Fire your tax related queries and i would get it solved!!!

[wattax]

Dear,

In Income tax Assessment year is one year ahead of the financial year

AY 2008-09 means FY 2007-08 hence AY starts from 01-04-2008 to 31-03-2009 BUT it relates to financial year 01-04-2007 to 31-03-2008 since it is that years income being assessed in the next year hence it is one year ahead of the FY.

Due date for AY 2008-09 has already ended....

for salary it was 31-07-2008
for business it was 31-07-2008 if not auditable
for business auditable it was 30-09-2008
though the returns could have been filed upto 31-03-2009 without any penatly....

BUT LEKIN KINTU PARANTU

you can still file for AY 2008-09 ... there is no restriction that you cannot...though if the department wants they can recover a max of Rs. 5000 as penalty.

Many thanks Diosys, that explained it perfectly. So I guess I still have time for my FY2008-09 filing.

But my FY07-08 accounts aren't in perfect order. I noticed there's an option in ITR4 for people like me.

What are the repercusions of using this option? Will there be a mandatory scrutiny of my accounts or something?

 

[diosys]

Hello, diosys!

Good Morning to you. i have some issues relating to share trading and want to learn from you, if you would permit that.

A large number of shares of DLF fell in one's lap by luck. i bought just 50 shares way back in 1994 at par value. Later, against fully convertible debentures, a sum of Rs. 5000 got converted into 500 shares of Rs. 10 nominal value, making the total as 550 shares. Bonus shares issued @ 7 shares for every share made the number of shares held as 4400. Split of Rs. 10 shares into Rs. 2 each made the total number of shares as 22000 of Rs. 2 each. Net cost of each share was only Rs. 0.25.

In January 2008, when the DLF shares were valued around Rs. 1100-1200 per share, the holding became worth about Rs. 2.5 croes. This made one book a plot and an apartment as one does not have own roof yet to live in. Quickly, however, the capital value of Rs. 2.5 crores melted down to Rs-40-50 lacs. Paying for the property installents yet keeping something for maintenance became a major poblem.

It became necessary to make an effort to regain the capital worth. So share trading was started. The scale of activity has been pretty extensive, in terms of extent and quantity per transaction. One goes mostly long but,at times, short too. The arena is mostly limited to Equity but some times Derivatives also.

i do not have any CA for help and operate on my own on line from home through Internet trading. India Infoline's Trader terminal is used for this purpose.

Being a tax compliant person, there are a number of issues emerging. The first question that arises is: Would i be considered as a trader or an amateur for the purpose of ITax, that is, whether i would have to pay for Capital Gains or for PL?

Once this issue is sorted out, there wouild be further issues that would be raised later, again if you permit.

i shall be grateful, if you (or some other expert) can help me.

Hugs

Rajen

Hi Rajen,

You have started the discussion in absolutely the correct manner....

TRADER OR INVESTOR ???

first i would suggest you one thing....please go through the posts on the first page of this thread....Many of your questions would be answered itself...Then if you have any specific questions to ask you are free ask me...

Just go through the first page wherein i have explained a lot about these concepts....

 

[diosys]

Many thanks Diosys, that explained it perfectly. So I guess I still have time for my FY2008-09 filing.

But my FY07-08 accounts aren't in perfect order. I noticed there's an option in ITR4 for people like me.

What are the repercusions of using this option? Will there be a mandatory scrutiny of my accounts or something?

Dear,

First of all let me tell you this option is only available for those whose income in the previous year has been less than 1,20,000.... So if you are below that then you free to use this option, otherwise you are not eligible THOUGH many people do use this option as a short cut. Sometimes they are caught and many times are not noticed....

So first see whether you fit in this bracket or not.

 

[wattax]

So first see whether you fit in this bracket or not.

I don't, damn. Not a problem, it's mostly just MFs and stuff so it should be easy to fill out. Thanks.

But on that subject, my MF was held for 13months, meaning it falls under ltcg right? But what's the tax percentage on ltcg? I ask because I seem to remember a revision on the % number recently.

Same with the STT on the MFs. Wasn't there a change recently(from deduction in IT to business expense or something)? I'd like to know if there's a difference in these two between FY06-07, 07-08 and 08-09. Thanks in advance.

 

[diosys]

I don't, damn. Not a problem, it's mostly just MFs and stuff so it should be easy to fill out. Thanks.

But on that subject, my MF was held for 13months, meaning it falls under ltcg right? But what's the tax percentage on ltcg? I ask because I seem to remember a revision on the % number recently.

Same with the STT on the MFs. Wasn't there a change recently(from deduction in IT to business expense or something)? I'd like to know if there's a difference in these two between FY06-07, 07-08 and 08-09. Thanks in advance.

Dear,

LTCG is tax exempt....NO TAX....

Secondly the above part of the the return you had posted was for business INCOME only and not LTCG. so if you filling in LTCG then that requirement all together goes out of the window...

Once you file under LTCG then there is no deduction for STT.

 

[VJAY]

Dear,

LTCG is tax exempt....NO TAX....

Secondly the above part of the the return you had posted was for business INCOME only and not LTCG. so if you filling in LTCG then that requirement all together goes out of the window...

Once you file under LTCG then there is no deduction for STT.

Dear diosys,

If one filing his returns as business income then there is no LTCg?

Regards
VJAY

 

[vasa1]

Dear,

LTCG is tax exempt....NO TAX....

Secondly the above part of the the return you had posted was for business INCOME only and not LTCG. so if you filling in LTCG then that requirement all together goes out of the window...

Once you file under LTCG then there is no deduction for STT.

Hi Diosys, what I have put in bold may cause confusion. Please see if you agree.

This is only true for equity transactions via a stock exchange and for what are classified as equity MFs and not for MFs which have less than 65% Indian equity or for equity sales done direct with companies such as buybacks / delisting in off-market mode. STT is levied in the former cases but not in the latter.

There is LTCG on debt MFs: 20% with indexation or 10% without. Surcharges / cesses extra.

 

[rds1933]

Hi Rajen,

You have started the discussion in absolutely the correct manner....

TRADER OR INVESTOR ???

first i would suggest you one thing....please go through the posts on the first page of this thread....Many of your questions would be answered itself...Then if you have any specific questions to ask you are free ask me...

Just go through the first page wherein i have explained a lot about these concepts....

Thanks a great deal, diosys. Your zeal in answering to quries of one and all must be very taxing. One sincerely appreciates your effort.

The first page of the thread initiated by you was seen before addressing you. This was done thinking that the first page was written in May 2006 and by now perhaps the matter must have been settled with clarity. This was the reason for giving an account of the circumstances under which share trading was initiated. The under current of the logic running in the mind was that trading was initiated not to make 'profit' but with a view to gaining the lost value. Acquisition of DLF shares that was surely by chance could not be classified as 'trading'. Loss of value of the shares also could not be attributed to 'trading' by the holder. Therefore, an attempt to regain the lost value should also not be treeated as trading!

It is, however, appreciated that this argument would not be acceptable to IT authorities. One has to proceed with the assumption that the author of this mail would be considered as a trader and not an investor.

Now, the issue related to calculation of PL arises. The query is proposed to be raised by taking a real time example. During the period April 01, 2009 to March 31, 2009, 1500 shares of Balrampur Chini were 'Buy', 1200 were 'Sell'. leaving a closing balance of 300 shares that were carried over to the year 2009-10.

The 'Net Qty' carried over to the year 2009-10 was 300. The average cost per share of these 300 sahares would be (Buy value of 1500 minus Sell value of 1200 shares)/Net Qty of 300. The net rate of these 300 shares worked out to Rs. 46.96.

The Trading software of India Infoline indicated the closing price of the shares as Rs. 52.45. Needless to say, both the figures of Rs. 46.96 and Rs. 52.45 would have to be adjusted after taking into account the brokerage and taxes.

Now, one method to work out the PL for 2008-09 can be as under:

(A) PL = (Value of the OB quantity - Buy cost of 1500 shares + Sell value of 1200 shares - Value of the balance quantity)

It may be noted that, in this case, the opening balance of this scrip for the year 2008-09 was 'nil'.

Another method to work out the PL for 2008-09 could be:

(B) PL = Sell value of 1200 shares, to be based on Average Sell Rate - Buy value of 1200 shares, again based on Average Buy rate deduced from the Buy value of 1500 shares on pro-rata basis.

The author would be grateful to know from you which of the two methods (A) or (B) would be correct?

Further, the question that arises is whether the value of the OB Qty of 300 would be worked out from Rs. 44.96 or Rs. 52.45 for calculating the PL for 2009-10? (C)

Your opinion on (C) would also be valuable.

Thanks again in anticipation for your indulgence.

Hugs Rajen

 

[diosys]

Dear diosys,

If one filing his returns as business income then there is no LTCg?

Regards
VJAY

Yes.....For the same transaction it would be very tough to prove that part is business income and part LTCG....

 

[diosys]

Hi Diosys, what I have put in bold may cause confusion. Please see if you agree.

This is only true for equity transactions via a stock exchange and for what are classified as equity MFs and not for MFs which have less than 65% Indian equity or for equity sales done direct with companies such as buybacks / delisting in off-market mode. STT is levied in the former cases but not in the latter.

There is LTCG on debt MFs: 20% with indexation or 10% without. Surcharges / cesses extra.

Yeah Vasa, you are absolutely correct....my answer was relating to transaction on Stock exchange where STT has been paid....