Important Keyword: CA, Income Tax Account, ITR Website Credentials, Tax Audit.
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How to Add CA in Income Tax Portal
If an assessee is subject to a tax audit under the Income Tax Act, they must appoint a Chartered Accountant (CA) through their account on the income tax e-filing portal. Here’s a simplified guide to help you through the process:
Login to the e-Filing Portal: Start by logging into your account on the Income Tax e-Filing portal using your user ID and password.
Add the Appointed CA: Once logged in, go to the section where you can add a CA. Enter the CA’s membership number and other required details.
Confirm the Appointment: After adding the CA, confirm the appointment. This step links the CA to your account.
CA Uploads the Tax Audit Report: Once the CA is added and the appointment confirmed, the CA can log into the portal to upload the Tax Audit Report on your behalf.
Prerequisites for Adding a Chartered Accountant on the Income Tax e-Filing Portal
Before you can add a Chartered Accountant (CA) to your account on the income tax e-filing portal, ensure you have the following details ready:
CA Membership Number: This is the unique identification number assigned to the CA by the Institute of Chartered Accountants of India (ICAI).
Name of Chartered Accountant: The full name of the CA as registered with ICAI.
Validity Date: The date until which the CA’s membership is valid. This ensures that the CA is currently authorized to practice and handle your tax audit.
Steps to Add CA on Income Tax Portal
Login to Income Tax Account Visit the e-Filing portal and login using user ID and password.
My Chartered Accountant (CA) Click on Authorized Partners > My Chartered Accountant (CA) option from the dashboard.
Add CA Click on the “Add CA” option and enter the required details such as CA Membership Number, Name of Chartered Accountant & Validity duration.
File Income Tax Forms After adding a CA to your account, you can file income tax forms that can be reviewed by the assigned CA. Navigate to the “File Income Tax Forms” as shown below:
Navigate to the appropriate form – in this case, we are taking Form 3CD-3CB Once you reach the income tax forms page, select the 2nd page or use the search bar and enter the query “Form 3CD-CB”
Enter Details Enter the required details as mentioned under the form and do not attach any file and click on continue.
Some additional details: While filing form 3CD-CB, select the filing type as original and the appropriate assessment year and assign a chartered accountant by selecting a name. Do not add any attachments and hence, clicking on continue will automatically add the CA.
Important Keyword: CA, Income Tax Account, Tax Audit, Tax Audit Report.
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Accept / Reject Tax Audit Report on Income Tax e-Filing Portal
Exactly! Under Section 44AB of the Income Tax Act, if a taxpayer’s total income exceeds the specified threshold, they are required to undergo a tax audit conducted by a practicing Chartered Accountant. Once the tax audit is completed, the CA prepares and uploads the Tax Audit Report on the Income Tax e-Filing portal.
Subsequently, the taxpayer has the responsibility to review the Tax Audit Report and either accept or reject it. If accepted, the taxpayer can proceed to file their Income Tax Return based on the audited information. However, if the taxpayer rejects the report, they must provide reasons for rejection, and necessary revisions or amendments may be made accordingly. This process ensures compliance with tax regulations and facilitates accurate reporting of financial transactions to the tax authorities.
Steps to Accept / Reject Audit Report
An assessee needs to follow the below steps to accept/reject the Audit Report.
Login to Income Tax E-Filing Portal
Log in to the Income Tax E-Filing Portal using valid username and password.
Navigate to Pending Action
Click on Pending Action from the dashboard and select worklist from the drop-down.
Worklist dashboard
You can accept or reject the audit report from this dashboard.
Absolutely, once the taxpayer approves the audit report, the filing process is considered complete, and the report is forwarded for processing by the tax authorities. If the taxpayer rejects the report due to discrepancies or errors, the Chartered Accountant (CA) must rectify the issues and make the necessary changes to the audit form. Once the revisions are made, the CA uploads the corrected audit report again on the Income Tax e-Filing portal for the taxpayer’s review and approval. This iterative process ensures that accurate and compliant information is submitted to the tax authorities for assessment and verification.
Important Keyword: CA, Income Tax Account, Tax Audit, Tax Audit Report.
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Accept Appointment and Filing for Tax Audit Report
When it comes to audit report filing on the income tax portal, there are four important functions:
Taxpayer appoints practicing CA for Tax Audit: If a taxpayer falls under the purview of Section 44AB of the Income Tax Act and is thus liable for audit, they must appoint a practicing Chartered Accountant (CA) to conduct the tax audit. This CA will be responsible for preparing and uploading the Tax Audit Report on the Income Tax e-Filing portal.
CA accepts/rejects the appointment: Upon receiving the appointment, the CA has the option to accept or reject it. If accepted, the CA proceeds with the tax audit process. If rejected, the taxpayer must appoint another CA for the audit.
CA files the Tax Audit Report: Once the tax audit is completed, the CA files the Tax Audit Report on the Income Tax e-Filing portal. This report contains details of the taxpayer’s financial transactions, ensuring compliance with tax laws and regulations.
Taxpayer accepts/rejects Tax Audit Report: After the CA files the Tax Audit Report, the taxpayer has the opportunity to review it. The taxpayer can either accept or reject the report. If accepted, the audit process is considered complete, and the taxpayer can proceed to file the Income Tax Return. If rejected, the taxpayer must communicate the reasons for rejection to the CA for necessary revisions or amendments.
Steps to Accept and File Tax Audit Report on Income Tax E-Filing Portal
Login to Income Tax E-Filing Portal
Log in to income tax e-filing portal with valid username and password
View Worklist
Navigate to the profile and click on the worklist option.
Accept Option
Under the “For your action” section, click on the accept option for the form request.
File Form
Clicking on accept form would take you to the pending for filing section. Click on the option to file form.
Verify details
Verify the details presented on the screen and click on continue.
Upload filled forms
In the next window, upload the supporting documents such as balance sheet, profit & loss, cost audit, etc.
Important Keyword: F&O Trading, Income from Business & Profession, ITR-3, Tax Audit.
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Income Tax on F&O Trading
The rise in Futures and Options (F&O) trading, especially during the COVID-19 era, has been significant. F&O trading involves buying and selling futures contracts and options contracts, both of which are categorized as derivatives. Derivatives derive their value from the price movements of underlying assets such as stocks, commodities, or indices.
Given the popularity of F&O trading and its classification as derivatives, traders engaging in such activities are required to file income tax returns to report their income or losses from these trades. It’s crucial for traders to accurately report their F&O trading activities to ensure compliance with tax regulations and avoid any potential penalties or legal issues.
What is F&O Trading?
Futures and Options (F&O) trading involves agreements to buy or sell assets at a predetermined price and date in the future. These derivative instruments derive their value from the underlying assets, which could be stocks, commodities, currencies, or indices.
In Futures trading, traders agree to buy or sell assets at a specified future date and price, regardless of the market price at that time. This allows traders to hedge against price fluctuations and speculate on future price movements.
Options trading, on the other hand, gives traders the right, but not the obligation, to buy or sell assets at a predetermined price within a specified timeframe. Options traders pay a premium for this right, which provides them with flexibility and risk management strategies.
Both Futures and Options trading can be used for various purposes, including hedging, speculation, and arbitrage, making them essential components of financial markets worldwide.
Income Head, ITR Form, and Due Date for F&O Trading
Income Head
F&O Income or Loss is a non-speculative business income as per the Income Tax Act. Thus, it should be reported as Business Income under the head PGBP (Profits & Gains from Business and Profession).
ITR Form
Since F&O Income is a business income, the F&O trader should prepare financial statements and file ITR-3 (ITR Form for individuals and HUFs having PGBP Income) on the Income Tax Website.
Due Date
31st July is the due date for traders to whom audit is not applicable & 31st October is the due date for traders to whom Tax Audit is applicable
F&O Turnover Calculation
Determining whether a Tax Audit is applicable involves calculating Trading Turnover, which is crucial for tax assessment. However, it’s important to note that the tax liability doesn’t hinge on Turnover alone.
Trading Turnover in Futures & Options Trading is computed as the Absolute Profit. This involves summing up the positive and negative differences from trades. The calculation method can be either scrip-wise or trade-wise.
For instance, let’s consider Rahul’s trading activities:
He purchases 200 contracts of Heremotoco Futures at Rs. 100 on 05/05/2023 and sells them at Rs. 90 on 08/05/2023.
Next, he buys 150 contracts of Nifty Futures at Rs. 45 on 07/09/2023 and sells them at Rs. 50 on 12/09/2023.
From these trades:
Loss from Trade 1 = (90 – 100) * 200 = Rs. -2,000
Profit from Trade 2 = (50 – 45) * 150 = Rs. 750
Hence, the Absolute Profit is Rs. 2,750 (|Rs. -2,000| + Rs. 750). This figure is crucial for assessing whether a Tax Audit is necessary and for other tax-related evaluations.
Applicability of Tax Audit for F&O trading under section 44AB
Trading Turnover up to INR 2 Cr
If a taxpayer incurs a loss or the profit falls below 6% of the Trading Turnover, and they have opted out of the presumptive taxation scheme in any of the immediate 5 previous years, while their total income exceeds the basic exemption limit in any of the previous years, then a Tax Audit under section 44AB(e) is applicable. However, if the profit equals or exceeds 6% of the Trading Turnover, a Tax Audit is not necessary.
For Trading Turnovers ranging between INR 2 Cr and INR 10 Cr, the provisions of Section 44AB do not apply because the majority of transactions, over 95%, occur digitally through Demat. Consequently, Tax Audit is not required regardless of profit or loss.
In cases where the Trading Turnover exceeds INR 10 Cr, Tax Audit under section 44AB(a) is obligatory, irrespective of profit or loss. It’s noteworthy that for F&O Traders, since all transactions are digital, the prescribed rate under Sec 44AD would be 6% instead of the usual 8%.
Income Tax on F&O Trading
Income Tax on trading income is calculated at prescribed slab rates as per the Income Tax Act.
Slab Rates if F&O Traders Opt for Old Tax Regime
Taxable Income (INR
Slab Rate
Up to 2,50,000
NIL
2,50,001 to 5,00,000
5%
5,00,001 to 10,00,000
20%
More than 10,00,000
30%
Note: Surcharge is liable for the total income as per the prescribed surcharge slab rates. Cess is liable at 4% on Total Tax (i.e. basic tax + surcharge).
Slab Rates if F&O Traders Opt for New Tax Regime from AY 2024-25
Taxable Income (INR)
Slab Rate
Up to 3,00,000
NIL
3,00,001 to 6,00,000
5%
6,00,001 to 9,00,000
10%
9,00,001 to 12,00,000
15%
12,00,001 to 15,00,000
20%
More than 15,00,000
30%
Advance Tax for F&O Trading
If F&O Traders choose not to opt for presumptive taxation under Section 44AD and have profits from F&O trading, they are required to pay Advance Tax in four installments as outlined in the table below:
15% of the advance tax by June 15th of the financial year.
45% of the advance tax by September 15th of the financial year.
75% of the advance tax by December 15th of the financial year.
100% of the advance tax by March 15th of the financial year.
This schedule ensures timely payments of advance tax based on estimated F&O trading income, preventing last-minute financial burdens on the taxpayer.
Advance Tax Liability
Due Date
15% of Tax Liability
On or before 15th June
45% of Tax Liability
On or before 15th September
75% of Tax Liability
On or before 15th December
100% of Tax Liability
On or before 15th March
Advance Tax for F&O Traders who opt for Presumptive Taxation
For F&O traders who choose presumptive taxation under Section 44AD and generate profits from their F&O trading activities, the entire amount of Advance Tax must be paid in a single installment on or before March 15th.
New Tax Regime for F&O Trading
Under the new tax regime introduced by Section 115BAC of the Income Tax Act, F&O traders have the option to calculate their tax liability based on slab rates specified in the new regime. Notably, they are ineligible to claim Chapter VI-A deductions, and they must file Form 10IE on the income tax website.
Should a trader with business income opt for the new tax regime, they retain the flexibility to revert to the old regime. However, if they subsequently choose the new regime again, they forfeit the option to revert to the old regime for the remainder of their lifetime.
Carry Forward Loss for F&O Trading
Regarding the treatment of losses from F&O trading, such losses are classified as Non-Speculative Business Losses. In the current assessment year, they can be set off against any income except salary income. However, in subsequent years, they can only be set off against business income. F&O traders have the option to carry forward these losses for up to 8 years.
Important Keyword: Business Income, Capital Gains, Equity Trading, Income Tax Rates, ITR-2, Tax Audit.
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Income Tax on Equity Share Trading
Trading in equity shares and stocks has witnessed a remarkable surge in accessibility, thanks to the proliferation of online trading platforms. This convenience has empowered individuals to engage in equity trading, encompassing a spectrum of financial instruments like delivery stocks, intraday trades, futures, options, and more. However, it’s imperative to fulfill tax obligations by filing Income Tax Returns (ITR) and settling taxes on such earnings. Equity share trading typically manifests in two primary forms: Equity Delivery Trading and Equity Intraday Trading.
What is Equity Trading?
Equity Delivery Trading
When a trader engages in Equity Delivery Trading, they purchase equity shares from the stock market with the intention of holding onto them for more than a day. The term “delivery” denotes the transfer of ownership of shares to the buyer’s Demat account. The primary objective here is to capitalize on potential short or long-term capital gains. Income generated from Equity Delivery Trading is categorized as either Capital Gains or Non-Speculative Business Income.
Moreover, when an investor subscribes to an IPO (Initial Public Offering) and receives shares, any income generated from selling these shares is treated as capital gains for tax purposes.
Equity Intraday Trading
Equity Intraday Trading involves the purchase and sale of equity shares within the same trading day. The aim is to capitalize on price fluctuations and generate profits swiftly. Unlike Equity Delivery Trading, there is no transfer of ownership of shares in Equity Intraday Trading, as trades are executed on the same day.
For tax purposes, Income Tax treats Equity Intraday Trading as Speculative Business Income. This is because it involves trading without the actual delivery of shares and with the objective of making rapid profits. Consequently, traders engaged in intraday trading are required to pay taxes at slab rates.
Equity F&O Trading
Equity Futures and Options (F&O) Trading involves buying or selling futures contracts or options contracts based on an underlying asset, such as equity shares. Income generated from equity F&O trading is categorized as non-speculative business income for income tax purposes.
Unlike speculative income, which is associated with activities like intraday trading, non-speculative business income is derived from trading activities where contracts are held for longer durations and involve predetermined terms. Therefore, income from equity F&O trading is taxed differently from speculative income, and traders are subject to specific tax regulations governing non-speculative business income.
How to treat sale of shares as Capital Gains or Business Income?
The classification of income from the sale of equity shares and mutual funds as either Capital Gains or Business Income hinges on several key factors. These factors are essential in determining the tax treatment of such income and have been subject to interpretation and debate between traders and tax authorities.
Significant Trading Activity: The level of trading activity conducted by the taxpayer is a crucial factor. If the trader engages in substantial and regular trading of shares, securities, or derivatives like futures and options, the income derived from these activities is typically classified as Business Income. Conversely, if the volume of trading transactions is low, irregular, and not a primary activity, the income is usually treated as Capital Gains.
Intention of the Taxpayer: The taxpayer’s intention behind the transactions also plays a vital role. If the primary objective is to actively trade shares and securities for short-term gains, the income is considered Business Income. Conversely, if the taxpayer’s intention is to hold investments for long-term appreciation, earning dividends and interest, the income is categorized as Capital Gains.
These factors collectively guide the tax authorities in determining the appropriate classification of income from equity trading. It’s essential for traders to understand these distinctions to ensure compliance with tax regulations and accurately report their income.
Clarification from CBDT Circular
To streamline tax procedures and minimize disputes, the CBDT has proposed a structured approach regarding the classification of income from shares and securities:
Listed Shares and Securities:
Taxpayers have the flexibility to choose whether to report income as Capital Gains or Business Income for listed shares and securities.
If the taxpayer treats listed shares and securities as stock-in-trade, regardless of the holding period, the income will be categorized as Business Income.
If the taxpayer considers listed shares and securities held for over 12 months as investments, the income will be treated as Capital Gains. Continuity in this method is required in subsequent years unless there’s a significant change in circumstances.
Unlisted Shares and Securities:
Income from unlisted shares and securities should uniformly be treated as capital gains, irrespective of the holding period.
Other Cases:
For all other scenarios, including listed shares and securities not falling under the above categories, the determination of income head will be based on significant trading activity and the taxpayer’s intention regarding holding them as stock or investment.
This structured approach aims to provide clarity and consistency in the treatment of income from shares and securities, thereby reducing ambiguity and potential litigations.
Determining whether income from the sale of shares should be classified as Capital Gains or Business Income involves considering various factors:
Nature of Activity:
Whether the purchase or sale of securities is linked to the taxpayer’s usual trade or business, or if it’s an occasional independent activity.
Intention of Purchase:
Whether the purchase of shares is for resale at a profit or for long-term appreciation and earning interest/dividends.
Volume and Frequency:
The significance of the volume of transactions in the financial year and whether there were continuous and regular trading activities.
Holding Period:
The duration for which shares and securities are held by the taxpayer.
Impact on Livelihood:
The time devoted to trading and its impact on the taxpayer’s livelihood.
Regarding the treatment of income, taxpayers can maintain two portfolios:
An investment portfolio comprising securities treated as capital assets.
A trading portfolio comprising securities treated as trading assets.
Income under both Capital Gains and Business Income heads can be possible in such cases. However, taxpayers must maintain clear records to distinguish between shares held for investment and those held as stock in trade.
For Equity Share Trading, the income is classified as Capital Gains in the following manner:
Long-Term Capital Gain (LTCG) under section 112A for listed securities held for over 12 months.
Short-Term Capital Gain (STCG) under section 111A for listed securities held for up to 12 months.
By adhering to these guidelines and accurately documenting transactions, taxpayers can ensure proper classification of income from equity share trading.
Equity Trading as Non-Speculative Business Income
In cases where a trader engages in significant trading activity and derives trading income as their sole source of earnings, the resulting profit or loss is categorized as Non-Speculative Business Income. Under this classification, the trader is eligible to claim expenses incurred in generating this business income. Consequently, the trader must file their income tax return using Form ITR-3. This form is specifically designed to accommodate individuals or Hindu Undivided Families (HUFs) with income from business or profession, ensuring accurate reporting and compliance with tax regulations.
Income Tax on Equity Share Trading
The taxation rates on trading in equity shares vary depending on how the income is classified. When the income from trading is categorized as Non-Speculative Business Income, it is subject to taxation at the applicable income tax slab rates. However, if the income is treated as Capital Gains Income, the following tax rates apply:
Long-Term Capital Gains (LTCG) under Section 112A:
For listed securities held for more than 12 months: LTCG exceeding INR 1,00,000 is taxed at a rate of 10%.
Short-Term Capital Gains (STCG) under Section 111A:
For listed securities held for up to 12 months: STCG is taxed at a rate of 15%.
It’s essential for traders to accurately determine the nature of their income and apply the corresponding tax rates to ensure compliance with tax laws and regulations.
Income Tax on Equity treated as Capital Gains Income
Type of Security
Period of Holding
Long Term Capital Gain (LTCG)
Short Term Capital Gain (STCG)
Domestic Company
Listed Equity Share (STT paid)
12 months
10% in excess of Rs. 1,00,000 under Section 112A
15% under Section 111A
Listed Equity Share (STT not paid)
12 months
10% without Indexation
Slab Rates
Unlisted Equity Share (STT not paid)
24 months
20% with Indexation
Slab Rates
Foreign Company
Listed Equity Share
24 months
10% without Indexation
Slab Rates
Unlisted Equity Share
24 months
20% with Indexation
Slab Rates
Income Tax on Equity treated as Non-Speculative Business Income
Non-Speculative Business Income is taxable at slab rates.
Slab Rates if Equity Trader opts for Old Tax Regime
Taxable Income (INR)
Slab Rate
Up to 2,50,000
NIL
2,50,001 to 5,00,000
5%
5,00,001 to 10,00,000
20%
More than 10,00,000
30%
Certainly, it’s important to consider the additional surcharge and cess while calculating the total tax liability. Here’s how it works:
Surcharge: Surcharge is applicable on the total income as per the prescribed surcharge slab rates. These rates vary depending on the level of income.
Health and Education Cess: Additionally, the Health and Education cess is levied at a rate of 4% on the total tax amount, including the basic tax and surcharge.
By factoring in both the surcharge and the Health and Education cess, taxpayers can accurately determine their total tax liability on trading income from equity shares.
Slab Rates if Equity Trader opts for New Tax Regime
Taxable Income (INR)
Slab Rate
Up to 2,50,000
NIL
2,50,001 to 5,00,000
5%
5,00,001 to 7,50,000
10%
7,50,001 to 10,00,000
15%
10,00,001 to 12,50,000
20%
12,50,001 to 15,00,000
25%
More than 15,00,000
30%
Turnover Calculation for Equity Trading
Correct, turnover is a crucial factor in determining the applicability of tax audit, especially when equity trading is treated as a business income. Here’s how turnover is calculated:
For Equity Delivery Trading, turnover is calculated as the absolute profit. This means summing up the positive and negative differences resulting from trading activities. Turnover calculation can be done either through a scrip-wise method or a trade-wise method, depending on the preference and ease of calculation for the trader.
Tax Audit for Equity Trading
Understandably, determining when a tax audit is necessary can be complex, especially for equity delivery trading treated as business income. Here’s a breakdown of the conditions:
Trading Turnover up to INR 2 Cr:
Tax audit is applicable if:
The taxpayer incurs a loss or the profit is less than 6% of the trading turnover, and
The total income exceeds the basic exemption limit.
If the profit is equal to or more than 6% of the trading turnover, tax audit is not required.
Trading Turnover of more than INR 2 Cr and up to INR 10 Cr:
Tax audit is applicable if:
The taxpayer incurs a loss or the profit is less than 6% of the trading turnover, or
The profit is equal to or more than 6% of the trading turnover, and the taxpayer has not opted for the Presumptive Taxation Scheme under Section 44AD.
Tax audit is not applicable if:
The profit is equal to or more than 6% of the trading turnover, and the taxpayer has opted for the Presumptive Taxation Scheme under Section 44AD.
Trading Turnover of more than INR 10 Cr:
Tax audit is mandatorily applicable if the turnover of intraday trading exceeds INR 10 Cr.
These guidelines aim to ensure compliance with tax regulations while providing clarity to traders on when a tax audit is necessary.
ITR Form, Due Date, and Tax Audit Applicability for Equity Traders
ITR Form
ITR-2 if the trading is treated as Capital Gains. ITR-3 if the trading is treated as Business Income.
Due Date
31st July if Tax audit is not applicable 31st October if Tax audit is applicable
Tax Audit
If trading is treated as business income then trader have to verify the audit applicability
Advance Tax for Equity Share Trading
Here’s how the Advance Tax payment schedule works for equity traders who don’t opt for presumptive taxation:
Advance Tax Payment Schedule for Equity Traders (Non-Presumptive Taxation):
15% of Estimated Tax by 15th June: Estimate your total tax liability for the financial year and pay 15% of it by 15th June.
45% of Estimated Tax by 15th September: By 15th September, pay 45% of your estimated tax liability for the year.
75% of Estimated Tax by 15th December: Pay 75% of your estimated tax liability by 15th December.
100% of Estimated Tax by 15th March: Finally, pay the remaining 100% of your estimated tax liability by 15th March of the financial year.
These installments help ensure that taxpayers meet their tax obligations progressively throughout the year, rather than facing a large tax bill at the end. It’s important for equity traders to estimate their tax liability accurately and make timely payments to avoid penalties and interest charges.
Advance Tax Liability
Due Date
15% of Tax Liability
On or before 15th June
45% of Tax Liability
On or before 15th September
75% of Tax Liability
On or before 15th December
100% of Tax Liability
On or before 15th March
For equity traders who opt for presumptive taxation under Section 44AD and have profits, the Advance Tax payment differs from those who don’t opt for this scheme. Here’s how it works:
Advance Tax Payment for Equity Traders (Presumptive Taxation):
Single Installment by 15th March: The entire amount of Advance Tax must be paid in a single installment on or before 15th March of the financial year.
Under the presumptive taxation scheme, traders are not required to make quarterly installments. Instead, they pay the entire Advance Tax amount at once by the specified date. This simplifies the tax payment process for eligible traders, allowing them to fulfill their tax obligations efficiently.
Carry Forward Losses for Equity Trading
Under the tax treatment of equity trading as capital gains, different rules apply depending on whether the gains or losses are short-term or long-term. Here’s a summary:
Short-Term Capital Losses:
Can be set off against both short-term and long-term gains in the current financial year.
If any loss remains after set off, it can be carried forward for up to 8 years.
Such carried forward losses can be adjusted against any capital gains in the subsequent years, regardless of whether they are short-term or long-term.
Long-Term Capital Losses:
Can only be set off against long-term gains in the current financial year.
If any loss remains after set off, it can be carried forward for up to 8 years.
Subsequent years’ gains can only be adjusted against these carried forward losses if they are long-term gains.
When equity trading is treated as business income, the losses incurred are considered non-speculative business losses. Here’s how they are treated:
These losses can be adjusted against any income except salaries.
The trader can carry forward these losses for 8 years.
In any of the upcoming years, these losses can be adjusted against gains earned from speculative or non-speculative business activities.
These provisions provide traders with options to manage their losses effectively, whether they are trading as investors with capital gains or as active traders with business income.