Presumptive Taxation U/S 44ADA and Sort term capital gain tax

Taxation
1

Last year filed ITR 4 for presumptive taxation U/S 44ADA. This year I have short term capital gain from Mutual fund. How can I file presumptive tax either ITR4 or ITR 3 ???

2

You can file ITR 3 which have both the options…

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@TAXIQ.IN i have been only filing ITR4 with presumptive tax because its easy to fill and file. I am not sure if this is the best option for traders.

I would be much obliged if you can clarify my following doubts so that I can plan for tax efficiency in future.

If there is a loss ( say this financial year FY 18-19), I shd not be filing ITR4. Dy doubts are

  1. Is there any way to avoid audit to report a trading loss under ITR3 along with some profits from say dividends (exempt income), interest on bonds (taxable income).

  2. Assuming in current FY, if I suffer trading loss that is less than the profits from say capital gains ( I already have some capital gain for this FY-18-19 but exempt from tax due to grand fathering clause) and exempt income like dividends, Interest on bonds. Can I carry forward those losses to off set next financial year trading profits?

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Thanks. In ITR 3 There is a column about profit amount . When u/s 44ADA book is not maintained, how profit is calculated?

5

In ITR3 , where to show the Income/profit from STCG of debt mutul fund

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Mr.”A” business profession is intraday trading in cash equity and derivative fno intraday

All the transactions are 100% online .

His turnover is 2 crores and his profit is 12% of the turnover .

He chooses Under the itr4 presumptive . As , Under this as per the LAW Rule ; no books of accounts has to be maintained .

So , he declares (with deliberate intentionally or by mistake without intentionally) : turnover as 1 crore and profit @ 10% of the turnover .

My questions are :
(1) since , there is NIL books of accounts to show/maintain under ITR4 presumptive as per the Rule Law ; how would the taxman come to know the actual real turnover and the actual real profit percentage of the turnover ?

(2) Is there any chances of being caught by the taxman ? is there any time limit period of years by which the taxman has power to scrutinize such case ?

(3) what if the taxpayer made the mistake deliberately with intention or without deliberately without intention ; is there any difference in the punishment ? and what is the punishment ?

Pls kindly enlighten …

7

It’s “presumption”:

the act of believing that something is true without having any proof:

The gross turnover can be calculated as everything is online. Gross turnover is not presumed. 6% profit is presumed. There is no concept of intention or deliberation or anything else. The only accusation that can be leveled is the hiding of gross turnover. Even if profit is 99%, the act provides 6% presumption. You can try to be a “good” citizen and pay 99%, but when you make a loss, you still have to pay 6% in order to be in the scheme. if you go out of the scheme, you can’t go back in for 5 years.

8

Hello @HSL

Answer to your queries is as below:

  1. Even though maintaining books of accounts is not compulsory under presumptive taxation, the tax department already has access to your actual turnover through broker submissions, SFT reports, and AIS data. Any discrepancy between the turnover declared in your ITR and the turnover reported by your broker/SFT will be detected automatically.

  2. The likelihood of being identified is very high. The tax department can reopen the assessment within 3 years from the end of the relevant assessment year, and up to 5 years if the income concealed exceeds â‚ą50 lakh.

  3. If the discrepancy occurred unintentionally, the department may only demand the additional tax along with the applicable interest. However, if the under-reporting is found to be deliberate, penalties ranging from 50% to 200% of the tax amount may be levied, and in serious cases, prosecution can also be initiated, which may lead to imprisonment from 3 months to 7 years.

Thank you

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the taxman can come to know the actual real turnover BUT how the actual real profit percentage of the turnover ?

so , although the actual real profit % of the turnover is 12% ; can he declare 9% ?

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@HSL

You are allowed to report profits at 9% of turnover under the presumptive taxation scheme, even if your actual profit is 12%, as per the Income Tax Act of India. Since you are opting for the presumptive scheme, the department generally will not question the lower declared profit.