In this article, you will learn about how we can do some tax planning when we are investor and save some taxes and what are the tax filing and tax audit requirements, if you are an investor or a trader.
Hello friends, my name is CA Arun Tiwari and you all are reading this article which is based on my YouTube channel Mark2Market and this is F&O Shots Series in which we are teaching you that how you can start your future and option journey with some nice hedging strategies and we are at second last step which we had divided into 2 parts so in last part we understood what are the different tax treatment of capital gain and when you treat your share as business income then how you will have to do the tax treatment. Now, we are going to learn about tax planning tricks which you can use it.
Tax filing: If your accounts are not being audited then 31st July is the due date of filing of your return and your income from trading then you have to file ITR-3. If you are treating the sale and purchase of shares as a capital gain and you don’t have any other income then generally ITR-2 which you should generally file. This is the short thing which you should keep in mind.
If your accounts are being audited then the due date is 30th September. So, this is most easy but most important part.
Second thing I want to make a different article on auditing but here I have just explained in what situation your account has to be audited because if your account has to be audited then you have to pay very nice fee to some CA like me. So, 1st thing you have to understand that why you have to do the audit and in what conditions i.e., your turnover should be more the 5 crore and from next year it will become 10 crores. So, now how to reach turnover. To Calculate turnover, you have to take the profits and losses but in losses, you have to ignore the negative. So, for example: if you have a profit of Rs.5000 and losses of Rs.5000 and you have received as premium of Rs. 2000 from selling the shares on future and options then your turnover will be Rs.12000/- and not Rs.2000. You just have to add all profits and losses that will be your turnover.
So, from next year this limit has been increased from 5 crore to 10 crore. Now, there is a catch, if your turnover is more than 10 crores then its ok but if your turnover is more than a 10 crore then its ok but if your profit is not at least 6% now suppose your turnover is 5 crores then 30 lakhs should be minimum income to be declared but if your income is not 6% but your total income is more than 2.5 lakhs i.e. the basic exemption limit still you have to get tax audit. So, most of the people turnover does not exceed more than 5 crores but their losses and profits is less than 6% so do not be in confusion. Always check with this condition, what is the total turnover. Turnover you have to calculate in the following way:
Income from salary- 5,00,000 Income from Business Normal Business- 10,00,000
Trading- 5,00,000
Speculative- 50,000 Income from other sources- 4,00,000 Total Income- 14,00,000
6% of it- 84000
But Our profit- 500000
In this case, audit is required. So, in simple meaning, if your profit is at least 6% then there is no need for the audit but if your profit is less than 6% then there is a requirement of doing the audit. So that thing you have to keep in mind.
Tax Planning: Here we will do some easy tax planning in which there is no requirement for doing the lot of adjustments and anyhow friends please do not think it as a tax evasion in the name of tax planning because one thing I have learned during my CA course that you can delay taxes but you cannot deny taxes so if you are not paying now you will pay may be 5 years or 6 years and when the technology will be more updated and more information will be in government hands. So, now a days, most of our transaction are held online using the mobile or apps so hardly anybody is using the cash so what happen if you evade something now then after few years you have to pay the same with huge penalty and interest. Always remember in mind taxes cannot be avoided. They can be delayed but cannot denied.
Let’s move ahead, what are the ideas from which you can save a nice amount. 1st idea is basically, if you are a long-term investor then up to 1 lakh your capital gain is exempt so suppose you have invested in your wife’s name so each member may get the exemption of Rs. 1 lakh. So, if each family member is earning 1 lakh rupees, then you can easily save the taxes of 30000 to 40000.
You can open HUF account so you can literally pay the amount on the name of some other person on the paper and up to 250000, this will be considered as short-term capital gain and 250000 is your exemption amount plus if you are in long term, you will get additional exemption of Rs.100000. So up to 350000, you can get an exemption which is legal. 2nd important point is, everybody should do which is not a tax planning but if you do then you can save a lot of taxes. You have to do on 31st march, you sell whatever your position is in loss. So, for example, if you are having a profit of Rs. 1 lakh from normal accounting strategy and there is a mark to market loss in your account then you can sell before 31st march but to be ensure that not all the share should be sale out. Maybe you can sell in the month of march or you can sell in small tranches and whatever the loss will come, you can adjust with the profit you will earn and very first i.e., on 1st April again you can buy back your position. Otherwise on profit you will pay taxes and, on the losses, you will carry forward. So, this is called loss harvesting. It is very well-known theory and well-known idea so you can search on Google also. So, these are the thing that you should keep in your mind that 1st you can open your account with your own family name and you can save Rs,1 Lakhs as a capital gain in each account. If there is a capital gain plus suppose you are not earning then short-term capital gain will be charged and you will get the exemption of 250000.
So that’s all friends in today’s article. I deliberately kept my articles short because that’s why people like to read it. So, last part of this series is pending and after that this series will be over.