F&o loss set off against Equity Intraday profit

I have a few questions. It would be a great help if anyone can provide rhe answers

  1. I suffered loss in f&o last year. I did some equity intraday trading this year and earned some profit… can f&o loss be set off against equity intraday trading profilt. If not , is there any other way by which i can save the tax on intraday profit
  2. I am a salaried person and i do the equity intraday and delivery trading. Can i choose the presumptive taxation scheme and file the return with itr-4 form ?
  3. Is it possible to carry forward the losses by choosing the itr-4 form i.e presumptive taxation?

Hi @rocky18

  1. Yes, you can. Any business loss other than speculative business (F&O is considered as non-speculative income) can be set off against any head of income except from Salary.

  2. As all the transactions are in digital mode, it doesn’t really make sense to report “presumptive” income as actuals are easy to fetch for the department so there is always a potential chance of department seeking explanation or notice in future so whether you wanna take that risk is upto you and your tax consultant.

Note : This is my personal view. @Quicko and Other experts @Jason_Castelino can share their thoughts on this as well.

  1. @Quicko can help us here.
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I always prefer declaring actual income.

Hey @rocky18,

With regard to your queries,

Yes, F&O losses can be set-off against your profits from intraday trading.

As all transactions in the case of trading are digital and books of accounts can be easily maintained, it is better to disclose your income as regular business income. If you opt for presumptive taxation scheme you’ll have to report 6% of your turnover or actual profits, whichever is higher, as your income and pay taxes on the same.

You need to report a minimum of 6% of your turnover as profits if you opt for the presumptive taxation scheme. You cannot report losses and hence, cannot carry them forward either.

Hope this clarifies.

Thanks for replying. I have some more doubts

  1. What is the total turnover in case of Presumptive taxation for Share market Trading? I am quoting 1 example here-
    I bought 100 share of Company A at 100 rs each share - Total Buy Value is = 10,000 rs/
    I sold 100 share of Company A at 110 rs each share - total Sell value= 11,000 rs/
    Profilt earned = 11,000-10,000 = 1,000 rs/
    I bought 100 share of Company B at 100 rs each share - Total Buy Value is = 10,000 rs/
    I sold 100 share of Company B at 90 rs each share - total Sell value= 9,000 rs/
    Loss sufferred = 10,000 - 9,000 = 1000 rs/
    What would be total turnover here?
    Toal turnover would be Total buy value (A & B) + Total Sell value (A&B) i.e 10,000(A-Buy) +10,000(B-Buy) + 11,000(A-Sell) + 9,000(B-Sell) = 40,000 rs
    Toal turnover would be Profit earned from Company A + Loss beared from Company B
    i.e 1000 (Profilt) + (-1000 Loss) = 2000 rs

  2. I am a salaried person. If i go with the Presumptive taxation scheme. How the tax would be calculated on my salary

  3. The question above i posted, i got 1 of the response that there is no point of going with “Presumptive” income… I am also doing the Freelancing work.
    Now i have 3 source of income - Salary income + FreeLancing Income + Share Market Income . Can i file the ITR-4 (form for Presumptive Taxation) ? And is it safe to file the ITR-4. Asking this i do not want any notice from Income Tax department. I read it on income tax website that if income is upto 50 lakh from all the source then you can file ITR-4

  4. What would happen if i incurred the loss in Share market in a financial year and i opted for Presumptive taxation?

Hey @rocky18,

The turnover is calculated as sum total of absolute profits and losses. Hence, this is correct.

Your salary income will be added to the profits you declare and the total income will be taxed as per slab rates.

You can declare income from freelancing under the presumptive taxation scheme and your business income (i.e. your trading income) as normal business income. In this case, you will have to file ITR 3. In ITR-3, you can choose whether you want to report your business/profession under the presumptive scheme or not.

You can set-off and carry them forward if you declare it under normal business and not opt for a presumptive scheme for your trading business. If you do opt for it, you need to mandatorily declare a minimum 6% of your turnover as profit (can’t declare profit less than 6% or losses) and pay tax on the same.

Hope this clarifies.