liabilities and whether my income from equities is not allowable considering my scholarship status.

  275. kalpana says:

    Dear Sir, Very very thanks for reply, if i want o fill revise income tax return, if it is possible. tax audit last financial year ki kab tak karani hoti hey. pl inform last date of filing return. pl replysir, i m very thankful to u. if i provide my details, can u file my revised return on payment. pl help.

  276. Kalpna says:

    Dear sir, i m trading in future (derivatives) sir please let me know that tax liability on net profit or net loss only or on turnover also. If i m in loss, then i pay tax on loss amt or turnover amt. Pl reply as soon as possible,. Thanks

  277. aman786007 says:

    Nitin Sir,

    I have another question , that i have incurred losses of 9 Lakh in F&O trading , in the period may 2015 to feb 2016, I was unaware of the fact that i have to show the losses in my income tax return and i filed the income tax return on basis of my salary . but after going through this form i got aware.Now what should i do , as when in contacted my CA , he said that he has already filed the return and requested for the refund that is due to me. Please help

    • Venu says:

      You should be able to revise your returns and file them again.
      If you have a loss, you’ll have to undergo audit unless you are declaring 8% profits.

  278. aman786007 says:

    Respected Nitin ji,
    i have a query regarding F&O , suppose i have made losses in F&O in the period from (may 2015- feb 2016) , so can i show these losses in the income tax return and for how much time in the future?. and can i offset these losses from the short term capital gains in the next Assessment Year . if yes then how.

    Regards

    • Venu says:

      Non-speculative losses can be set-off against any other business income except salary income the same year. So they can be set-off against bank interest income, rental income, capital gains, but only in the same year.

      You carry forward non-speculative losses to the next 8 years; however do remember carried forward non-speculative losses can be set-off only against any non-speculative gains made in that period.

      • aman786007 says:

        Sir , I was reading your taxation module. On page no 33, its written, Speculative gain and non speculative loss can off-set each other. Same thing i am asking that if i have made losses in Non Speculative F&O in period May 2015- Feb 2016, can this loss be offset with the speculative gains (Short Term Capital Gain) in the next year or say in period April 2016 to Feb 2017 ?

        • Short term capital gains are capital gains and not speculative gains. They can’t be offset with F&O loss unless if you declare your capital gains as also business income. But if you do, yeah you can.

  279. sankar says:

    sir,

    Futures realized profit -1887702.50
    Options realized profit 0.00
    Total realized profit -1887702.50
    Futures unrealized profit 0.00
    Options unrealized profit 0.00
    Total unrealized profit 0.00
    Futures turnover 2737977.50
    Options turnover 0.00
    Total turnover 2737977.50

    no taxable income other than stcg loss of equtity

    do i get tax audit

  280. sridhar says:

    How to prepare Profit and loss account for Equity Future transactions for tax audit purposes

  281. Vivek Agarwal says:

    Hi Nitin,

    I am salaried employee and I have intraday loss of 96000 thousand. Do Tax Audit is application for me, if i file ITR4 and show indraday loss as speculation loss.

  282. Rajiv Shegal says:

    Hello Sir,

    I have played intraday in 2013-2014 & 2014-2015 year and had a loss of 8Lakh. I was not aware that i have to show a loss to income tax department. Today i have received a notice from income tax department with below detail:

    This is for your kind information that the return of income for Assessment Year 2015-2016 filed vide ack. no XXXX on 26/07/2015 has been selected for Scrutiny. Following issues have been identified for examination:

    1. Securities Transaction

    I have some queried in my mind which i want you to clear before going to infront of ITR Officer:

    1. Which type of proofs i have to carry and what will be the procedure to handle this case easily?
    2. I have P&L statement for 2014-2015 year which shows the loss value. Should i show the P&L statement for 2013-2014 as well?
    3. Do i have to provide the the saving account statement as well from money was debited or it is not required?
    4. I paid the loss amount through personal loan. Do i have to provide the personal loan statement as well?
    5. Total Loss was 8 Lakh, I took personal loan of 5.5L and rest of the money was in my account which i borrow from my wife and brother. Do i have to declare that i got money from my wife and brother or it is not required?
    6. Online Bank statement is sufficient if acccount statement is required or i have to collect the letter from bank that in this year i borrow money from wife and brother and bank will give the confirmation of money transfer with account number as in online saving account statement it is showing NEFT transfer, it is not mentioned payee name.

    Thank you it advance.

    • Venu says:

      Dear Rajiv,
      It’s best if you can get in touch with a Chartered Accountant who can help you with the scrutiny of your books. You will have to produce all of those documents that will substantiate the losses you’ve made. This includes the P&L statements for older years, personal loan statements. It’s also dependent on what the Assessing officer needs. As I said earlier, best to get in touch with a CA who can help you with the scrutiny.

  283. Mishra says:

    I find this article very helpful. Please read my queries and reply ASAP.

    I have already made my return filed for the salary I received this year.But after reading this article, I got to know it is necessary to file return for trading in equity.

    The particular problem is as follows:
    1 – I receive money from my brother who is staying abroad.
    2 – I invest that in stock market
    3 – and I incurred huge loss in that.

    My questions:
    1 – Do I need to show money received from brother as income? (As I read from http://www.incometaxindia.gov.in, money received from immediate relatives will not be counted as Income)
    2 – Can I revise ITR 1 and re-file with ITR 4.
    3- To get the benefit, do I need to revise it today or within 30th Sep.

    Please reply.

  284. Anie says:

    Last Year, I am Salaried Persion. One of my friend played Intraday and made profit of 2.2L and Loss of 11L from my demat account. Today i got a notice from income tax department regarding the same. I have not mentioned in this in my ITR as i am not aware of it. Can you please help me out to understand that how much tax i have to pay for it. Below are my details:
    Annual Package: 5.5L
    Already paid tax approx 10K after declaring home loan, PPF and mediclaim. Please let me know how much tax i have to pay for Intraday transaction.

    • If you have made a net loss there is no taxes to be paid. You just have to explain to the ITO with proof that you had made a loss and you were unaware. Btw if you made intraday equity gains and F&O losses, you can’t combine both and show a net loss. Equity is considered speculative and you will have to pay tax on that profit as per the slab you fall in.

      • Anie says:

        Hello Nithin,

        Thank you for your quick reply. I have some more questions:

        1) I made both profit and loss in intraday, in this case i have not to pay any tax. Is it correct?

        2) Which type of proof i have to show to ITO office to proof that i made loss in intraday. Account statement is enough of or not?

        3) My close friend played through my demat account and i have annual income of 5.5L and loss in intraday was 10L approxx. Can i have to show from where i got funds to play intraday or not?

        4) I have to go ITO office next week.. can you please guide me how tackle this case.

        Below is the brief of my case.
        One of my close friend did intraday trading on regular basis from my demat account as he dont have PAN card (I was not aware that i have to pay income tax on this). In 2014-2015 year he made profit of 2.2L and 10L Loss in intraday only. Today i got notice from ITO with below message:

        “This is for your kind information that the return of income for Assessment Year 2015-2016 filed vide ack. no XXXX on 26/10/2015 has been selected for Scrutiny. Following issues have been identified for examination:

        1. Commodity Transaction
        2. Securities Transaction

        In view of the above, we would like to give you an oppurtunity to produce, or cause to be produced any evidence which you feel is neccessary in support of the said return of income on 12/08/2016 at 2:45P, in the office.”

        Can you please help me on this..how to tackle that.. I need to carry only demat account statement or i have to carry proof from where i got that money to play intraday. Please advice.

        • 1. You have to pay taxes only if you have net profits.
          2. yes just P&l and ledger is enough
          3. Yeah, you will need to show how you got funds.
          4. Tricky, best to choose a CA who can help you .

          • Anie says:

            Thank you.

            I tood money from my friend and some personal loan. I can show this as proof. I am going to contact CA tomorrow morning.

  285. Arun says:

    If I declare myself as a trader can I still do long term invetments in equity and have 0 zero tax on that particular script for long term capital gain?

      • Mangesh says:

        Hello Sir,

        How can this answer be “Yes” for a trader?

        In the above blog, it is mentioned as…
        “Trader
        Any income from buying and selling shares even if more than a year is considered as a business income. This gets added to your income and then taxes paid according to the above mentioned slabs .”

        • Venu says:

          If you’re declaring yourself as a trader, you ll have to consider income from trading in equities as business income. Hence the Yes.

  286. Renuka says:

    Hi Nitin
    I am Sr.Citizen
    my holding in joint demat account, actually are 16 years old.
    I had transfered shares from one broker to other
    and name and style of account kept same capacity
    Finally today I am at doorstep of ZERODHA
    No need to mention Zero beroker
    If I sale shares, I will be eligible for Long term Gains

    last year from june 15 , I have made fresh purchase
    No sales
    So as on today , I am as INVESTOR
    Now I wish to enter activity of in this financial year
    like
    Day trading
    sale of shares within year
    or may be long term investment if situation in
    Scrip/Market warrants
    may be derivatives
    So I would be defined as Trader
    My Question is
    If I start trading activity in this financial year
    whether I will be eligible
    for Long term gains so Zero Tax, on old holding
    or
    It will be treated as bussness income and added
    to my others income and taxed according to slabs
    Please guide
    whether I can start trading in this year and get
    long term gain on old holdings
    OR
    In this financial year
    I sale old holdings and claim long term gains as investor
    and
    start Trading in next financial year
    Regards
    Renuka

    • 1. Your long term holdings will continue to be long term.
      2. You can have both investment and trading portfolio at same time, you have to demarcate it yourself. CBDT circular this year, has clarified it. Check this chapter on Varsity.

  287. Peyush says:

    Hi I am an NRI and have not filed income tax returns as I didnt have any taxable income in India.
    I have received notice for non filing of rturns for FY 2012-2013 & 2013-2014 for clauses CIB 403, CIB 502 STT01 STT02 194A 195.

    most of my investments are in NRE Fds which are tax free,
    on and of I have been keeping some money in NRO where I keep earning savings interest which is in the range of 30-70000 interest per annum.
    I have a equity trading account through PIS route where initially in 2012-2013 FY I had sold a few stocks and has STG ( total gains of 1,05,000) in 2013-2014 the STG Income was 43000 after that all the stocks i have held for long term and sold mostly after 2 years which are tax free.
    I have received notice for following clauses CIB 403, CIB 502 STT01 STT02 194A 195.

    CIB 502- conract of 10 Lakhs or more in commodities exchange is something thats puzzling me as I have never traded or invested in commodities
    STT01 and STT02 seems fine as i had traded/invested in equities but the total gains were much less than the 2.5 lakhs exemption limit. was it 2.5L in 2012-2013 an 2013-2014?

    infact the total income after adding all the incomes is less than 2 lakhs.

    Please advice how to go about it especially CIB 502 I couldnt understand in my case.

    Thanks

    • A NRI doesn’t get the benefit of tax slabs/exemption limit. So ideally you should have declared/paid taxes. It is too late to file ITR, but I guess what you can do is get all the financial documents in place, pay the taxes that was supposed to be paid, reply to the notice saying it was a mistake, and you didn’t file because you thought the exemption limit was applicable to you.

      You can reply in the same notice that you have never traded commodities, you could probably attach your ledger/p&L from the brokerage firm you have an account with.

      • Peyush says:

        HI Nitin,
        thanks for your reply.
        but if all the earning were received after deduction of TDS from respective parties which for NRIs is almost 30%
        i am sure there is no tax liability but i should be liable for return.

        also when you say NRIs do not have slabs then how should i calculate the tax if total income is less than 2.5 lakhs

        I have jusr rented my apartment also from next month as 50:50 ownership for 228000 /annum rent. how will that add to my taxable income?

        Please advice

        • Yes, you should file ITR.

          When I meant you won’t get benefit of tax slabs, I meant in the context of stock markets or short term capital gains. Residents, if they have STCG upto 2.5lks, don’t have to pay any tax (if no other income). While NRI’s are required to pay a flat 15% in any case.

          For rent and other income, you get the benefit of tax slabs.

          • Peyush says:

            Hi Nitin,

            Thanks for your reply.
            1. in my case with income from house property, investments in equities and MFs and dividend income and FD interest from NRE account which ITR form I need to fill?

            2. When I check 26AS there in no mention of any of my NRE account or LTGs and dividend income as I guess no TDS is deducted because they are not taxable. if they are not taxable do i still need to show them as income in my ITR or I need to show just taxable income in ITR?

            Regards,

            Peeyush

            • 1. ITR2
              2. You can show it under exempt income in ITR

              • Peeyush says:

                Hi Nitin,

                I was under impression that exempt NRE FD interest needs to be declared on maturity but have been reading that we need to declare it on accural basis every year. as I had not declared it on accural basis due to the above confusion. can I declare it all ( total maturity proceeds) in the FY year when i received the proceeds or as per rules only yearly accural interest has to be declared?

                Thanks.

                Peeyush

            • Peyush says:

              Hi Nitin,

              when I try filing returns on incometaxindiaefiling by logging with my PAN it shows only ITR1 and ITR-4S as 2 options.
              it does not show ITR2. how to go about it in that case?

              Regards
              Peeyush

  288. Tarun says:

    In ITR -4 Samlple excel:
    In Analysis of PL Reports sheet, In P&L Account Purchase of share is shown as 150,000 and sale of share as 100,000 for Equity delivery while just below under Short Term Capital Loss, Sale Consideration is shown as 100,000 while cost of purchase as 120,000. Why is this different ?? shouldn’t it be 150,000 which is same as above if both are for Sale of Equity share kept less than 1 year ? Or Are these entries for different kind share purchases?
    Please help

  289. Intraday Trader says:

    I trade only in Intraday Cash Markets.No F&O,Currency,Commodities and my only source of income is Intraday Trading Cash Market.I am confused as my CA is telling that as I do only Intraday I need to pay 15% for short term capital gains tax along with the Tax slabs from total income in between 5-30%. So that means Intraday Traders pays the highest amount of Tax. Please help.

    • Check this module. Intraday and F&O are considered as speculative and non-spec business income, they are not short term capital gain. Since they are business income, you have to pay tax according to the tax slab you fall in (no 15% extra as STCG)

  290. Confused says:

    Dear Shri Nithin, I have read the blog right from 2013 and this is an extra ordinary service to the trader community given the plethora of provisions, interpretations, advices etc., some of which can be contradictory!
    Please see if there is a simple answer to my case. I am salaried (Annual salary Rs 5 lakh) and I have traded almost everyday in spot (intra-day) and F&O. My loss in intra-day spot is Rs 4 lakh whereas my profit in F&O is Rs 3.50 lakh. Seeing absence of trading profit I simply filed salary returns only. I have received scrutiny notice for “security transaction” asking information. My fear is that I would be taxed for business income (of Rs 3.50 lakh) in F&O without considering intra-day spot market loss. My query is whether I can declare myself as trader and state that both spot as well as F&O should be considered together to arrive at my net income from securities trading.

    • It is too late to revise the ITR, you just have to explain to the AO that you didn’t file because you had net loss. Most AO’s don’t understand the difference between F&O and intraday, so if you take your P&L and trading ledger and show them that there was a net loss on your trading account and you haven’t evaded paying any taxes, you should be okay.

  291. Sushant Karbhari says:

    Hello,Nithin!

    My query is that i am a salaried employee and I have frequent transactions in Derivatives. Can i consider this under capital gains as there is an issuance of circular dated on 29th of February 2016 by CBDT which states that an assessee is allowed to take an option for PGBP or capital gains as per his choice.(Irrespective of frequency and duaration of transactions) but once he exercises this option-he cannot choose change it in the next year.
    Also, if i consider it under PGBP- can i show it as normal business and not maintain books of accounts u/s 44AB if my turnover is about 10 lacks and i dont want to exercise the option of 44 AD?

    Thanking you in anticipation!

    • Venu says:

      The choice of declaring yourself as a Trader/Investor under this circular is only if you are trading in the Capital Segment. If you’ve done trades under Derivatives, it’s considered Business Income, you can’t show it as Capital gains.

      • Sushant Karbhari says:

        Thank u for ur reply!

        But as per definition of Short term capital gain as per section 2(42A) it includes assets held for not more than 12 months as STCG,which includes-Any other “security” listed in a recognised stock exchange.
        And as per Definition of security as per2(h) of securities contract act- Securities include “Derivatives”.

        So, why will i not be able to classify it under short term capital gains/loss???

      • Sushant Karbhari says:

        Also the same circular specifies Shares/Securities. So doesn’t securities mean as per the definition of 2(h) of securities contract act,which includes derivatives?

        • Sushant, check this chapter and the CBDT links at the beginning. Capital gains are meant to be for investments, and investments are those on which you earn dividends. Since derivatives don’t earn, it can’t be capital gains. Also there have been a bunch of circulars from CBDT pointing out to trading in F&O as non-speculative business.

  292. prashant says:

    I am a salaried person with LTCG, STCG & speculative (intraday) loss on equity. I understand that I have to use ITR-4 for filing return.
    Kindly let me know whether I have to keep books and get them audited?

  293. Rakesh says:

    Hi Team,
    I have a demat account owning myself and holding some stocks in my portfolio since 2014 and have not filled ITR returns yet . I am a non salaried person and bought shares from my father’s money who is salaried. In the meantime i have traded in some stocks in which some stocks i booked loss and in some i have some profit but not exceeding the 2.5 lakh profits in a year.

    So my question is –

    1> How do i show myself in ITR and which ITR form should i fill (like i think ITR 4) ?
    2> Do i need to pay tax on the invested amount which i got from my father for demat account trading and investing?
    3> As I have traded in some scripts and locked some scripts for long term because long term (ie more than one year holding tax exemption) tax is zero.
    4> How do long term is calculated like from the dater of purchase and sell or by the completing financial year?
    5> Most of my portfolio stocks have completed almost 2 years lock in period and if i sell
    them and the selling value is 15 lakh that will be tax free or not?
    Kindly clarify and reply as soon as possible.

    Regards
    Rakesh kumar

  294. CHirag Mittal says:

    Hi Team,

    I had trading in FY-15-16 in Commodity segment (MCX and NCDEX) and details is given below

    1.Turnover :- 311,683.43 (on trading price)
    2.Brokerage :- 7,929.68
    3.Other Charges :- 7,318.68 (STT, Service tax and other).
    4.P&L :- 75,867 Loss (Excluding Brokerage and other charges mentioned in point 1 and 2)
    5. Net Loss :- 91,115

    I have below query

    1. My Net profit is less than 8% of Turnover, in my case audit is required.
    2 I don’t have maintain any record, if audit is required then any alternation option to avoid audit.
    3. I don’t want to carry forward this loss for future so can i avoid disclose this Loss in ITR.
    4. I have other income from Tuition (other source) is 200000 but total income is less then tax slab 2.5Lk.
    If i declare 8% of turnover in point 1 which should be arround 40K and add in my tuition income after that my i come also less then tax slab, can i fill ITR 4s.
    5. If use ITR 4S can any type of query may received from department.

    Request you to please help on my case and reply asap.

    Regards
    Chirag Mittal

    • Chirag, suggest you to go through this module: http://zerodha.com/varsity/module/markets-and-taxation/. Turnover is not trading turnover, but yes if profit is less than 8%, you will need an audit if there is other income on which there is a tax liability. If this is the only income and your income is less than 2.5lks, no not required. Records are maintained with your broker, so even if you haven’t it is okay. It is best to declare all income on ITR. If your total income is less than 2.5lks, then no audit required provided turnover is less than 1crore. Check out the module to find out how to calculate turnover. Since you have done only F&O, you can use ITR4S.

  295. Ramprasad says:

    Hi Nitin,

    i am a salaried employee, and a active trader in F&O, i made 10 to 12 transactions in equity also on short term basis.
    kindly advise, in this case which form do i need to fill to file the returns.

    and tell me which column do i need to consider as turnover (turnover column or turnover with sale value)

  296. Vishnu Sankaran says:

    Dear Nithin,

    Very useful and user friendly document regarding taxes. I have few more doubts since I am doing this first time. Kindly reply on the following.

    1) I used to be an NRI till end of 2014 and used to stay in abroad
    2) I came back and settled in Indi