• Income from profession and income from F&O

Dear Sir/Madam,
Kindly address my below query.
I have been paying tax u/s 44ADA -presumptive basis for the income generated from my profession for last 2 yrs.
This year I started trading in F&O.

1)Can I continue showing income from my profession u/s 44ADA (presumptive basis) & income from F& O business under income from business(non presumptive basis) by maintaining BOA ,Audit if reqd 

2)If i hv a loss in F&O can I offset it against Income from my profession(profession income filed  u/s 44 ADA )

3)Can I show income from my profession u/s 44ADA & income from F& O business under 44AD -presumptive basis
Asked 6 years ago in Income Tax

Yes,

You can show your normal professional income under section 44ADA and F&O on Non-presumptive basis.

Thereafter only speculative losses under head PGBP ie. Intraday losses are not allowed to be set-off against business income.

In this way, you can opt 44ADA for profession and regular books for F&O and atlast can set-off your losses against each other (you have to show both the businesses separately while filing your ITR).

Thanks

Sourabh Pahuja

Sourabh Pahuja
CA, Delhi
78 Answers
1 Consultation

5.0 on 5.0

1. Regarding your first question, yes you can do. However ITR needs to be seen at the start of AY so that practical reporting constraints can be identified, as for last DAY there where many issues in the ITR form. However as per Act you can do.

2. If you are showing F&O under 44AD you would never have loss. If you are under Audit and show loss, you can claim setoff. There are various debates over application of speculation trade definition of section 43(5) over section 72, call need to be taken in that case. There are few HC decision in assessee favour, however jurisdictional HC decision needs to be studied

3. Yes you can

Karan Vora
CA, Ahmedabad
10 Answers

5.0 on 5.0

1) Yes, you can offer income from profession u/s 44DA, if it is eligible profession and income from F&O Business on non presumptive basis.

2) Yes, provided the loss is not a speculation loss.

3) While income from profession can be shown u/s 44ADA, assuming that yours is an eligible profession, Income from F&O cannot be taken u/s 44AD, as it is a not an eligible business.

B Vijaya Kumar
CA, Hyderabad
1001 Answers
124 Consultations

5.0 on 5.0

1. Yes..

2.Yes..In respect of losses arising on ‘futures’ and ‘options’ which are claimed as business losses (Non-Speculative) and claimed as set-off against other income (other than salary), one needs to get the tax audit done. This view is taken by CPC at the time of processing of returns and CPC has not allowed such losses in absence of tax audit since returned income/loss is less than 8% of the gross receipts/turnover.

3. In case of profit yes..in case of loss in F&O business No.. As if loss audit is required to set off against other income ( other than salary)

Anna Khanna
CA, Chennai
4 Answers
2 Consultations

5.0 on 5.0

Dear Sir,

1) My suggestion would be instead of showing income u/s 44ADA, it would be better to prepare BOA and get the Audit done because deemed rate of tax u/s 44ADA is 50% of total receipts which is more than the industry standards.

For F&O, you need to check the volume of transactions and their frequency to classify them as business or investment. If the volume and frequency of transactions is on regular basis classify them as business otherwise as investment. For F&O business income, definition of turnover is different from regular business.

For query 1, I would suggest maintain BOA for both profession and business and get the Audit done.

2) My suggestion would be don't set-off any loss from F&O business to profits and gains from profession to avoid the litigation in future.

3) Yes you can show both the incomes under presumptive basis. In that case, you can not set-off loss as the purpose of presumptive taxation scheme would defeat.

Thanks & Regards

CA Vivek Arora

Vivek Kumar Arora
CA, Delhi
4840 Answers
1037 Consultations

5.0 on 5.0

Hi,

Your replies are as below:

1) Yes, you can continue showing Income from profession u/s 44ADA and Income from Business under non-presumptive basis. You have to maintain books of accounts and get the same audited, if applicable, u/s 44AB for your Income from Business.

2) Yes, you can set-off the loss arising from business activities from the income from your profession, even in case you have claimed income from profession u/s 44ADA.

3) Yes, you can opt for presumptive income under both sections i.e. Sec. 44AD as wel as 44ADA. However, you have to keep in mind that once you exit presumptive income basis i.e. u/s 44AD, you can not opt in for next 5 years. However, the same restriction does not apply for Section 44ADA.

Regards,

CA. Sunny Thakral

Sunny Thakral
CA, Delhi
224 Answers
8 Consultations

5.0 on 5.0

Hello

Yes You can use presumptive method for 1 Business and non presumptive method for other business

Yes you can offset loss from other business income

F & o income can’t show under 44AD

Lalit Bansal
CA, Delhi
773 Answers
61 Consultations

5.0 on 5.0

Hi,

1, yes you can show the two incomes in different sections ,

2,losses in F & O can be offset with yours professional income,

3,There is no problem in showing income form profession and your F&O business under Presumptive Taxation,

Manita Bhatt
CA, Dehradun
1 Answer

Not rated

Hi,

1. Yes, you can show Income from profession u/s 44ADA and Income from Business under non-presumptive basis.

2. Yes, you can.

3. Yes, you can opt for presumptive taxation for business as well as profession.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

1- Section 44AB will hit you.

2- No

3- Section 44AB will hit you.

Priyank Kumar
CA, Agra
63 Answers

5.0 on 5.0

1) If you want show income on presumptive basis as well as on non presumptive basis, you have to file two ITR which is not possible, it better to maintain books of accounts for both business and file one ITR.

2) Also it is not possible to adjust loss under F & O against profession income computed on presumptive basis, if the income from both business shown under non presumptive basis then loss can be adjusted provided loss should not be from speculation.

3) Income from F&O business is more than Rs.120000(250000 fromAY18-19) or turnover is more than Rs.1000000(2500000 fro AY-18-19) then BOA has to be maintained hence if income or turn over is less than prescribed then income under F&O business can be shown under presumptive basis or if the income is shown in ITR less than 8% of turn over then income can not been shown under presumptive basis.

Amrut Deshmukh
CA, Nagpur
27 Answers
1 Consultation

5.0 on 5.0

Hi

1. Yes, this can be done.

2. Yes, set off is possible.

3. Yes.

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

Hi,

Based on above we would like to express our views as follows

a) Firstly i would like to clarify that section 44ADA has become effective only from 01/04/2017 so it cannot be possible for you to file for last 2 years and

b) With respect to your 1st Query i would like to submit that Yes, you can show your income from profession u/s 44ADA & income from F& O business as a separate business income. as there is a possibility for an assessee to conduct various businesses for which he may opt presumptive for some or none.

C)With respect to your 2nd Query i would like to submit that " in the above mentioned case if you have a loss in F&O business the same can be set off with the Presumptive Income computed u/s 44ADA as deductions covered from Sec. 30 to 38 are only deemed to be covered u/s 44ADA but not beyond that, therefore u/s 72 the loss of F&O business can be set-off with presumptive income u/s 44ADA

D) With respect to your 3rd Query i would like to submit that " Yes, you can take the benefit of both sections at a time as there is no specific limitation as such.

However, it will not be beneficial in your case as in case of using presumptive basis u/s 44AD you have to mandatorily show the income of 8% though you have genuine loss, if you want to show lesser income than 8% then you should get your books Audited u/s 44AB.

I Hope that i have clarified your queries and if there is any further queries feel free to contact.

Thanks & Regards,

CA Chaitanya Krishna

Ph.no:

Mail:

Chaitanya Krishna
CA, Hyderabad
4 Answers

Not rated

What is your profession?

Karthikreddy
CA, Hyderabad
6 Answers

Not rated

Yes. If u maintain separate BOA

Karthikreddy
CA, Hyderabad
6 Answers

Not rated

1. Yes, you can can go ahead and show your normal professional income under section 44ADA and F&O on Non-presumptive basis.

2. Yes, in case of a loss you can offset against Income from profession filed u/s 44ADA. However, speculation loss may not be available for set off.

3.Yes You can.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

1) Yes

2) Yes

3) Yes. 44AD can't be applied if the turnover exceeds Rs. 2 Crore or if the Profit shown is below 6%

Pradeep Bhat
CA, Bengaluru
542 Answers
94 Consultations

5.0 on 5.0

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