As per the Indian income tax regulations, purchase of stocks made with the aim of earning income will be looked at as business income, whereas investments made out of the intention of getting income through dividends will amount to ‘capital gain’. Say Mr. Ganesh has gained Rs. 200,000 by intraday trading/ trading in F&O.

It shall be taxable under the head Income from Business or Profession. While if he retains the stocks for a considerable period time with a target of investment i. a short term or long-term then it falls under head Capital Gains. If an individual earns income from intraday trading/ F&O and from shares held with an investment objective, then he shall have 2 portfolios. Income from intraday Trading/ F&O comes would be categorized as Business Income while Investment in shares with the intent of accumulating profits would be categorized as Capital Gains. In both full cases, a revenue and loss declaration and Balance Sheet of the business enterprise should prepare yourself and taxes will need to be decided.

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  • Companies or individuals seeking substitute investments such as real estate and hedge funds
  • Killam Properties (KMP) – $ 14.40
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In determining the income/ deficits from intraday, business expenses like internet, depreciation on laptop, mobile bills, brokerage, service charges, audit fee, etc can be viewed as as expenditure and net income/ reduction can be produced accordingly. You should have bills to aid the expenses because they’re verified by the CA during an audit. F&O intraday loss being non-speculative in character can be carried forwards for 8-assessment years, whereas collateral intraday deficits being speculative in nature can be transported forwards for 4 assessment years. Carry forwards is possible only once you did the taxes audits (when suitable) and filed the ITR on time.

If tax audit does apply, the due date to file becomes September 30 instead of July 31. Hence, you have extended time. In case your trading turnover is more than Rs. 2 Crores: Mandatory taxes audit, no option of presumptive available. If your trading turnover is between Rs. 1 Rs and Crore.

2 Crores: If you’re not opting for presumptive taxation, it is required to obtain a tax audit done, irrespective of the fact that your revenue is greater/ less than 8% of the turnover. If your trading turnover is significantly less than 1 Crore: In case your turnover doesn’t go beyond Rs. In case, an ITR is submitted without a tax audit (where relevant), it’s very likely to get a notice from the tax division to revise the ITR. Penalty under section 271B is a sum equal to 1/2 percent of the full total turnover/ gross receipts or an amount of Rs. 1 lakh, whichever is less.

In case your trading turnover is below 2 more, you can choose the presumptive taxation plan. Under situations 2 & 3 above, in the event you opt for presumptive provisions, you will need to pay fees on 8% (or 6%) of your turnover. This becomes a significant hefty amount, if your turnover is high and hence recommended only for those who don’t intend to operate much in the future. Presumptive method used needs to be followed for 5 years once. Also, you won’t have the ability to carry forward any losses. Hence, you might choose between tax presumptive and audit, whichever is more beneficial available for you.