F&O trading expenses which can be claimed as business expense

Taxation
21

Can you help on these 2 queries:

  1. How exactly the IncomeTax people identify the expenses are related to business?
  2. Apart from the expenses mentioned in the article, any other expenses can be claimed?
22

@Quicko can u update on this

23

@Quicko please update on this

24

Hello @ajay_kumar10

Please find the reply to your queries as below:

  1. ITD may ask for relevant proof and facts based on which they can identify whether the expenses incurred and claimed as business expense are actually incurred for business purpose. There is no rule for the same. However, the liability to prove that the expenses were incurred for business purpose always lies on the taxpayer.
  2. Yes, the article has only few examples of expenses that can be claimed. The list changes for every business.

Thank you.

1 Like
25

@Quicko

Lets say I am a salaried employee and trade FNO in personal account.
I am aware that, laptop, mobile and internet expenses can be claimed from FNO profits.
But I am not sure if car loan or its expenses can be claimed from FNO profits.
Please share your inputs on the same.

26

You can claim it

But the question is will you be able to prove it you used the car for business purposes (F&O) when they come knocking ?

27

If you have an office that’s not your home and you need the car to travel there for business (trading), then the depreciation on that capital asset can be claimed. You can’t claim the car or any capital asset as an expense but can deduct depreciation. :open_book:

If you end up using the car for personal purposes, just like internet and other expenses, you can only claim depreciation/deduction on the time used for business activity. :face_with_monocle:

28

So I need an office (pvt limited) to prove that I can use a car between home and office ?

29

An office can be for your trading business, it doesn’t need to be a registered business unless you have other primary business activities. :dizzy:

30

@Quicko What are the ways people usually do this… they setup office ?

also, I heard that if we have to setup a company just for trading, FNO cannot be the primary business. Any idea how others are doing it then. I am sure many are setting up only for trading if so why is RBI not acting on them

31

Hello @RS6006

In case you are incurring car expenses, rental expenses, or fuel expenses solely for business purposes, you can claim them as business expenses. You don’t need to set up a company just to rent an office — even as a sole proprietor, you can have an office and claim related expenses. The key is that any expense claimed must be exclusively for business and backed by proper documentation.

However, if you plan to set up a company with the primary objective of trading in securities, it falls under the definition of financial business. In such cases, obtaining an NBFC license from the RBI is required.

1 Like