Intraday Income and Other business Income (44AD)

Taxation
1

Hi,

So, one of my parents has the following income sources this year:

  • Income from business (this was filed under normal rules but we decided to switch it to 44AD from this year).
  • Income from Intraday (speculative income) with turnover < 1 lakh.

Business income exceeds 2.5 lakhs but is under the 44AD limit. Also, there is no FnO trading involved here - only normal equity and intraday. Total turnover is < 25 Lakhs.

So my questions are:

  1. Am I still eligible to use section 44AD as my primary business is eligible for that?
  2. Do I need to maintain books/accounts for speculative business (intraday) separately OR do I need to maintain combined books/accounts for both these business OR am I eligible to not maintain any books/accounts?
  3. Where do I declare my intraday income? Is it under Part B P&L (item 65) or under Trading Account?
  4. What do I select under the question “Whether assessee is declaring income only under section 44AE/44B/44BB/44AD/44ADA/44BBA” AND “Are you liable to maintain accounts as per section 44AA?”?
  5. What do I fill in Balance sheet? Do I fill just the no-accounts case (44AD) OR both sections (as 44AD + speculative) OR only the normal accounts case?
  6. Unrelated to this particular case - but at what point does someone dabbling in intraday need to file ITR-3 instead of ITR-2? If turnover is <1,000 - do we still need to file ITR-3? Or, can I show that income under another head such as Other Sources or STCG?
2

@Quicko would really appreciate your help here.

3

Can anyone help here?

4

As per my understanding:

  • Turnover determined to arrive at the eligibility for Presumptive taxation will include both the business. As they are under the limit, you are eligible to file under presumptive taxation

  • The main advantage under presumptive taxation is one need not maintain books of accounts for taxation purpose. So, the liability to maintain books under section 44AA won’t be applicable.

  • irrespective of turnover, if there is business income , one has to go for ITR 3.

@Quicko @Jason_Castelino can throw more light on this topic

1 Like
5

Thanks for replying!

So in case I show my main business in ITR 3 under 44AD (as I am eligible). Where do I need to show my speculative (intraday) income? Should I include it in 44AD / Show it in PnL under No accounts case (line 65 for speculative income) OR do I need to show accounts and file it under trading account (again, under heading speculative income, but where accounts are maintained)?

6

You need to file ITR-4 for presumptive income.

7

But speculative income can’t be shown in ITR-4