I am a derivative trader and want to open a sole proprietorship firm for trading purpose. The reason is for an individual taxpayer, many of the deductions are going to go away. Therefore I want to open sole proprietorship trading account and charge all eligible expenses such as employee salary, business tour, etc under the trading P & L.
I have the following queries
What is the procedure to open a sole proprietorship firm for derivative traders
Can I include the trading under individual name in the tax and P&L statement of sole proprietorship firm (of mine)
Do I need GST registration if yes, what kind of returns do a derivative trader need to file regularly
Can u also mention a brief of expenses that cud be charged under firm’s P&L
When it comes to income tax, registration of sole proprietorship firm will not affect your tax liability. Since the PAN of an individual will be the PAN of the Sole Proprietorship firm.
No, GST Registration is not required in case of a derivatives trader.
You can claim expenses such as professional fees, consultancy fees, office supplies, rent expense, books and subscription, trading expenses, etc.
So i assume there is no difference between the kind of expenses i could claim under sole proprietorship or under individual account name…
for example i could claim salary for an employee who is assisting me on trading both under individual trading account & sole proprietorship. Is this correct?
@Quicko
Corporate tax is low compared to personal tax if we are in 30% slab. So can you please tell the Pros and Cons for trading under private limited company rather than individual account.
Corporate tax is low compared to personal tax if we are in 30% slab. So can you please tell the Pros and Cons for trading under private limited company rather than individual account. @Quicko
Please can you use quotes while replying.
The gentleman has a valid question and there could be hundreds waiting for clear answers which would be appreciated.
@Quicko is it possible for plc to purchase shares in its own name if its primary objective is to trade in securities and financial assets without requiring NBFC license.
@Quicko . When applying PLC Registration in Memorandum of association we need to tell about our business activity. In our case its purely for trading only. So any chance for reject the application.
The cons i have a doubt. Suppose the PLC generate good amount profit and then withdraw a portion to directors account, For example 10 Lakhs, In this case director again need to pay tax for that. Or the best practise is to live with company account and forgot the personnel account.
While applying for the PLC registration, one needs to be careful with the objective of PLC. The objective should clearly state that PLC will only accept the deposit/advances from directors only. Otherwise, there are chances of rejections.
PLC can not share profits directly with shareholders/directors. PLC can distribute profits in the form of Dividend. Up to FY 2019-20, DDT will be paid by the company hence dividend will be exempt in the hands of the shareholder up to INR. 10,00,000. However, from FY 2020-21, TDS will be deducted on dividend income.
Hope this helps! For any further questions feel free to connect with us at Quicko.