Dear sir,
I just started (3 months) intraday trading with RS 5 lakhs. I make atleast 2 trades A DAY. I get approximately 3 thousand profit a day. avg. RS 50,000/month. I anticipate 12 x 50,000 = 6 lakhs/- year
I understand my income tax will come under BUSINESS INCOME.
I trade under my father trading account who is 62 yrs age.
My question is :
1) Should we pay both CAPITAL GAIN TAX and INCOME TAX for this income (my father have no other earning)? if so, howmuch capital gain tax and income tax to be paid. Day trading attracts brokerage and taxes, education cess other levies..while we calculate taxable income, all these to be deducted from total profit to get taxable income?
3) what is the tax liability if I make a profit of 6 lakhs in the financial year?assume i have no other investment which saves tax.
2) If turnover exceed 40 lakh , then it should be audited. HOW TURNOVER IS CALCULATED? is it TOTAL BUY + SALE + PROFIT? multiplied by number of trades.
eg.: 2 x 5 lakhs BUY in a day
2 x 5 lakhs SALE in a day
3000 profit
20,000 LOSS in one year year
15 days trade a month
1 year
so.. ((4 x 5 lakhs) + 3000) * 15 * 12 = 36,540,000 TURN OVER
OR
ONLY PROFIT + LOSS to be summed up?? in my case, (3000*15*12) + 20,000 = 560000 TURNOVER??
I have not given any IT yet. this is just beginning.
Hope you will help me..
Regards
MICHU
Dear Michu,
First let me congratulate for your great going in these dicey markets...
Capital gains is a part of Income tax and both are not separate....There is nothing that you have to pay capital tax AND income tax....If you pay capital gains tax then that is your income tax...
Secondly as you have rightly mentioned that you would fall in the business category. In that there is no such thing as capital gains...It is a flat tax based on your income levels...
This is how tax is calculated for FY 2008-09
Income 1-1,50,000 - NIL tax
Income 1,50,000 - 3,00,000 - 10% tax (Rs 15,000 in your case)
Income 3,00,000 - 5,00,000 - 20% tax (Rs. 40,000 in your case)
Income 5,00,000 and above - 30% tax (Rs. 30,000 in your case)
so on Rs. 6,00,000 for FY 2008-09 the total tax liability would be 15K+40K+30K = 85,000 plus 3% edu cess....
Thirdly, in business income all those expenses which you do for earning an income all those can be set off with your income...
Fourthly, the second (summation of profit and loss) is the correct method of determining the turnover for 44AB purposes...