Suppose i have 5 lacs in my trading account and after a year of trading if i get a 5 lacs profits ! so my account size is 10 lacs . so if i want to withdraw all my funds, do i need to pay tax on my return if i use the funds without filing ITR? or am i taxed only if i file my ITR ? or will it be a trouble in future if i dont file ITR ?
you should do both… income tax department will issue you notice if you don’t file returns and can also penalize you, it is always best to file itr
You need to pay taxes irrespective whether you will withdraw the funds or not.
It is always better to file the income tax return if your income crosses the basic exemption limit.
No need to file ITR if your yearly earnings is below 2.5L from all your sources (till 2,50,000 Rupees per Financial Year). ----> As per law.
You have to file ITR anything above that.
But it is better if you just file ITR even for the amount below 2.5L.
Suppose my account balance now is 50k, so i dont need to file ITR and my friend or family gives me 5 or 7 lacs… so i need to file ITR or taxed for this even though its not my from trading or any business?? Is there a difference between Filing ITR and Paying tax?
Gifts from friends up to 50,000 Rupees are exempt from paying any tax on them.
There is no tax on money received from your family even if it is 10 Lakh rupees - as long as your family can show the source of income.
This is what I read but you should discuss it with others as well.
Filing ITR is to show all the sources of your income to the income tax department.
If your earnings are below 2.5L then its not compulsory to file ITR
If your earnings are above 2.5L then it is mandatory to file ITR
If your earnings are below 5 Lakhs then you don’t have to pay any tax.
Even if your earnings reach 6.5 Lakhs then there are certain ways to pay no tax at all. (Example: 80c deductions)
Even if your earnings reach above 6.5 Lakhs there might be some ways to pay no tax (or) reduce the tax amount. (Such as detections related to your work)
Earnings are calculated based on ‘Financial Year’ and not ‘Current Year’
My income is less than 2.5lacs but i have faced a loss of 70K , this year . If i file taxes ( even though i dont need to cuz my earnings is less ) , can i carry forward my 70k loss for the coming years , so that i can pay less tax when i’m in profit?
Yes, if you file before the due date of filing the original return - you can carry forward the loss for subsequent years and set it off against profits in future years.
Suppose I start filing my tax this year to carry my losses ! will i need to file taxes every here from now ? what happens if i dont file the next year ? even though my earning is less than 2.5lk
It is better to file the return to carry forward the losses.
However - if it is optional to file your return in subsequent year; it is upto individual’s choice to file the return - nothing will happen to losses.
Say i start with 5lakh capital , and end up making a 2.5lakh profits … so my tax is 20% of my profits or 20% of 5 + 2.5lakh?
how is the tax calculated?
Tax is levied on profit earned. It will on the profits of Rs 2.5 Lacs which you have earned.
so my tax would be 20% ,thats 50K.
so if my capital is 7 lakhs and i make a profit of 7 lakhs so thats 14lakhs . So my tax would be 30% of profits thats 2.1lakh ? Is it right ? or is it a different calculation when it crosses above 10lacs?
That depends on the nature of profits earned;
A] If it is FNO Income or Intraday Gains - tax will be payable as the per the below slabs.
- Upto Rs 2.5 Lacs - No tax
- From 2.5Lacs to 5 Lacs - 5% tax of the amount exceeding Rs 2.5 Lacs
- Rs 5 Lacs to 10 Lacs - Rs 12500 + 20% tax of the amount exceeding Rs 5 Lacs
- Rs 10 Lacs and above - Rs 112500 + 30% of the amount exceeding Rs 10 Lacs
Eg : You have earned 20% on 7 Lacs i.e 1.4Lacs, there is no tax payable.
B] For Short Term Capital Gain - It is flat 15%.
C] For Long Term Capital Gain - It is 10% for gains exceeding Rs 1 Lacs.
No tax till 2.5 lakh profit.
So for FnO if my capital is
- 10 lakhs and i earn a profit of 4 lakhs , my taxable amount would be 5% of 4 lakhs thats 20k .
- 10 lakhs and i earn profit of 6 lakhs , my taxable amount is Rs.12500/- + 20% of 6lakhs , thats Rs.1.2 lakhs, so a total of Rs. 1,32,500 .
- 10 lakhs and i earn profit of 12 lakhs , my taxable amount is Rs.112500/- + 30% of 12 lakhs , thats Rs.3,60,500lakhs, so a total of Rs. 3,60,500+112500 .
Is This right ?
No, it will be Rs 7.5k (Rs 1.5Lacs * 5%). Income upto Rs 2.5Lacs will be exempt. Tax will be calculated on balance Rs 1.5 Lacs.
Tax will be Rs 32.5k.
A] Upto Rs 2.5Lacs will be exempt.
B] From 2.5 Lacs to 5 Lacs - Rs 12.5k (Rs 2.5Lacs×5%)
C] From 5 Lacs to 6 Lacs - Rs 20k (Rs 1 Lacs×20%)
Tax will be Rs 1.725k (172500/-)
A] Upto Rs 2.5Lacs - no tax.
B] Rs 2.5Lacs to Rs 5Lacs - Rs 12.5k.
C] Rs 5 Lacs to Rs 10 Lacs - Rs 1 Lacs.
D] From 10 Lacs to 12 Lacs - Rs 60k.
Perfect ! Got it .
So if i earn a profit of 15 lacs,
A] Upto Rs 2.5Lacs - no tax.
B] Rs 2.5Lacs to Rs 5Lacs - Rs 12.5k.( 5% of 2.5 lacs)
C] Rs 5 Lacs to Rs 10 Lacs - Rs 1 Lacs.( 20% of 5 lacs)
D] From 10 Lacs to 15 Lacs - Rs 150000. ( 30% of 5lacs)
so total of Rs. 2,62,500/-