My Turnover and profit for year 17-18 as below :
Intra-day / Speculative profit 698.45
Intra-day / Speculative turnover 1741.95
Short-term profit 2709.35
Short-term turnover 929393.65
Long-term profit 0.00
Long-term turnover 0.00
other than this I am having own business and salary income (Both)and net taxable income is around Rs 8 lack/per anum
Do I need Audit for trading as profit is less than 6 %
Yes. The only way to avoid is to declare a profit of 6% on turnover and pay taxes on it. You won’t be able to upload the Income tax return by showing less than 6% profits. In your case, it would be advisable to go for tax audit as the cost of audit will be far less than the tax you’d have to pay on 6% of your turnover.
Hi @namitrathore @TAXIQ.IN
Is this a legal and valid way as per it dept.i hear different views from different CA. Some say it is illegal to do this way.what if they tally our returns with statements from brokers and find we don’t actually have profit but showed profit only to escape the audit
Use ITR 3. Report Short-term profit ( STCG ) under ‘Schedule CG’ . Short-term Turnover is of no significance if you classify your Delivery based transactions as an investment activity.
Audit requirement depends on the Profit , Turnover and Nature of the other business you are doing. If you can give us some more details about your other business, We might help you out.
I am a salaried person having > 2.5 lakhs taxable income.
Have the following
Mutual fund capital gains
Equity capital gains
Future and Options transaction with net profit approx 1600 with total turn over as 56000
intraday trades having losses nearly 6000
One of the CA i spoke to said that we can show 8 to 10 percent on 56000 turnover as profit and pay tax on this profit instead of going for audit as it costs more .So my question is this the correct and legal way?
Yes, You can declare 6% of the T/O ( FnO + Intraday ) as profit and pay taxes on it accordingly. Yes, This is a legal way under Section 44AD and You are also eligible for ‘NO Account Case’.
But here lies the catch. If you opt for Sec 44AD this year, You will have to declare your business income under that section ( more than 6% of your T/O ) for next 5 years compulsorily. If you wish to offer profits less than 6% of T/O for any particular year ( Let say X ) out of those 5 years, You have to maintain books and get them audited as well. As a penalty, Irrespective of your profit you will be also required to maintain books and get them audited for next 5 years after that particular year X.
If you never declared profits under Sec 44AD in any 5 previous years then you can easily carry forward your losses without Tax audit but you have to maintain books of account. You have to use Balance sheet and P&L Sheet, You can’t use ‘NO Account Case’. I would suggest you to do the same instead of going for Sec 44AD. Ask your CA to create Balance sheet and P&L statement for you. It should not cost you much.
File ITR 3 and ‘Schedule CG’ will take care of your capital gains.
The Income tax officer will be within his rights to question you if you have inflated your income. But he won’t because you paid income tax on your inflated income. If he finds out that you have inflated your income and want to assess your return based on actual income, you will benefit as you would get a refund of tax paid on the inflated income. So IT officer won’t be asking you this. As long as your actions did not cause revenue loss to the govt, you are ok.
Perfectly legal. Govt doesn’t mind earning revenue on non-existent income.
But for itr-4 instruction says not to be used by those having speculative business income ,so how can day traders use presumptive itr-4 ? please clarify?