Deduction of depreciation and costs

F&O
1

Hi there,

For ITR/ audit purposes, from what value do we deduct the depreciation and costs (brokerage, taxes, etc.)
Is it from

  1. gross PL or
  2. net PL (gross PL - costs)

So for example,
gross PL is Rs. 1 lac.
costs (brokerage, taxes, etc.) are Rs. 10k
net PL comes to 90k
depreciation of assets and other costs is Rs. 15k

So, while showing PL for ITR/ audit, will it be,

  1. gross PL - costs - depreciation = 1 lac - 10k - 15k = 75k or
  2. net PL - costs - depreciation = 90k - 10k - 15k = 65k
2

@mohitmehra Can you.

3

If you reduce cost from net PL then you’re essentially reducing costs twice since net PL = gross PL - costs.

So, Gross PL - costs - depreciation is your taxable business income

4

@mohitmehra @siva Sorry, I forgot to ask it before. Can I get a few reference links to the same, or the exact location where it is mentioned in Zerodha varsity?

5

You check the discussions in Varsity on this:

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