I’ve been submitting my ITR displaying earnings from equities as Capital positive factors. This supply of earnings contains income from fairness investments together with intraday transaction and transaction in Futures and Choices. Now I wish to present this earnings below the top “Income and positive factors of enterprise”. Can I do that? Whether it is doable are there any implications for the previous returns filed displaying this earnings below the top Capital Good points? As per my understanding Securities Transaction Tax (STT) is deductible provided that I present this as enterprise earnings. Is that this appropriate? Can I declare the deduction for STT if I proceed to indicate this earnings below the top capital positive factors? If I determine to indicate this earnings below the enterprise head, can I declare even supply primarily based transactions below enterprise head or it has to must be proven below capital positive factors solely?
The transactions of intraday buying and selling and people below future and choices are enterprise transactions and in my view can’t be proven below the top “Capital Good points. So far as supply primarily based transactions are involved, prima facie these are taxable below the top “Capital positive factors”. Whether or not the delivery-based transactions change into taxable as enterprise earnings or capital positive factors would depend upon numerous elements like quantity of transactions, supply of cash for funding, common holding interval of the investments and intention of the tax payer. So whether or not these transactions are to be taxed below capital positive factors or as enterprise earnings would depend upon information of every case and a readymade reply can’t be given.
Because the transactions of Future and Choices (F & O) and intraday represent enterprise transactions and the revenue/loss on such transactions ought to have been supplied as enterprise earnings up to now. It’s by no means too late to appropriate a mistake. So begin displaying these transactions as enterprise transactions for the ITR to be filed. It is vitally troublesome to state whether or not altering the therapy of those transactions from capital positive factors to enterprise earnings may have any implications on your previous earnings tax returns. For my part, the probabilities of your previous ITR reopened are minimal until the earnings tax return being filed now’s chosen for detailed scrutiny.
You can’t declare STT paid towards your capital positive factors. Nevertheless, you’ll be able to declare STT as enterprise expenditure in respect of the transactions handled as enterprise. Please notice for intraday and F & O transactions, you’ll have to present minimal 6% income on the turnover of the 12 months. In case you declare that your web income are decrease, you’ll have to get your accounts audited no matter the quantum of the turnover. In case your turnover exceeds specified limits, it’s a must to get your accounts audited no matter the proportion of turnover as web income you declare.
Balwant Jain is a tax and funding professional and may be reached on jainbalwant@gmail.com and @jainbalwant on Twitter
Supply: Live Mint