• Stock market income

I am unable to find suitable code for "nature of business" to be specified in ITR3. 

I have stock market income as follows:

1. Short term gain from stocks (average stock holding period is 1 month)

2. No intra day.

3. No F & O.

4. No salary, no profession. 

Apart from above I have capital gain from mutual funds so I need ITR3 only. 


What is the correct "nature of business" code?
Asked 6 years ago in Income Tax

Dear Sir,

You need to file ITR-2 and not ITR-3 as it is capital gain income and not business income.

Thanks

Vivek Kumar Arora
CA, Delhi
4863 Answers
1052 Consultations

5.0 on 5.0

Dear Sir,

Hope you are doing well !

It is not covered under business income. The same will be treated as capital gain

You are required to file return of income in ITR-2 . You will be required to prepare your return of income offline using ITR-2 utility (Java Excel) available on the e Filing portal of the income-tax department; generate xml file and upload the same. Only the ITR 1 and 4 can be prepared and submitted online.

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
5188 Answers
291 Consultations

5.0 on 5.0

Income from trading in Intra Day and F&O is considered as 'Income from Profession or Business' and hence ITR 3 will have to be filed.

Since you only have done delivery-based trading and through mutual funds, the income from them will be considered as 'Capital Gains' and not 'Income from Profession or Business'.

Hence you shall need to file ITR 2 and not ITR 3.

Hope I've clarified your query. Do let me know in case you need any further clarifications.

Harshith Mannem
CA, Hyderabad
10 Answers
1 Consultation

Not rated

You will need to file ITR2 and not ITR 3 .

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Dear Sir,

If it is delivery based trading then it should be treated as capital gain only and not business income therefore you need to file ITR-2 for it and not ITR-3.

Thanks

Vivek Kumar Arora
CA, Delhi
4863 Answers
1052 Consultations

5.0 on 5.0

Hi,

Whatever the level of trading, it is not considered as a business income, you will have to file ITR 2.

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
5188 Answers
291 Consultations

5.0 on 5.0

What is the average holding period of the stocks sold during 2017-18 Financial Year?

Harshith Mannem
CA, Hyderabad
10 Answers
1 Consultation

Not rated

Hi

Yes, it can be declared as business income. It's at your option to consider it as capital gain or business income. However, you should be consistent in the coming years with such approach that you select.

The code shall be 09028.

You may opt for 44AD whereby your profits shall be presumed to be 6% of the gross receipts I.e. 32 lacs.

Lakshita Bhandari
CA, Mumbai
5687 Answers
912 Consultations

5.0 on 5.0

Hi,

Firstly please note that you have an option to choose between business income and capital gain.

If you choose to opt it as business income in the current year, you will have to stick to it for all the future years unless facts get changed.

Further, if you are opting for section 44AD in the current year, you will have to do this continuously for 5 years and even if you have losses in next year, you will have to show profit of 6% except in the case where you choose to go for audit.

Further, nature of business code is 09028

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hi,

You have an option of disclosing it as business income.

The code shall be 09028.

Hope that clarifies,

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Hi

It can be declared as business income .Code can be 09028.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

Hi

There is no point of harassment until you are clear about your views. It all depends on your intent of purchasing stock. Even an assessee is allowed to manage 2 portfolios at the same time - business and investment portfolios whereby income from business portfolio is taxed as business income and income from investment portfolio is taxable as capital gains. Further, since you don't have any other income, it becomes more easy to prove such trading as a business.

Lakshita Bhandari
CA, Mumbai
5687 Answers
912 Consultations

5.0 on 5.0

Dear Sir,

- If you will avail the option 44AD in ITR-3 then you have to file comply with the section 44AD for next five years also otherwise you need to maintain books of accounts and get them audited.

- You can treat them as business income as you don't have any other income which can be presumed that it is the only business income you have but you need to declare profit equal to or more than 6%/8% and prepare balance sheet for such business.

- Under ITR-2 you need to show capital gain of only 4 lacs.

Thanks

Vivek Kumar Arora
CA, Delhi
4863 Answers
1052 Consultations

5.0 on 5.0

I would suggest you to read the following CBDT circular:

https://www.incometaxindia.gov.in/communications/circular/circular-no-6.pdf

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

I dont see any reason for harassment by 24thyhe department. Till the time you are complying with the law , therecwill be no issues.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Could you let me know what the average holding period is for your shares?

Harshith Mannem
CA, Hyderabad
10 Answers
1 Consultation

Not rated

As you are not having any other income it is better you disclose your income from shares transactions as business income.

Praneeth Thunuguntla
CA, Guntur
56 Answers
1 Consultation

Not rated

If there is no business income & no intra day and F&O activities then you can file ITR 2 turnover without worry

Nitin Jain
CA, Jaipur
214 Answers

4.7 on 5.0

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