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Under the Income-tax Law, different forms of returns are prescribed for different classes of taxpayers. The return forms are known as ITR forms (Income Tax Return Forms). The forms of return prescribed under the Income-tax Law for filing of return of income for the assessment year 2015-16 (i.e Previous Year 2014-15) are:

Return Form

Brief Description

ITR- 1

Also known as SAHAJ. It is applicable to an individual having salary or pension income or income from one house property (not a case of brought forward loss) or income from other sources (not being lottery winnings and income from race horses).

ITR -2A(introduced from this AY)

This form is applicable for those who have salary income and own more than one house property/rental income from more than one House property or income from other sources (not being lottery winnings and income from race horses) but DO NOT have any capital gains. If Long term capital gain is there on which STT has been paid, even then assesse can use ITR 2A as these Long term capital Gain is exempt from Tax

ITR -2

It is applicable to an individual or a Hindu Undivided Family having income from any source other than “Profits and gains of business or profession”.

ITR- 3

It is applicable to an individual or a Hindu Undivided Family who is a partner in a firm and income chargeable to income-tax in his/its hands under the head “Profits or gains of business or profession” does not include any income except the income by way of any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him from such firm.

ITR- 4S

Also known as SUGAM is applicable to individuals and HUFs who have opted for the presumptive taxation scheme of section 44AD/ 44AE.

ITR-4

It is applicable to an individual or a Hindu Undivided Family who is carrying on a proprietary business or profession

ITR-5

It is applicable to a person being a firm, LLP, AOP, BOI, artificial juridical person, co-operative society and local authority. However, a person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4C) or 139(4D) shall not use this form (i.e., trusts, political party, institutions, colleges, etc.)

ITR-6

It is applicable to a company, other than a company claiming exemption under section 11 (charitable/religious trust can claim exemption under section 11​).

ITR-7

It is applicable to a persons including companies who are required to furnish return under section 139(4A) or 139(4B) or 139(4C) or 139(4D) (i.e., trusts, political party, institutions, colleges, etc.).

ITR- V

It is the acknowledgement of filing of return of income

Generally it has been observed that people having salary/business or any other income and trading in stock market are using ITR 1, 2 and 2A. If you are trading in stock market, please make sure that you use right ITR, as trading in stock market has serious implications if trading profits or losses are not declared properly

There has been a sudden rush of notices that traders in stock/scrips/F& O /commodities have received from the income tax department recently, so declare all your trading activity and other incomes properly.

The following points should be kept in mind for return filing when trading in the stock market.

Taxation while trading Stocks/F&O/Commodities

First most important thing to do for every trader is take a stance on his trading activity because the tax liability would change based on this. Following are the couple of options one has:

  • You are an investor, who buys/sells stocks once in a while and you typically would hold the investments you make for a longer period of time.
  • You are a trader, you actively trade stocks/ F & O/ currency/ commodity.

It is your prerogative if you call yourself as a trader or an investor, but if you are actively trading on stocks or even if occasionally dabbling in f&o, currency or commodity, it is advised to declare yourself as a trader.

TURNOVER FOR TRADING IN SHARES/SCRIPS/F & O/COMMODITIES

Turnover is being calculated here just to determine if you need a tax audit or not

Turnover calculation is quite simple for delivery based trades and it can either be done scripwise/stockwise or tradewise for intraday equity and F&O.

By scripwise/stockwise, it is meant that you consider the profit or loss made on that particular scrip in the financial year as turnover, and you sum up the absolute values of individual P&L of all the scrips to have a consolidated turnover for the year.

By tradewise, it is meant that you consider the total sum of  profit and loss of each trade that you have done during the financial year ,as your turnover.

To summarize, it is the absolute sum of settlement profits and losses

 

Audit by a CA is required if:

  • Turnover as calculated above for financial year is > ₹1 crore
  • If turnover < ₹1 crore and profitability is less than 8% of turnover ( as minimum profits to be declared as per presumptive taxation is 8% of turnover) (Section 44 AB)

Due Dates for filing your returns:

Irrespective of the nature of trades you carry out your income tax returns have to be filed before July 31 for individuals and 30th September for companies. For Assessment year 2015-16 due date is 31st August instead of 31st July

If audit is required then the due date is September 30 to file the returns for Individuals. Under section 271 B, failure to submit the tax audit in time has a penalty of 0.5% of turnover or Rs 1.5 lakhs, whichever is lesser.

Other Important Points:

  • If you have brought forward losses under the head of Income from House property Use ITR 2A instead of ITR 1

  • Do Not use ITR 1 if exempt income is more than 5,000 or if losses are there under ‘Income from Other sources’

  • Residents having foreign assets or having any foreign income can’t use ITR 1/ITR 2A

  • If the partner of a firm has only exempt income by way of share of profit in the firm without any interest, salary, commission etc, even then he has to file ITR 3 and not ITR 2

  • In case of a taxpayer who is engaged in any business eligible for the presumptive taxation scheme of section 44AD or section 44AE but he does not opt for the presumptive taxation scheme, then such a taxpayer has to maintain the books of account of the business as per the provisions of section 44AA​​ and has to get his accounts audited. In such a case he cannot use ITR 4S. Such a taxpayer has to file its return of income in Form ITR – 4.


1 Comment on this article

  • Rashmi August 7, 2015

    Thanks for such an informative article.

    Reply

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