I have few queries regarding deduction of expenses:
Can i claim Zerodha Demat AMC (Rs.354) as expense?
By mistake I closed my position in Liquidbees and incurred intraday loss of Rs.100 plus Rs.250 as charges. Can I claim this as specuative loss and carry forward the loss of 350? Since this is debt and not equity is it allowed to show as specuative loss?
I have paid Rs.30k+20k (50K) to a family member thru online transfer for assisting/guiding me in F&O Trading.
a) How do I claim this - as Salary or Advisory/consultancy fee? What are the TDS conditions for such payments? I read that Individual/HUF with no tax audit liability need not deduct any TDS.
b) What are the addl things I need to keep in my mind or comply with if I show it as Salary? (apart from no TDS till 2.5L) If I make such payments once in a qtr instead of monthly can I still claim it as Salary?
c) How to consider profit sharing - say if I pay some % of profit in addition to above payments
My turnover is around 20L and profit is around 3L. After expenses it is less than 2.5L plus Salary+other income of 6L. Do I need to maintain books of accounts since Business income is less than 2.5L and this is 1st yr of Business income.
Can I claim Zerodha Demat AMC (Rs.354) as expense? – Yes, you can claim AMC as expense.
By mistake I closed my position in Liquid Bees and incurred intraday loss of Rs.100 plus Rs.250 as charges. Can I claim this as speculative loss and carry forward the loss of 350? Since this is debt and not equity is it allowed to show as speculative loss? – Liquid Bees is a debt ETF; it can’t be treated as speculative loss. You should treat it as short term capital loss.
I have paid Rs.30k+20k (50K) to a family member thru online transfer for assisting/guiding me in F&O Trading.
a) How do I claim this - as Salary or Advisory/consultancy fee? What are the TDS conditions for such payments? I read that Individual/HUF with no tax audit liability need not deduct any TDS. Treatment/Categorization should be same at both ends; meaning you should also treat it as Salary expense and the recipient should also treat it as Salary Income. If you are treating it Advisory or consultancy fees; they fall under the category of professional fees and TDS is to be deducted if the payment crosses Rs 30K. However there is no need to deduct TDS if tax audit was not applicable in previous financial year.
b) What are the addl things I need to keep in my mind or comply with if I show it as Salary? (apart from no TDS till 2.5L) If I make such payments once in a qtr instead of monthly can I still claim it as Salary? Professional tax registration is mandatory if you are paying a salary or wage of more than Rs 15000/-
c) How to consider profit sharing - say if I pay some % of profit in addition to above payments Treat the profit % as professional fees and deduct TDS if applicable.
My turnover is around 20L and profit is around 3L. After expenses it is less than 2.5L plus Salary+other income of 6L. Do I need to maintain books of accounts since Business income is less than 2.5L and this is 1st yr of Business income.
@San78 Thank you for your reply. Few more queries…
1.Fine. So I can claim it as business expense eventhough Zerodha shows it under EQ-TAX-PNL in P&L report and I use it only for F&O? Can I also deduct AMC of another demat a/c which is used only for investment purpose?
2.Can intraday loss in this case be shown as STCL? If so, I can also include charges of Rs.250, right? Or I can altogether ignore this small loss and not show it in ITR?
a) So I can show this 50k as consultancy fees without need for any TDS deduction.
I need to enter this in Part A- P&L Column 32 Professional / Consultancy fees / Fee for technical services, If shown as Salary I need to show it in Column 22 Compensation to employees - am I right?
b) Is the 15000 limit for each payment or monthly/yearly? Is registration mandatory even if I do adhoc payments or once in a qtr instead of monthly. Can I simply show this as expense in Column 46 Other expenses in such cases?
Ok. Just the bank statements, Zerodha reports and CAS is enough right?
Fine. So I can claim it as business expense even though Zerodha shows it under EQ-TAX-PNL in P&L report and I use it only for F&O? Can I also deduct AMC of another demat a/c which is used only for investment purpose? - You can claim only those expenses attributable to FNO Business. Hence you cannot claim AMC of another demat which is used for investment purpose. With regards to AMC - you claim it proportionately depending based on gains earned or since it is around Rs 350 - claim 50%.
Can intraday loss in this case be shown as STCL? If so, I can also include charges of Rs.250, right? Or I can altogether ignore this small loss and not show it in ITR? Intraday is only in the case of equity shares. You need to show it as STCL. What is the nature of these charges?
a) So I can show this 50k as consultancy fees without need for any TDS deduction.
I need to enter this in Part A- P&L Column 32 Professional / Consultancy fees / Fee for technical services, If shown as Salary I need to show it in Column 22 Compensation to employees - am I right? Yes 32 is Professional and 22 is Salary.
b) Is the 15000 limit for each payment or monthly/yearly? Is registration mandatory even if I do adhoc payments or once in a qtr instead of monthly. Can I simply show this as expense in Column 46 Other expenses in such cases? It is per month per employee. As nature of the payment is ascertainable - it is better to declare it as professional fees.
This Rs.354 is from demat a/c used mainly for FnO trading. So I will claim 100%
2.The usual charges - Brokerage, Stamp duty, Exchange Txn, SEBI Turnover. There is no STT since it is debt ETF.
Ok fine. This is clear.
Income tax site says “If your income from business or non-specified profession exceeds Rs. 2.5 lakh, or the turnover of such business or non-specified profession exceeds Rs. 25 lakh, you are liable to keep and maintain books of accounts and other documents.”
I also read at several sites that 2.5L Business income/25L Turnover is the limit for Individual/HUF. So what is “income from business” in this case - Gross or Total? Total or net income is after deducting expenses, right?
As I said earlier my turnover is around 20L and profit is around 3L. After expenses, net Business income is less than 2.5L and Salary 5L and other income of 1L. In my ITR3, Part B-TI Col 3. Profits and gains from business or profession shows less than 2.5L So what is business income in this case 2.5L or 3L? Or, should I take into account entire income including Salary for ascertaining this limit?
if I don’t need to maintain books, can I submit under “No accounts case”?
As per Income Tax provisions, an individual needs to maintain books of accounts under following circumstances
A] If income from business or profession exceeds Rs 2.5 Lacs
B] If turnover from business or profession exceeds Rs 25 Lacs
C] When you have opted for presumptive scheme in previous year and declares profit less than 8% or 6% as applicable in current year and your overall income exceeds basic exemption limit.
Since your turnover is less than 25Lacs and business income is less than 2.5Lacs, maintaining books is optional.
Further, you can submit under “No accounts case”. For this, you need to fill relevant details under Balance Sheet(#6). Also, in Schedule Part A - General; under Audit Information - Select NO (a1) [Are you liable to maintain books as per Section 44AA]
In addition to what you said, now I don’t need to fill Schedule Trading Account & Schedule P&L items 13-60 and instead only need to fill item.64 in P&L, right?
Liquidbees is a mutual fund and treatment should be similar to the Debt Mutual Fund. It should be reported as Capital Gains.
You can claim as an advisory expense. However, there must be a valid invoice in your name with the correct details. TDS is not required to be deducted under Section 194J if you are not liable to tax audit.
To report it as a salary expense, salary slips should be maintained. Please note, any expense can be claimed only if the expense is related to business activity.
If income is earned on a PAN, it should be taxable on the same PAN. In the case of sharing profits, a separate entity with defined profit sharing should be created.
Since turnover is less than 25 lacs, you need not maintain books of accounts.
Hi, I have a few queries:
I have short-term capital gains, intraday losses, and F&O profits in Zerodha as well as other accounts. I also have a salary income.
What expenses can we claim in STCG? STT, GST, Exchange Transaction Charges, SEBI Turnover Charges, Stamp Duty, Brokerage?
What expenses can we claim in speculative business income? STT, GST, Exchange Transaction Charges, SEBI Turnover Charges, Stamp Duty, Brokerage?
What expenses can we claim in non-speculative business income? STT, GST, Exchange Transaction Charges, SEBI Turnover Charges, Stamp Duty, Brokerage?
Also can I claim AMC charges, DP Charges, and Bank Transfer charges in any of the above?
The shares that we are holding have already incurred the above charges, should we take those charges as expenses currently or only when we sell them? ex: I have bought SBI in July 2020 and am still holding it. That transaction has already incurred charges like STT, brokerage, etc. Should I claim those expenses right now or only when I sell SBI shares?
I have STCG and F&O profits. I am sitting on a 9000 loss in intraday trading. Is Audit applicable to me?
For Non speculative business income i.e FNO - you can claim all the expenses STT+GST+Exchange Transaction Charges+SEBI Turnover Charges+Stamp Duty and Brokerage.
Yes, you can claim AMC, DP Charges and Bank Transfer charges.
Audit applicability depends on the turnover. If it exceeds the threshold limit; then audit is applicable.
Regarding AMC Charges and Bank Transfer charges, in which income should I claim them, STCG, speculative or non-speculative as they are given in Others Debits/Credits in Zerodha and their purpose is also general?
Also, DP Charges are only for short-term trades, so should they be claimed in STCG only?
You can claim all transfer expenses except STT to calculate STCG
You can claim all transfer expenses to calculate Speculative Profit / Loss
You can claim all transfer expenses to calculate Non-Speculative Profit / Loss
Yes. Since these charges are directly related to trading activity, you can claim them as expenses to compute Profit / Loss
You can claim expenses against an income. The income (capital gains) would arise on the sale of shares. Thus, when you compute capital gains on the sale of shares, you can claim both expenses incurred on sale and purchase
Tax Audit is applicable if profits are less than 6% of turnover and total income exceeds the basic exemption limit. However, in case of a negligible loss, you may not opt for a tax audit if you do not want to claim the loss.
Thanks for the replies. Can you also help out on the following?
Regarding AMC Charges and Bank Transfer charges, in which income should I claim them, STCG, speculative or non-speculative as they are given in Others Debits/Credits in Zerodha and their purpose is also general?
Also, DP Charges are only for short-term trades, so should they be claimed in STCG only or in all?
I am sitting on a intraday speculative loss of 12K. Can I avoid the audit and not carry forward the loss?
As mentioned in point 5, I can claim expenses on the sale of shares, means I have to segregate the charges incurred just on the purchase of the shares that i am still holding and leave them as it is?
Trader having income they classify Capital Gains cannot claim any trading expense except Brokerage. This can happen in the case of traders investing in equity delivery and mutual funds.
But you have mentioned I can claim all charges other than STT. Please clarify?