Ask Me Anything about Taxation on Trading & Investing #TaxSeason2020

@Quicko
How much do you guys charge for audit?
I would be filing my taxes first time as business income, hence I need help with tax advice and also filing. Do you guys provide this service? If yes, how much would be the charges?

For the financial year 2019/20 my total turnover in equity is 40k and fno is 30k overall pnl is -18k loss is audit required. And I dnt have any income for this year is filling ITR mandatory.

Hey @Darshan_MC

Quicko is an online tax filing platform. However, when our customers have audit requirements, we connect them with Chartered Accountants who could conduct tax audit if you want.

Check out zerodha.quicko.com for ITR filing. :slight_smile:

Hey @Double_hammer,

Tax Audit is applicable in case:

It is a good practice to file ITR and avoid the chances of getting a notice from the ITD. After the SEBI and ITD collaborations for data exchange, the taxman can now have details of your trading activity as well.
If your income is less than the basic exemption limit, you can file a NIL return.

REPLY

When turnover is below 2 crore and profit less then 6% or losses audit is applicable, turnover above 5 crore audit is applicable then why when turnover is between 2-5 crores audit would not be applicable?

Hey @Prakhar_Agrawal,

FinMin left a loophole when they announced that if turnover is between 2-5 crores, an audit would not be applicable irrespective of profit or loss, and CBDT clarification is still awaited. Refer to this article to know more about tax audit applicability

Hi @Quicko

If I have 5 lakh loss from F&O trading and I have 50,000 LTCG, how much loss can I carry forward in the next year.

Will it be 5 lakh -50k = 4.5 lakh or I can carry forward the entire loss of 5 lakh to next FY.

Can you please advise.

Hey @Praksy,

F&O loss is treated as a non-speculative business loss and can be carried forward to 8 financial years.
Such non-speculative business loss can be set off against all incomes except salary income.
Therefore, you will be able to carry forward 5,00,000 (F&O loss) - 50,000 (LTCG) = 4,50,000 to 8 years.

Read more on set off and carry forward loss.

Thanks @Quicko for your reply. I didn’t know this thing.

If this is so, suppose I have 5 lakh loss from F&O trading and 5 lakh LTCG. So situation is No Profit No Loss.

In this case, according to you, I cannot carry forward my F&O loss because both adds up to zero.

And then in this case, do I also have to pay 10% tax on the LTCG of 5-1 lakh exempted = 4 lakh ie 40k?

If I have to pay 10% LTCG tax here, that will mean, that although I had net No Profit No Loss situation, still I had to pay tax.

Can you please clear this situation.

@Praksy, Since you pay income tax on the realized income, your LTCG will be taxable at the applicable rate i.e. 10% on LTCG above INR 1 lakh.

Learn more about treatment of short/long term capital gains/losses

@Quicko

Wow, so I have to pay 40k income tax on LTCG even though I had net No Profit No Loss, and even though I cannot carry forward the 5 lakh FnO trading loss.

Is my understanding correct? This sounds so strange.

@Quicko

Is setting off gains or losses compulsory as per Income Tax Act. Suppose I have 2 lakh LTCG and 50k STCL.

Can I choose to pay 10% tax on the LTCG amount of 2-1 lakh and carry forward the 50k STCL to next year FY so that next year I can reduce my new STCG by the carry forwarded 50k.

I read your articles and everywhere it is mentioned that losses ‘CAN’ be set off. It is never said losses have to be compulsorily set off. So can I choose to not set off.

Can’t i submit audit report along side with my ITR on Nov last week?
Is it compulsory to submit audit report by 30th Oct?

If a person have no other income, and he gain 2.5 lakh in f n o, will it be taxable or not, please clarify.
Which itr need to be fill itr2, itr3

I don’t want to mention my scripwise details onto ITR, Is it possible to mention the STCG from stocks without uploading scripwise details to ITR, though quicko. As per my understanding it’s not complusory to mention scripwise details, unless its a CG grandfathering involved.

Pls. advise.

You can carry forward the loss after it is set off against the realized capital gains in the current year, provided you file your ITR on or before the due date i.e. 30th Nov 2020. In such cases the tax liability will be calculated in the remaining realized profit.

When filing your ITR, the losses automatically get set off and carried forward.

On Quicko, all these conditions are incorporated so you don’t have such worries :slight_smile:

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Hey @rajgupta9011

The due date to submit the approved tax audit report for FY 19-20 is 31st October 2020 and for filing your Income-tax return is 30th November 2020. Under budget 2020 as per section 44AB, FinMin announced that the tax audit report submission should be a month prior to filing your ITR. To know more about tax audit, go through this article :slight_smile:

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Hey @Mr_M,

It is a good practice to file ITR and avoid the chances of getting a notice from the ITD. After the SEBI and ITD collaborations for data exchange, the income tax department can now have details of your trading activity.

If your income is below the basic exemption limit, you can file a NIL return.

F&O trading is non speculative income and is usually reported when filing ITR-3. You can use this tool to Know which ITR form to file.
PS: when filing your ITR using Quicko, it chooses the right ITR form for you. :wink:

@Quicko instead of setting off the LTCG against the STCL, what if @Praksy invests in 54EC bonds within 6 months of booking LTCG profits, can he then carry forward the STCL as he wishes to do?

Hey @Vik,

You can report your capital gains without uploading your scrip-wise details by aggregating your purchase and sales price and adding it manually on Quicko under the Capital gains section. Alternatively, you can directly import your trades directly from Zerodha using your Kite Login. Learn more about scrip wise reporting for shares eligible for grandfathering.