Hey Friends, Today we are going to learn about the Turnover Calculation for Intraday and F&O Trade? and also guide you on How to Show Intraday and F&O Trading Income in Income Tax Return.
Intraday and F&O Trade come under Tax Audit implications if the “TURNOVER” goes beyond the prescribed limit of Rs. 10 Crores.
The Calculation of turnover has not been mentioned in the Income Tax Act. But, practically we follow the Institute of Chartered Accountants of India (ICAI) Guidelines in this regard which are well accepted by the IT Department as well.
Calculation of Turnover Calculation for Intraday and F&O Trade?
(1). For Intraday Tradings: Intraday Turnover shall be ABSOLUTE PROFIT. Absolute Profit means the Aggregate of Favourable and Unfavourable Difference.
- On day 1, You bought 100 shares of Tata Steel at Rs. 85. Sell them on the same day at Rs. 88. Profit=Rs. 300.
- On Day 2, Buy 200 shares of LIC at Rs. 50. Sell on same day Rs. 45. Loss = Rs. -1,000
Here, Turnover shall be Rs. (300+1000) = Rs. 1,300/-. This is called Absolute Profit.
(2). For Future Tradings: Exactly Same as Intraday Tradings.
(3). For Options Tradings: Turnover shall be SALE VALUE (+) ABSOLUTE PROFIT.
How to Show Intraday and F&O Trading Income?
In recent years, many people have been involved in Intraday and Future & Options Trading in the share market.
The Tax Treatment of Intraday and F&O is totally different from that of Delivery Based Shares.
While the Delivery Based Shares are taken under Capital Gains, Intraday and F&O are considered as Business Income. Therefore, it also comes under Tax Audit implications if the turnover goes beyond the prescribed limit of Rs. 10 Crores.
Taxation of Intraday and F&O Incomes
(1). Intraday Income: It is considered Speculative Business Income and therefore if there are losses under Intraday Trading, it cannot be merged with ANY other income. However, it can be carried forward for the next 4 Assessment Years.
(2). F&O Income: It is considered as Non-Speculative Business Income. Therefore, it becomes normal business income (like any other business). If there are losses under F&O, that can be set off against any other Income (excluding Salary and Special Rate Incomes). Losses remaining after set-off can be carried forward for the next 8 Assessment years.
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