Hi sir, I have a query. I am a state government employee in which I receive 34k salary and I am doing option buying trading since March, 2020. And I’m in huge loss approximately 7 lac. Now which ITR form should I file? I generally file ITR 1. Is there anything wrong if I do so? Is it mandatory to show my trading activity despite being in loss? If show, please tell me the process. I know nothing about it. And please do let me know how to carry forward losses to save tax in the years to come?
1 Like
Brother…I think u need to file itr 3…
Audit…that would depend on ur turnover I think…but not sure…
Get in touch with a reliable CA and try to file itr quickly as 31st is last date…U can carry forward ur loss only if u file itr by due date I think…
More experienced members can further guide…
God bless
1 Like
For audit case, due date is 15th Jan. Anyways you shouldn’t delay. Get in touch with a CA.
One more thing. Since you are a government employee I guess it’s illegal for you to trade. Please check your employment agreement. Not sure if its for all government employees.
4 Likes
Thank you so much for your kind words. Can you do me one more favor by providing me the contact of any reliable CA? Actually I don’t know any CA in my place. And can you please tell me the approx expense for having a CA in my case?
1 Like
Sir, I didn’t read any such agreement. Probably I have missed it. In that case what should I do now? Am I going to face any further disaster apart from this financial losses? Any penalties? I don’t know how to handle all these stress. Actually a clerk in our employer office fills up our ITR on behalf of all our school staffs and in return we pay him some amount. Last year and the year before he filled itr 1. Now things are messed up. I don’t know what to do.
Use this tool to find out the tax audit applicability. My first hand assumption is that you would need a tax audit. You can get to a CA via Quicko.
Use this tool to find out your ITR form. Again my assumption is that you will need ITR 3
Central govt employees are restricted from taking f&o trades. Not sure about your state govt service rules.
1 Like
What if I don’t want to carry forward loss and close my trading and demat account? Should I still go with Itr 3? Or I can go with itr 1 that I usually do every year?
Depending on your turn over you can look into persumptive taxation scheme Section 44AD – Presumptive Scheme to be opted for atleast 5 years
1 Like
I think government employees are prohibited from speculative trading. You can buy securities for short term or long term. But I think there are restrictions in intraday trading. You can refer this article :
2 Likes
This is for central government employees. State govt employees may have different code of conduct.
1 Like
Someone from Zerodha has said that this rule applies to state government employees as well. Basically anyone who might have access to insider information.
The said code of conduct is as per
In here government means central government.
State govt employees have their respective code of conduct rules.
Assuming he is from West Bengal, this is the code of conduct for West Bengal state government employees:
1 Like
If so he should adhere by it.
1 Like
ITR 3
Yes. you need to disclose loss and need an audit.
Contact a reliable CA, they will ensure audit compliance. No need to fear for an audit.
1 Like
The consequences wil be as mentioned in the respective employment agreements or the state Act whichever is applicable. Nothing to do with income tax.
You may get away this year but make sure you don’t continue it in future.
-
You must mandatorily show losses in stock market trading in ITR returns.
-
If you are a state govt employee, get in touch with rule book while you joined the job. You should not be allowed to do trading since it is a business. However you can do investing. Better option would be to do it on your mother’s or wife’s name.
-
You should fill ITR3 or ITR4. However, in ITR4, you can’t carry forward your loss to next year.
1 Like
My thinking/understadning is this:
- Only Intraday trading in equity is not allowed
- IF you are option buyer/seller, you could say that you took position as a hedge to your portfolio without any issue (even if it is a business).
Better way would be to trade in your wife/mother a/c.
If you do not wish to carry forward losses, then show it as presumption income (depending on the turn over) and close it.
Plz. do check with your CA.
BR
1 Like
Thanks for valuable suggestion
1 Like