Taxpayer need to decide between capital gains or business income?

I read quicko team’s article that taxpayer has to choose (first time share market taxpayer) between how he wants to treat selling or shares - either has business income or short term capital gain …is this still true?

What if taxpayer has both income from selling of shares (due to this bull run) and also have options/intraday income ?

How can one file tax return …I don’t think he can file two separate - one for capital gain and one for business income (options/intraday) correct? @Quicko @TAXIQ.IN @Taxreturns @CA_umesh @Ca_Omprakash_Jain @CA_Guru_Madevu


Hey @curiousvi

A taxpayer can file only 1 return on one PAN. And that return shall mention all the incomes of the taxpayer from different heads. It is at the discretion of the taxpayer to treat Income from Equity as Business Income or Short term Capital Gains.

So if you wish to continue to treat income from delivery based trading of shares as Capital Gain the same shall be mentioned under the head Income from Capital Gains. And the profit/loss from options/futures/intraday trading shall be reported under the head “Income from Business & Profession”

Hope this helps! :slight_smile:

1 Like

Ok so taxpayer can elect how to treat short term gain from delivery based trading - between capital gain vs business income.

Let’s say she choose to treat as business income than there will not be 2 different heads …but if you wants to choose it has capital gains than there will be 2 different heads in one return (not 2 returns)
But I also read that if she chooses to treat as business income (instead capital gain) she has to continue to do that for coming years …she can not change that.

Also, what is your advise …should she treat as business income or capital gain?

Hey @curiousvi

Yes, it is at the discretion of the assessee to choose the treatment of delivery-based trading as capital gains or business income. If he/she considers delivery based trading as business income the same shall be mentioned under the head “Income from Business & Profession”

As per the CBDT Circular, the treatment of income from the sale of shares should be consistent each year. The only condition is to follow the same method continuously in subsequent years. The taxpayer shall not be allowed to adopt a contrary approach in subsequent years.

Hope this helps! :slight_smile:

1 Like

i opted for stcg in past 2 years and i opted for business income in last year…what should i do…many cas say that you cant show it as capital gain…and i have showed it as pgbp last year…i am really confused

If one wants to show equity sale as business income instead of capital gains/losses, can one show STCG as capital gains and LTCG as business income? @Quicko

If an individual has FnO loss than it should show in ITR 3 as business income and maintain Balance sheet and PnL statements. Now the question arises that weather it should file ITR 3 at business level or at assesse level because at assesse level all other asset and liabilities apart from FnO trading should also be mentioned in balance sheet like purchase of house or plot, any loan , OD etc which I think much better way .What you think @Quicko ?

Hey @aashutoshg2007,

Both of these are different schedules. If you are reporting business income, you’ll have to report your businesses’ assets and liabilities in the balance sheet.

Personal assets and liabilities are mandatory to report if your total income exceeds ₹50L and in that case schedule AL needs to be filled in the ITR.

Hope this helps!