We are a bunch of friends who invest/trade the markets. Couple of us invest only, while 3 of us trade F&O actively. We haven’t really declared any returns from market till date because it has been losses all this while. One person in the group has got a notice from Income tax department a couple of days back, so this has scared the shit out of us, and we have decided to start filing
Which forms and how?
ITR 1 can be used only if you have a salary income, there is no provision to show capital gain or business income. Your friends who don't trade/invest and earn only salary income can use this.
ITR2 for your friends who only do investing in the markets, since you get an option to declare capital gain (your short term and long term).
ITR4 for your friends who trade futures and options, as it is considered as a business income.
ITR 4S is what is introduced this year for preemptive taxation for people who don’t come under audit and from the following sectors: Transport, construction contractors, small retail shops.
How? Check this post, has a detailed explanation.
Is presumtive taxation allowed only for construction business, transport or small retail shops?
Yes and along with you can include retail trading, this is a very grey area as ideally trading the markets shouldn’t come under presumptive taxation.