Current Accounts for Two small businesses

I have the following two small businesses planned out and was thinking of ITR4S. Would I be able to use section 44AD?

1) Consulting services (Expected Inc. 50,000 per month)

2) Stock trading. 

If I can use one current account for both 1 and 2, then I can easily use the money earned from 1 in 2 also.

I am an individual, operating alone, and it would be a headache to open and maintain two current accounts separately. I already have a few savings accounts and mutual funds, and it is already difficult to handle the confused paperwork of the financial sector.

Please provide a minimum headache solution.

I cannot afford to get my time entangled in forming some company then getting seed capital and TIN numbers and DIN numbers and DSCs and all that jungle of confusion that the govt regulators create for every tiny thing.

Also, is ITR4S applicable?

Please advice on how to best carry out these activities.

Thank you. Much appreciated.
Asked 2 months ago in Income Tax from New Delhi, Delhi
ITR 4 is applicable. For Share trading need to check whether it is Short term or long term to guide u more
Shyam Sunder Modani
CA, Hyderabad
955 Answers
4.9 on 5.0
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Hi,
if you are running above businesses in your name or as proprietorship, then  one current account sufficient. 
Yes, you can file taxes on presumptive taxation basis .
For stock trading tax  u/s 44AD income will be assumed 8%, you can NOT claim any expenses or losses
For consultancy services - u/s 44ADA , as consultancy services fall under Professional services- income will be assumed 50%, you can NOT claim any expenses or losses.
or else you can maintain  the books of account and can claim lesser income or losses. then you need to file ITR 4
dont worry as yours is not a company.you can easily used your income for your other business or services.

there few more conditions under section 44ADA, that A  person  opting  for  the  presumptive  taxation  scheme  of  section  44ADA  is   liable  to  pay  advance tax. 
second
 Any person who is eligible to avail the scheme of Presumptive taxation can opt for the scheme any time.
 a person can opt out of the scheme at any time . however , if the person opts out of the scheme then he can not avail the benefit of the scheme for the next 5 years.
Suppose an eligible assessee declares his income under Section 44AD(1) for A.Y. 2017-18. Then as per new Section 44AD(4), he has to file returns for next 5 assessment years i.e. from A.Y. 18-19 to A.Y. 2022-23 by declaring his total income by applying section 44AD(1).

Vishakha Agarwal
CA, Bangalore
213 Answers
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Hi,
 section 44ADA is applicable from FY 2016-17.
if you are receiving Rs 25000 from your client then whole amount is your gross receipt..

You can continue work as an individual, Proprietorship will give name to your business, and its income will be included i your ITR. no other benefit as such.
it depends on quantum of trading done by you , if the purpose of trading to earn profits and number of transaction and amount involved are more then it is business and you are required to file ITR 4 or 4S.
otherwise it will fall under capital gain income.
if you file ITR 4 or capital gain loss (conditions applicable)
, you can carry forward your losses for 8 financial years.
and can claim all the expenses like advisory expenses, telephone, internet, brokerage fees etc.

if you file ITR4S you have to show gross income  and pay taxes and can not claim any losses.
Vishakha Agarwal
CA, Bangalore
213 Answers
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in your case, only service tax will be applicable NOT vat , that is also depends on your revenue. if it exceed Rs 9 lakhs in any financial year, then you are required to registered for service tax. if you are giving consultancy services to outside india ie exporting four services then it will be exempt from service tax.
yes you are required to select to business categories:
0703 & 0204.
there is different calculation for gross receipt in trading of shares.
If the purchase and sale of shares are delivery based, the gross sale value has to be taken as the turnover.
If the transactions in shares are non-delivery based, it is only the net of the sales and purchases that is to be treated as turnover. 
Tax audit under Section 44AB would be required only if the turnover so computed exceeds Rs 100 lakh.

It is better you consult a chartered accountant personally , he/she will explain you clearly..as many other parameters are there to look at...to decide your trading in share falls in which category, capital gain or business.
if you want you can contact me at 9538801976
Vishakha Agarwal
CA, Bangalore
213 Answers
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Sir

I will answer your question in simple answers :

1. For calculation of profit in Shares : Take sale cost and also take purchase cost of that stocks, the difference is short term gain/Loss. If the shares are held for more than 12 months then it is long Term Capital Gain/loss which is exempt from Tax.

2. You can also get this statement from your Broker where you are doing trading. You can ask for P & L Account or capital gains statement . He will provide you the same .

3. When you are receiving Consultancy fees this will be treated as gross receipts. From the Gross receipts you need to deduct expenses like salary, Telephone exp, Conveyance etc and the figure arrived at will be your net Income which is chargeable to tax.
Shyam Sunder Modani
CA, Hyderabad
955 Answers
4.9 on 5.0
  Talk to Shyam Sunder Modani
Hi,
As i told you before for  trading in shares will attract 44AD, it means your income from business in trading = 8% of turnover/ gross receipts.
As you are trading in shares on delivery basis - your gross sale value will be the amount you paid to purchase shares.
but if there is a loss you have to still pay taxes on sale value of shares.
the decision to use which ITR , should be taken at the end of the year,based on your income.
It is always advisable to keep all the paper to prove your case in case any any queries are raised.

i believe that shares trading are always online and you can easily generate report online any time. 
so i would advise save your decision till the end of the financial year and choose your option accordingly.
whether it is capital gain or business of trading and which ITR to choose. depending on your gain at the end of the year, if it more than 8% then go for ITR 4S or else go for ITR 4 .
Vishakha Agarwal
CA, Bangalore
213 Answers
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  Talk to Vishakha Agarwal
Vishaka Kindly explain. 

As per my view 44ADA is different as in that you need to declare 50% of Gross Receipts as Profit.
Share Profit is totally different and STCG and LTCG is being calculated.

Sir In Shares if you sell 20 Lakhs worth then the cost of that particular stocks will be deducted and profit computed as STCG or LTCG.

In case of more queries it is better you fix an phone consultation call with Ms. Vishaka so that your query is answered and your mails are also coming to us and thus we need to answer and revert back.
Shyam Sunder Modani
CA, Hyderabad
955 Answers
4.9 on 5.0
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that Rs 10 lakhs will be your closing stock of that financial year.
and it will be added in next year gross receipt.
Vishakha Agarwal
CA, Bangalore
213 Answers
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  Talk to Vishakha Agarwal
Dear Sir,

If you are running above businesses in your name or as proprietorship, then  one current account sufficient. 

Yes, you can file taxes on presumptive taxation basis .

For stock trading tax  u/s 44AD income will be assumed 8%, you can NOT claim any expenses or losses
For consultancy services - u/s 44ADA , if consultancy services fall under Professional services- income will be assumed 50%, you can NOT claim any expenses or losses. Please note income means gross fee received by the client.

Please feel free to call/revert in case of any doubts

Thanks and Regards
Abhishek Dugar
CA CS B.com
Caabhishekdugar@gmail.com

Abhishek Dugar
CA, Mumbai
766 Answers
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Sir share purchase and sale will not come under 44AD instead it will come under short term capital gain and long term capital gains.

If you are a trader i.e. broker in shares then only it will come under business.
Shyam Sunder Modani
CA, Hyderabad
955 Answers
4.9 on 5.0
  Talk to Shyam Sunder Modani
hi,
1) profit will be 35*8% = 2.8L
2) profit will be 20 * 8 % = 1.6 L
3) profit will 10 *8 % = .8L

under presumptive taxation as you are selling you will take 8 %  of sale as your profit. (if you are taking delivery of shares)
if in next year you are selling closing stock of previous year, it will add in your next year sale.

it is advisable to go for ITR 4.
no your rest of profit is not be a black money.
Vishakha Agarwal
CA, Bangalore
213 Answers
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  Talk to Vishakha Agarwal
Dear Sir,

Your profit in the three case will be 2.8 lakhs, 1.6 lakhs and 80 thousand respectively. Its simply 8% of your sale value regardless of your purchase. Tax payable in all the three case will be as per your slab. 

Assuming your slab is 30%, your tax payable would be 84,000, 48,000 and 24,000 respectively.

No, higher profit will not be your black money.

Please feel free to call/revert in case of any doubts.

Thanks and Regards
Abhishek Dugar
CA CS B.Com
Caabhishekdugar@gmail.com
Abhishek Dugar
CA, Mumbai
766 Answers
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I assume the question is suitably answered.
Rohit R Sharma
CA, Mumbai
719 Answers
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Please note the following points:

1. STCG tax is 15% in case of equity shares.

2. Turnover in case of stocks is absolute difference of sale less purchase value. You can call me to understand more.

3. Above calculation seems to be incorrect.

Please feel free to call/ revert in case of any doubts

Thanks and Regards
Abhishek Dugar
CA CS B.Com
Caabhishekdugar@gmail.com
Abhishek Dugar
CA, Mumbai
766 Answers
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