Voluntarily retired and now investing/trading

Taxation
1

@Quicko
Hi
I have a few of questions.

  1. I was salaried until 31st Oct. and took voluntary retirement. After that I have been investing and trading. I have some STGC , speculative and some non-speculative income. I have paid my advance tax for this FY using ZERODHA platform. Which ITR form am I supposed to file?
  2. i received some compensation for my voluntary retirement. Can I claim a deduction of Rs. 500000 for this compensation while filing my ITR?
  3. I have incurred a LTCL in my ICICIDIRECT account. Where should I report this to carry forward the same for the next 8 years?
    Thanks
2

Hi @bitte97,

  1. Since you have Speculative and Non-speculative income, you have to file ITR 3.
  2. Yes, a Standard deduction of 50,000 can be claimed if you opt for the old regime.
  3. You have to report in Capital Gains while filing ITR. Losses will be carried forward for 8 years if you file ITR before the due date.

Hope this helps!

1 Like
3

@Quicko @Sakshi_Shah
Hi,
Regarding point no. 2, I was referring to the below section:
As per Section – 10(10C) : –

Any amount received or receivable by an employee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement of –
(i) a public sector company; or

(ii) any other company; or

(iii) an authority established under a Central, State or Provincial Act; or

(iv) a local authority; or

(v) a co-operative society; or

(vi) a University established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a University under section 3 of the University Grants Commission Act,1956 (3 of 1956); or

(vii) an Indian Institute of Technology within the meaning of clause (g) of section 3 of the Institutes of Technology Act, 1961 (59 of 1961); or

(viia) any State Government; or

(viib) the Central Government; or

(viic) an institution, having importance throughout India or in any State or States, as the Central Government may, by notification in the Official Gazette, specify in this behalf; or

(viii) such institute of management as the Central Government may, by notification in the Official Gazette, specify in this behalf,

Is exempt to the lowest of the following amount:

  • 5.00 lakhs.
  • Amount equivalent to three months salary for each completed year of service.
  • Amount of salary at the time of retirement for the balance period of months of service left before retirement
4

Hello,

VRS Compensation is taxable as profits in lieu of Salary as per section 17(3) of the Income Tax Act. The taxpayer can claim a standard deduction of INR 50,000 under the head Salary.

However, if such VRS is of an employee of the government or local authority or PSU etc, it is exempt up to INR 500,000/- if certain conditions are complied with and the scheme is framed as per Rule 2BA of Income Tax Rules. Further, this exemption can be claimed only once in a lifetime.

5

Hi,
I understand that there was an amendment to include even private sector employees as well. Could you please clarify this for me as I would like to claim this exemption when filing the ITR this year.
Thanks

6

Hi @bitte97,

The list of eligible employees as per Sec 10(10C) who can claim VRS Exemption includes employees of ‘any other company’. Thus, private sector employees can claim exemption subject to the following conditions as per Rule 2BA:

  • Employee has completed 10 years of service or completed 40 years of age (Does not apply to public sector employees)
  • Can be claimed by all employees including workers and executives except directors
  • VRS Scheme is initiated for a reduction in the existing strength of the employees
  • Vacancy caused by the VRS is not to be filled up
  • The retiring employee shall not be employed in another company belonging to the same management

Amount of Exemption is least of the following:

  • three months salary for each completed year of service
  • salary at the time of retirement multiplied by the balance months of service left before the date of his retirement on superannuation
  • INR 500000

If you claim the exemption for VRS Compensation, it can be claimed only once in a lifetime. Further, if you have relief u/s 89, then exemption under this section is not available.

7

Hi,
Thanks for the detailed explanation. I seem to meet all the criteria. Is there any document that needs to be furnished?
In an unrelated topic, would you have a ready to use excel sheet where I can report all my trading/investing related expenses? A kind of expenses statement.
Thanks

8

Hi
In my case can I also claim my business expenses? I have invested some amount exclusively for this purpose . For example, computer, mobile, broadband, subscriptions etc. How do I do it? Can you provide me a list of claimable expenses.
Thanks.

9

Hey @bitte97

A trader can claim all expenses that are directly related to Trading activity as a deductible.

Learn more about expense a trader can claim in their Income Tax Return.

Hope this helps! :slight_smile:

10

@nithin
Thanks, that was very informative. What about DP charges on sale of equity? It is not mentioned anywhere. Also in case of ZERODHA, where can one find a consolidated list of all taxes and charges paid. Or is this already deducted from the taxable income on your CONSOLE when computing TAX P&L?
Thanks

11

DP charges will be posted on your ledger, you can view breakdown of this on the 'Other Credits and Debits" sheet on the downloaded Tax P&L report.

You can refer to your Tax P&L report, this will include summary of charges paid.