Get done in 7 mins. Plans start from Rs. File all GST returns for your clients with automated data reconciliation - No download required. Updated on Sep 25, - Unfortunately though, most people have little knowledge about how these trades are taxed. While this may happen due to sheer ignorance; reporting all your sources of income is mandatory. You may receive a notice from the tax department for non-compliance.
And as we will see below, reporting losses comes with tax benefits! Remember this also applies to individuals. Individuals can have business income too.
Reporting an activity as a business means you can claim expenses from earnings of your business. Expenses that can be claimed by you: Sometimes claiming expenses can lead to a business loss and that is ok too.
Claim expenses which have been directly and exclusively spent on the business. Or salary of a person you hired to help with your business. All of these can be claimed. Expenses over Rs 20, in cash, may not be allowed to be claimed. If an expense is both personal and business, claim a reasonable portion towards business. As a stock market expert, you may put your hands in many buckets. Intra-day stock trading or buying shares for short term or longer term.
For tax purposes, you must separate out these activities. If you have a large volume and high frequency of short term trading in equity shares that may be treated as a business too. Choose a basis wisely and implement it consistently across financial years. If you are a long term equity investor or have fewer short term equity share sales, gains from these may be treated as capital gains. So, in a financial year, you may have several types of business income or may have capital gains income as well.
Once your activity is treated as a business, there are some other tax rules that may apply. Businesses are required to keep accounting records, if their income in 3 preceding years or in the first year in case of a new business is more than Rs 1. Your book keeping will be simpler though.
Keeping your trading statements, expense receipts and bank account statements shall mostly suffice. From these your profit and loss account and balance is prepared. From AY , the limit of Rs. Audit and Return filing: We know that most taxpayers have to file return by 31st July, but those to whom audit applies, have a return filing due date of 30th September.
Audit applies to a business if its turnover exceeds Rs 1 crore. If you fail to maintain books of accounts, or do not get an audit done, penalties shall be applicable as per the income tax act. Maximum penalty of Rs 25, for not keeping accounting records, and 0. For applicability of tax audit, the turnover limit has been increased to Rs. Tax benefits on losses: It can be adjusted from income from remaining heads such as rental income or interest income cannot be adjusted from salary income.
Any unadjusted loss can be carried forward for eight years. However in future they can only be adjusted from non-speculative income. Intra-day stock trading is considered as a speculative loss. And it can only be adjusted against speculative income. Unadjusted speculative losses can be carried forward to four years. Aditya opened a trading account with a brokerage firm by paying Rs 5, as enrolment charges. He has to pay 0. Aditya spends a significant amount of time researching on the internet which help him improve his trading skills.
His monthly internet bill is Rs 1, Besides, salary Aditya has Rs 80, interest income and Rs 3. In the given case, income from has been declared at Rs. Thus, tax audit becomes compulsory and filing of balance sheet and profit and loss in the income tax return are mandatory in this case. Paid E-filing by Expert CAs. How to file GST Returns? Log In Sign Up. Please try again later.More...