2023-24

2023-24

REQUIREMENT TO

FILE ITR

www.taxmann.com Follow us :
 2023-24

Q1. I am a trader in Futures and Options (F&O). This year,

I incurred a loss in F&O trading. Do I still need to file
my Income Tax Return (ITR) even though my income is
below the exemption limit?
Filing an Income Tax Return is mandatory for individuals and Hindu Undivided Families (HUF) if their
income before allowing capital gain exemption and deductions under Chapter VI-A exceeds the
maximum exemption limit.

Since you have incurred a loss during the year, you are not required to submit an ITR under normal
circumstances. However, it is still necessary to file the ITR in order to carry forward the F&O losses.
Therefore, you should file your return of income on or before the due date to carry forward the losses.

Q2. I am a salaried employee. I am also engaged in trading

derivatives such as futures and options. I would like
to know the deadline for filing my Income Tax Return
(ITR), whether it is 31st July or 31st October.
The gains or losses arising from trading in F&O are always taxable under the head of ‘Profits and
Gains from Business or Profession’. Income or loss from F&O shall be deemed as normal business
income (non-speculative business) even though delivery is not affected in such transactions.

As your income from F&O falls under the business head, it is important to calculate your turnover
to determine whether you are required to have your accounts audited. The turnover computation
is crucial because the requirement for a tax audit is based on turnover. If your turnover exceeds the
specified limit, you must have your accounts audited, and in that case, the due date for filing your
ITR will be 31st October. However, if your turnover is below the specified limit, the due date to file the
ITR will be 31st July.

www.taxmann.com Follow us :
 2023-24

Q3. How to calculate the turnover in the case of F&O?

The Income-tax Act does not contain any provision or guidance for the computation of turnover in
F&O trading. However, the ‘Guidance Note on Tax Audit’ issued by the ICAI prescribes the method of
determining turnover, which shall be as under:

(a) The total of favourable and unfavourable differences is taken as turnover.

(b) Premium received on the sale of options is also included in turnover. However, where the premium
received is included for determining net profit for transactions, the same should not be included
separately.

(c) In respect of any reverse trades, the difference thereon should also form part of the turnover.

All the favourable or unfavourable differences are aggregated to calculate the turnover.

For example, Mr. A enters into the following transaction during the financial year:

Security name Type Premium Buy Amount Sell Amount Profit/(Loss)

received
Cipla Futures - 7,47,500 8,05,000 57,500
Nifty Call - 3,375 6,000 2,625
BHEL Call - 41,600 20,800 (20,800)
ONGC Futures - 3,48,500 3,28,000 (20,500)
IOC Put (Sell) 500 - - 500
ITC Put (Sell) 1,000 4,000 (Square Off - (3,000)
Price)
Reliance Ltd. Put - 4,500 2,500 (2,000)

www.taxmann.com Follow us :
 2023-24

In derivative transactions, the aggregate of both favourable and unfavourable differences (i.e., income
and loss) is considered the turnover. Further, the premium received on the sale of options is also
included in turnover if the same is not included while determining the net profit or loss from the
transaction. Thus, the turnover of Mr A shall be as follows:

Security Name Profit/(Loss)

Cipla 57,500
Nifty 2,625
BHEL (20,800)
ONGC (20,500)
IOC 500
ITC* (3,000)
Reliance Ltd. (2,000)
Total Turnover 1,06,925
* As the amount of premium received is already considered for computing the profit or loss from the transaction, it is not
included again while computing the turnover.

www.taxmann.com Follow us :
 2023-24

Q4. I am a senior citizen, and my only source of income

is the interest earned from bank deposits, which is
below the maximum exemption limit. The bank has
already deducted tax (TDS) from this income. Am I
required to file ITR?
Filing an ITR is not mandatory since your income falls below the maximum exemption limit. However,
it is important to note that if the amount of tax paid by an individual exceeds his actual tax liability,
the excess amount is considered an ‘income-tax refund’ that can be claimed by filing a return. If you
are eligible for an income-tax refund, it can only be claimed by filing the ITR.

Considering that the tax has been deducted from your interest income, filing the ITR to claim the
refund of TDS is advisable. If you do not file the return, you cannot claim any refund.

Q5. Which ITR form is to be used to report income from

crypto?
If you have income from transferring cryptocurrencies (Virtual Digital Assets), you should report such
income in ‘Schedule VDA’ in ITR-2 or ITR-3. It is important to note that you cannot use ITR-1 or ITR-4
to report this income.

www.taxmann.com Follow us :
 2023-24

Q6. I only have income from cryptocurrencies. When is

the due date to file my ITR?
If you earn income only from cryptocurrencies, the due date for filing your ITR depends on the head
under which you report this income. When reporting income from the transfer of virtual digital assets
in ‘Schedule VDA’, you need to select whether it falls under the category of business income or capital
gains. Here is how the due dates are determined based on the chosen category:

Capital Gains : If you report the income as capital gains, your due date for filing the ITR will
be 31st July.

Business Income : If you report the income as business income, you need to compute the turnover
to determine whether you must get your accounts audited. If your turnover
exceeds the specified limit, you must have your accounts audited, and in that
case, the due date for filing your ITR will be 31st October. However, if your
turnover is below the specified limit, the due date for filing your ITR will be 31st
July.

www.taxmann.com Follow us :
 2023-24

2023-24

DOWNLOAD PDF NOW

Link in the Description

LIKE OUR CONTENT? FEEDBACK?

Hit the like/share button to Call us
spread the knowledge!

www.taxmann.com Follow us :