I’m new to options and want to know if my understanding for fno taxation is correct or not.
if my total turnover is 1crore and net profit in fno is 50 lacs.
under 44AD, i can show at presumptive income and I only need to pay tax on 6% of total turnover i.e. total income = 6 lakhs and tax will be 0?
if not, what are other ways to save the tax legally or maybe not?
Hey @mia756
As per the IT Act, Section 44AD directs taxpayer to pay tax on higher of 6% of turnover or actual profit.
Since options trading is an online activity, the reports are available and actual profit can be calculated, thus you need to pay tax on actual profit i.e 50 lakhs in your case.
Option trading is considered as business income, you can claim all the expenses incurred for the trading purpose and pay tax on the net profit. Few examples of expenses can be brokerage, STT, any subscriptions purchased, training course fees etc.
Hope, this helps.
Thank you.
can we show the expenses even if all the profits gained are invested in stock market itself and nothing withdrawn from bank?
Yes, your realised gains will be taxable and you can claim the expenses and pay tax on the net profits.