Important keyword: F&O Trading, Speculative Income, Trading Income.
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Download ledger from 5 Paisa
At 5 Paisa, traders have the convenience of accessing their transaction details through the Tradebook or Ledger. Whether trading in Equity, Futures, Options, or other segments, every transaction is meticulously recorded in these documents. The Tradebook, also known as the Trading Ledger, serves as a comprehensive record of all buying and selling activities conducted in the stock market throughout the financial year.
Steps to download the Ledger/Tradebook from 5Paisa
Log in to your 5 Paisa account Add your user name and password here.
Click on your Profile logo From the dasboard
Go to My reports From the List
Select Ledger From the options
Select the necessary filters Then click on Go
Once you have been redirected You can now view your Ledger entries in detail
Important Keyword: F&O Trading, P&L Statement, Speculative Income, Trading Income.
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Download Tax Profit and Loss report from Axis Direct
Axis Direct offers the convenience of downloading your Profit and Loss Report online. This report, which is the same as a Tax P&L report, is crucial for calculating taxes on trading income. Traders also receive a “Trading Statement,” which lists all transactions made across various segments over a specific period. This statement includes details such as:
Date
Time
Script Name
Purchase Price
Sale Price
Segment
Quantity
These details help in determining the Income Tax on trading.
Steps to download Profit and Loss Report from Axis Direct
Follow these steps to download your Axis Direct Tax P&L
Download Tax Profit and Loss report from HDFC Securities
HDFC Securities provides the option to download your Profit and Loss Report online. This report, also known as the Tax P&L report, is crucial for calculating taxes on trading income. Traders also receive a “Trading Statement,” which lists all transactions made in different segments over a specified period. This statement includes details such as:
Date
Time
Script Name
Purchase price
Sale price
Segment
Quantity, etc.
These details then help determine the Income Tax on Trading.
Steps to download Profit and Loss Report from HDFC Securities
Log in to your HDFC Securities platform You can do it from here
Click on Portfolio Next, choose Profit and Loss statement
Select the Financial year, asset type and other necessary filters Click on Submit
Click on the PDF button on the top right Now, your statement downloads
The PDF will be downloaded on your PC Finally, this is what it will look like:
Important Keyword: Business and Profession, Income from Business & Profession, Income Source, Speculative Income.
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What is Business and Profession?
Exactly! Income from business or profession falls under the category of “Income from Business and Profession” for tax purposes. Here’s a breakdown of what constitutes business and profession:
Business: Business involves any activity carried out by a person with the intention of earning a profit. It encompasses a wide range of activities such as trade, commerce, manufacturing, and providing services to others. Examples of businesses include owning a shop, running a hotel, transportation services, operating a travel agency, and share broking.
Profession: Profession refers to vocations or occupations that require specialized knowledge, skills, and expertise. Professionals typically earn their livelihood through the application of their intellectual or manual abilities. Examples of professions include legal services, medical practice, engineering, chartered accountancy, architecture, and various other specialized fields.
Income generated from both business and profession activities is considered taxable under the head “Income from Business and Profession” in the Income Tax Act. This classification helps tax authorities and taxpayers differentiate between various sources of income and apply the relevant tax rules and provisions accordingly.
Maintaining Books of Accounts
Let’s summarize the key points:
Business Income:
Books of Accounts Maintenance: Businesses need to maintain books of accounts if income exceeds INR 1,20,000 or total sales, turnover, or gross receipts exceed INR 10,00,000 in any of the three immediately preceding previous years.
For individuals and HUF, the thresholds are income exceeding INR 2.5 Lakhs or total sales, turnover, or gross receipts exceeding INR 25 Lakhs in any of the three immediately preceding previous years.
Types of Incomes:
Non-Speculative Businesses/Professions
Speculative Businesses
Specified Businesses
Expenses Allowed: All expenses incurred wholly and exclusively in relation to the business and profession are allowed as deductions.
Profession Income:
Books of Accounts Maintenance: Professionals need to maintain books of accounts if gross receipts exceed INR 1.5 Lakhs in any of the three immediately preceding years.
Types of Incomes: Similar to Business Income, but for professions.
Expenses Allowed: Same as for business income.
Tax Computation:
Taxable income from business and profession is profits after deducting allowable expenses.
Tax is calculated at slab rates applicable to the taxpayer for the relevant financial year.
Examples of Allowable Expenses:
Rent and insurance of the building
Payments for Legal and Professional services
Remuneration, Bonus, Commission, etc. to employees
Interest and remuneration to working partners
Traveling and conveyance expenses
Membership fees
Depreciation on fixed assets
Advertisement expenses
Financial Charges (e.g., Interest on loans)
Entertainment/Business Promotion expenses
Staff Welfare expenses
Printing and stationery expenses
Postage expenses
All other expenses relating to business/profession
It’s crucial for taxpayers to maintain accurate records and understand the tax implications of their business or profession income to ensure compliance with tax laws.
Total Income
Tax Rate
Up to INR 2,50,000
NIL
INR 2,50,000 to 5,00,000
5%
INR 5,00,000 to INR 10,00,000
20%
Above INR 10,00,000
30%
Additional Cess:
An additional 4% Health and Educational Cess is applicable to the tax amount calculated.
Set off and Carry Forward of Losses:
Non-Speculative Business Loss: Can be set off against any income except Salary in the current year. Remaining loss can be carried forward for 8 years and set off against Business Income in future years.
Speculative Business Loss: Can be set off against Speculative Business Income only. Remaining loss can be carried forward for 4 years and set off against future Speculative Business Income only.
Specified Business Loss: Can be set off against any income except Salary in the current year. Remaining loss can be carried forward for 9 years and set off against Business Income in future years.
TDS/Advance Tax on Income from Business and Profession:
TDS (Tax Deducted at Source): TDS gets deducted on payments made to taxpayers for any goods or services sold. Any TDS deducted can be claimed while filing ITR for business and profession.
Advance Tax: If the tax liability is expected to exceed Rs. 10,000, the taxpayer must calculate and pay Advance Tax in quarterly installments to avoid Interest under Section 234B and 234C.
Due date of installment
Advance Tax payable by Individual and Corporate Taxpayers
On or before 15th June
15% of the tax liability
On or before 15th September
45% of the tax liability
On or before 15th December
75% of the tax liability
On or before 15th March
100% of the tax liability
In the realm of self-employment lies the domain of freelancers, individuals who have the autonomy to select their projects and tasks. Their income, which lacks steadiness, is predominantly professional in nature, falling under the category of “Income from Business and Profession” as per the Income Tax Act.
For freelancers, taxable income is the sum of all receipts received from various projects, minus the expenses incurred in their freelance endeavors. This net taxable income formula allows freelancers to deduct expenses related to their work, optimizing their tax liabilities.
What is Speculative Business Income?
Understanding Speculative Business Income is pivotal in comprehending the nuanced aspects of freelance taxation. Speculative transactions involve contracts for the purchase or sale of commodities, like stocks and shares, settled periodically without actual delivery or transfer. Income derived from such transactions constitutes Speculative Business Income, distinct from regular business income.
Presumptive Taxation Scheme
The Presumptive Taxation Scheme provides relief to small taxpayers from the burdensome task of maintaining books of accounts and undergoing audits. Professionals with gross revenue up to INR 50 lakhs can opt for this scheme, declaring 50% of their gross revenue as taxable income. However, opting for this scheme precludes the ability to claim profession-related expenses as deductions.
Tax Audit Applicability
Tax audit becomes applicable to businesses with a gross turnover exceeding INR 1 crore in a financial year. Similarly, professionals are subject to tax audit if their gross receipts under the profession exceed INR 50 lakhs in any given financial year. Failure to undergo a tax audit incurs a penalty of up to 0.5% of gross revenue or INR 1.5 lakhs, whichever is lower.
ITR Form and Document Checklist
When it comes to filing income tax returns, freelancers must use the appropriate form, such as ITR 3 for individuals or HUFs earning from business or profession, or ITR 4 for those opting for the presumptive taxation scheme. Additionally, GST becomes applicable if the turnover exceeds Rs. 40 lakhs for businesses or Rs. 20 lakhs for professions, necessitating registration and return filing.
Navigating the intricacies of taxation as a freelancer requires a thorough understanding of these concepts, ensuring compliance with regulatory requirements while optimizing tax liabilities.
