Stock Market and Taxes, All You Need to Know!.The number of people actively trading in the stock market has grown significantly over the years. However, it can be very challenging to determine how much income you should include in your tax return. This article aims to help security traders avoid these common mistakes.
Any loss or profit that was incurred from trading in future is considered as business income. Individuals can deal in F&O trades without opening a separate company.
Also reporting income under the business head comes with multiple benefits. One of them is that you can claim expenses related to trading.
Like any other business, you can deduct expenses that are directly related to earning from F&O transactions. These expenses are as follows: rent of the premises, internet charges, brokerage commissions, consultancy charges, and so on. You must also maintain the receipts and bills of such expenses. Also, any expense exceeding Rs 10,000 in a single day should not be paid in cash to be deemed valid.
How to report a loss from F&O Trades?
It has been made mandatory for individuals to report any losses on their ITR. Income tax department will be issuing notice in the case of failure in reports.
While filing your returns, declare all your losses and avoid any tax liability on the basis of these transactions. This benefit can be set aside against any other income. If the loss can be fully set off in the current year and cannot be fully recovered in the next year, it can be carried forward for eight years. This means that the loss can only be carried forward against business income in the subsequent years.
When to maintain books of accounts?
Accounts books must be properly maintained in the following case:
When the turnover is more than 5 crores. The turnover values were changed with the introduction of the Finance Bill 2020
If the turnover from the trade is less than Rs 2 crore, and if profit less than 6% of turnover and total income exceeds the basic exemption limit An audit is not required if turnover is less than Rs 5 crores but your total income is within the taxable limit of Rs 2.5lks.
When to get the Audit done?
An audit should be done if your turnover is above the criteria.The due date for filing the ITR in case of business to whom the audit is applicable as the government notifications of the last dates each year..
Self e-learning courses on Income Tax and GST
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What you will learn from our GST course
- Basic Understanding of Goods and Service Tax
- How to claim Input Tax Credit
- About Reverse charge Mechanism
- Composition Schemes
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- Returns and Its filing
What you will learn from our Income Tax course
- Basics and Major heads of Income
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- Depreciation under the income tax act
- Books of accounting & Documents and Maintenance of books of accounts
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Classes are structured to help students not just learn concepts but also to practice and revise them. Every class is carefully designed by experts from various fields with technologies that are proven to give immediate results.