I used to be in a job but current status is ""unemployed"". I have taken up stock trading (no intraday) as my source of income. Income would be from short term stock trading only and possibly 'futures and options' . Questions: 1. ) Will this be called professional income or business income? 2.) Which ITR to file next year? 3. ) What professional or business category to select in the ITR form? Question 4: I will not be taking clients because source of income will be stock market only. I might need to hire one stock market researcher full time or part time for assisting me in my work. This is undecided currently. Would setting up any formal structure like a pvt ltd or LLC etc benefit in any manner? If yes, please explain as well as the cost of setting it up. Thank you.
Hello,
1. It will be business income.
2. The form to be filled will be ITR-3.
3. Are you asking the code here ???
4. No, as of now it is neither recommended nor advisable as the cost of setting up a company and maintaining them is pretty high. Doesn't make sense spending that much amount as of now.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
Hi,
Hello,
1. It will be business income.
2. You will have to file ITR 3.
3. It should be trading shares or trading others.
4. It is not advisable to open a company or LLP. It will have unnecessary compliance burden.
Please feel free to call/ revert in case you need more clarity.
Hii
your working is Business not profession , run your business under proprietorship or partnership no pvt ltd company advisable , in delivery based trading your sales values count as revenue and as per volume when you cross Rs. 2 crore sales then Income tax audit is applicable. we have 2 clients of same business nature. further for accounting you can use shipi software
Thank you Lalit, will check out Shilpi software. I am currently using icicidirect to give me capital gain calculations, their (website) software is evolving quite well, though it is still very complicated for a layman like me. Thank you all for your clear answers. If I file my ITR next year under section 44AD (or 44ADA) would my short term capital gain tax reduce to 8% of the short term capital gain? I understand that conventionally, it is approx. 15% of short term capital gain and if there is a net loss, the loss can be carried forward for adjustment upto 8 years.
No, your tax does not reduce to 8% of the short term capital gain. You have to pay tax on the profit as per the applicable slab rate.
Hi,
If you decide to claim benefit of section 44AD, then your profits will 8% of the turnover (not capital gain). Tax will be payable as per slab rates on such profits. You cannot claim setoff of any losses of any year if you claim benefit of section 44AD.
If you do not select the benefit of section 44AD, then tax is payable at the rate of 15% of your short term capital gain. Losses can be setoff in this case upto 8 years.
Trust this clarifies.
Regards,
Keerthiga Padmanabhan
M.Com., CA, LL.B
Query being particularly asked to Mr. Lalit.