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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    Under Section 80D of the Income Tax Act, you can claim a deduction on the premiums paid for medical insurance. Here’s how it works: 1. Who Is Eligible? Self, Spouse, and Dependent Children: For individuals below 60 years, you can claim a deduction of up to ₹25,000 on the premium paid. If you or anyRead more

    Under Section 80D of the Income Tax Act, you can claim a deduction on the premiums paid for medical insurance. Here’s how it works:

    1. Who Is Eligible?

    • Self, Spouse, and Dependent Children:

      • For individuals below 60 years, you can claim a deduction of up to ₹25,000 on the premium paid.
      • If you or any of these insured persons are senior citizens (60 years and above), the limit increases to ₹50,000.

    • Parents:

      • If you pay the premium for your parents, you can claim an additional deduction:
        • Up to ₹25,000 if your parents are below 60 years.
        • Up to ₹50,000 if your parents are senior citizens.

    • Preventive Health Check-Up:

      • You can also include expenses for preventive health check-ups (up to ₹5,000) within these limits.

    2. Steps to Claim the Deduction

    1. Keep All Premium Receipts:

      • Make sure to collect and safely store your premium payment receipts or bank statements as proof of payment.

    2. Report in Your Income Tax Return (ITR):

      • When filing your ITR (using ITR-1, ITR-2, etc.), enter the details of the medical insurance premiums paid in the appropriate section (usually under “Deductions under Chapter VI-A”).
      • Include the amount paid for self, spouse, children, and parents separately, if applicable.

    3. Verify Your Documentation:

      • Ensure that your insurance policy is active and that the premiums are actually paid in the relevant financial year.
      • Retain the documents in case of any future inquiries by the tax authorities.

    3. Example Scenario

    Let’s say you are below 60 years old and have paid the following in a financial year:

    • Premium for Self, Spouse, and Children: ₹20,000
    • Premium for Parents (who are senior citizens): ₹40,000
    • Preventive Health Check-Up Expenses: ₹5,000 (included within the above limits)

    Total Deduction Claimed:

    • ₹20,000 (for self, spouse, and children) + ₹40,000 (for parents) = ₹60,000

    This amount is fully deductible from your taxable income, thereby reducing your tax liability.

    Final Thoughts

    Claiming a deduction on your medical insurance premium is a straightforward way to reduce your tax liability. Ensure you have the proper documentation and correctly report these amounts when filing your ITR.

    Read: Can we get deduction of medical expenditure incurred on the health of senior citizens under the income tax act?

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    In recent updates, the method to compute income from futures and options (F&O) trading (treated as speculative business income) has shifted from the traditional mark-to-market approach to a turnover-based method. Here's how it works: Step 1: Determine Your Turnover Turnover Calculation:For FRead more

    In recent updates, the method to compute income from futures and options (F&O) trading (treated as speculative business income) has shifted from the traditional mark-to-market approach to a turnover-based method. Here’s how it works:

    Step 1: Determine Your Turnover

    • Turnover Calculation:
      For F&O trading, the turnover is now defined as the aggregate sale consideration of all contracts you traded during the financial year.
      • This means you add up the sale prices of all the futures and options contracts sold (closed positions) during the year.
      • Even if the positions are not delivered (i.e., contracts are closed out), the sale consideration is included in your turnover.

    Step 2: Deduct the Purchase Cost

    • Purchase Cost:
      From the total turnover, subtract the total cost of acquiring these contracts (the purchase price paid when entering the contracts).

    Step 3: Deduct Direct Expenses

    • Direct Trading Expenses:
      Deduct all direct expenses incurred in trading, such as:
      • Brokerage fees
      • Transaction charges
      • Clearing and settlement fees
      • Any other costs directly attributable to the trading activity

    Step 4: Arrive at Your Net Profit or Loss

    • Net Speculative Business Income:
      The result after these deductions is your net profit (or loss) from F&O trading. This figure is treated as speculative business income and is taxed at your applicable business income slab rates.

    Summary Table

    Calculation Step Description Formula
    Turnover Sum of sale consideration of all F&O contracts traded Total Sale Consideration
    Less: Purchase Cost Total cost incurred to buy the contracts Sum of Purchase Prices
    Less: Direct Expenses Expenses directly related to trading (brokerage, transaction fees, etc.) Total Direct Expenses
    Net Income This is the taxable speculative business income from F&O trading Turnover – Purchase Cost – Direct Expenses

    Key Points to Remember

    • Revised Method:
      • The revised approach focuses on the actual sale consideration (turnover) rather than solely relying on the mark-to-market adjustments.
    • Business Expense Approach:
      • This method is similar to computing turnover in a typical business: you start with gross sales (in this case, sale consideration) and then deduct the cost of goods sold (purchase cost) and other direct expenses to arrive at net profit.
    • Taxation:
      • The resulting net profit or loss is considered speculative business income and is subject to tax according to the applicable slab rates for business income.

    Read: How to calculate capital gain on intra-day trading of shares?

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened
    This answer was edited.

    When it comes to intra-day trading (buying and selling shares on the same day), the Income Tax Act does not treat the profits as capital gains. Instead, such trading is classified as speculative business income. This means the traditional capital gains computation method doesn’t apply. Key Points NoRead more

    When it comes to intra-day trading (buying and selling shares on the same day), the Income Tax Act does not treat the profits as capital gains. Instead, such trading is classified as speculative business income. This means the traditional capital gains computation method doesn’t apply.

    Key Points

    • Not Capital Gains:
      Intra-day transactions are considered speculative because the shares are not actually delivered; they are bought and sold within the same day. Thus, the profits or losses from these transactions are treated as business income.

    • Calculation as Speculative Business Income:
      To compute your net income from intra-day trading, follow these steps:

      1. Calculate Turnover:
        Sum up the sale consideration of all intra-day trades (i.e., the total amount received from selling shares).

      2. Deduct Purchase Cost:
        Subtract the total purchase cost of those trades (i.e., the total amount paid to buy the shares).

      3. Deduct Direct Trading Expenses:
        Also deduct any brokerage fees, transaction charges, and other direct expenses incurred while trading.

      4. Net Speculative Business Income:
        The resulting amount is your net profit (or loss) from intra-day trading, which will be taxed as business income according to your applicable slab rates.

    Example Calculation

    Step Description Calculation
    Turnover Sum of sale prices for all trades e.g., ₹500,000
    Less: Purchase Cost Sum of buying prices for all trades e.g., ₹480,000
    Less: Trading Expenses Total expenses (brokerage, transaction charges, etc.) e.g., ₹10,000
    Net Income Final profit (or loss) from intra-day trading ₹500,000 – ₹480,000 – ₹10,000 = ₹10,000

    Additional Considerations

    • Set-Off & Carry Forward of Losses:
      Losses from speculative transactions can only be set off against speculative income and can be carried forward for one year.

    • Record-Keeping:
      It’s important to maintain detailed records (trade confirmations, brokerage statements, etc.) for each transaction to substantiate your calculations.

    Read: How to calculate capital gain on future and options trading?

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chetan singhania
Beginner
Asked: In:

The QRMP (Quarterly return and monthly payment) scheme

QRMP Scheme under GST
  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    Hi The QRMP (Quarterly return and monthly payment) scheme is introduced to help small taxpayers whose turnover is less than Rs.5 crores. As clear from the name It allows the taxpayers to file GSTR-3B on a quarterly basis and pay tax every month. It was brought into effect from 1st January 2021 for tRead more

    Hi

    The QRMP (Quarterly return and monthly payment) scheme is introduced to help small taxpayers whose turnover is less than Rs.5 crores. As clear from the name It allows the taxpayers to file GSTR-3B on a quarterly basis and pay tax every month.

    It was brought into effect from 1st January 2021 for the users having aggregate turnover of up to INR 5 crores in the previous financial year.

    Previously, taxpayers were required to file GSTR-1 and GSTR-3B monthly, but with the QRMP scheme, they can file returns once a quarter.

    Once the user opts for this scheme, He will continue to be in this scheme unless he crosses the turnover threshold or opt-out of it.

    Use can opt-in/out of the QRMP scheme by visiting the GST portal by clicking Login > Services > Returns. Then, click the Opt-in for quarterly return option.

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Anonymous
Anonymous
Asked: In:

  1. CA Manish Kumar Gupta Enlightened
    This answer was edited.

    Hi, Both are accounting terms. Let's understand first to "Trade payable" (TP). Trade Payable refers to a general ledger account of an identified vendor or supplier in the books of the company. The company has made transactions with them for the supply of goods/services and has some outstanding balanRead more

    Hi,

    Both are accounting terms. Let’s understand first to “Trade payable” (TP).

    Trade Payable refers to a general ledger account of an identified vendor or supplier in the books of the company. The company has made transactions with them for the supply of goods/services and has some outstanding balances to pay in accordance with the terms of payments/agreement.

    Since the company has the obligation to pay them they called creditors or trade payable. These are shown in the liability side of the balance sheet of the company.

    Now come to Expenses Payable, Technically they’re also the liability of the company and shown in the liability side of the balance sheet.  Generally, they belong to unidentified parties. It is also not confirmed that whether the company will require an outflow of economic benefit to settle their obligation in near future.  This means either the creditor is not identified or the obligation to payment of the outstanding amount is not confirmed.  For example, in the “Provision of an expense” here neither the party is identified nor the obligation is confirmed. When the party is identified or payment of obligation is confirmed the outstanding amount is transferred to the creditor’s account.

    Hope it clears the terms. There may be different opinions also.

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. Ramesh Sharma Enlightened
    This answer was edited.

    Trading in futures & options must be reported as a business income in the financial year. It is treated as Non-speculative business income. Income from trading in Futures and options (both intraday and overnight) is considered as normal business income/loss. Hence ITR-4 needs to be required forRead more

    Trading in futures & options must be reported as a business income in the financial year. It is treated as Non-speculative business income.

    Income from trading in Futures and options (both intraday and overnight) is considered as normal business income/loss. Hence ITR-4 needs to be required for this income for the assessment year 2021-22. F&O is also considered as non-speculative as these instruments are used for hedging and meant for taking/giving delivery of the underlying contracts.

    Assessee can also claim expenses from the earnings of your business. Expenses like brokerage, broker’s commission, subscriptions to journals related to trading, telephone bills, internet costs, consultant charges, fee of experts or salary of staff, all of these can be claimed. Assessee need to maintain proper records of all these expenses.

    Turnover:

    The method of calculating turnover is a debatable issue and what makes it a grey area is that there is no guideline as such from the IT department. One article of great help though is the guidance note on tax audit under Section 44AB by ICAI (Institute of chartered accountants of India, the governing body for CA’s). The article on Page 23, Section 5.12 of this guidance note has a guideline on how turnover can be calculated. It says:

    • Delivery based transactions

    For all delivery based transactions, where you buy stocks and hold it more than 1 day and sell them, the total value of the sales is to be considered as turnover. So if you bought 100 Reliance shares at Rs 800 and sold them at Rs 820, the selling value of Rs 82000 (820 x 100) can be considered as turnover.

    But remember that the above calculation of turnover for delivery trades is only applicable if you are declaring equity delivery based trades also as a business income. If you are declaring them as capital gains or investments, there is no need to calculate turnover on such transactions. Also, there is no need for an audit if you have only capital gains irrespective of turnover or profitability.

    • Speculative transactions (intraday equity trading)

    For all speculative transactions, aggregate or absolute sum of both positive and negative differences from trades is to be considered as a turnover. So if you buy 100 shares of Reliance at 800 in the morning and sell at 820 by afternoon, you make a profit or positive difference of Rs 2000, this Rs.2000 can be considered as turnover for this trade.

    • Non-speculative transactions (Futures and options)

    For all non-speculative transactions, the article says that turnover to be determined as follows –

    • The total of favourable and unfavourable differences shall be taken as turnover
    • Premium received on sale of options is also to be included in turnover
    • In respect of any reverse trades entered, the difference thereon should also form part of the turnover.

    So if you buy 25 units or 1 lot of Nifty futures at 8000 and sell at 7900, Rs.2500 (25 x 100) the negative difference or loss on the trade is turnover.

    In options, if you buy 100 or 4 lots of Nifty 8200 calls at Rs.20 and sell at Rs.30. Firstly, the favourable difference or profit of Rs 1000 (10 x 100) is the turnover. But premium received on sale also has to be considered turnover, which is Rs 30 x 100 = Rs 3000. So total turnover on this option trade = 1000 +3000 = Rs 4000.

    Carry forward and setoff of business loss:

    Speculative losses (Loss from intraday equity trading) can be carried forward for 4 years and can be set-off only against any speculative gains you make in that period.

    Non-speculative losses can be set-off against any other business income except salary income. So they can be set-off against bank interest income, rental income, capital gains, but only in the same year. They can be carry forwarded for the nest 8 years however non-speculative losses can be set-off only against any non-speculative gains made in that period.

    Offsetting of losses:

    Speculative (Intraday equity) loss can’t be offset with non-speculative (F&O) gains, but speculative gains can be offset with non-speculative losses.

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Amit Ganguly
Beginner
Asked: In:

  1. PrashantBute Beginner

    Even though both the Form GSTR-2A and GSTR-2B reflects similar details, both the forms are different in various ways. The difference between both the forms is summarized hereunder- Type of statement- Form GSTR-2A is a form of a dynamic statement. The details of inward supplies vis-à-vis input tax crRead more

    Even though both the Form GSTR-2A and GSTR-2B reflects similar details, both the forms are different in various ways. The difference between both the forms is summarized hereunder-

    1. Type of statement-

    Form GSTR-2A is a form of a dynamic statement. The details of inward supplies vis-à-vis input tax credit will be updated on a continuous basis.

    On the other hand, Form GSTR-2B is a form of a static statement. The details will be updated on a constant basis.

    1. The basis for reflection of details-

    In the case of Form GSTR-2A, the details of the inward supplies will be reflected in the statement on a real-time basis.

    In order words, the details will be updated as and when the supplier furnishes the details of outward supplies either in Form GSTR-1 or via using Invoice Furnishing Facility (i.e. IFF).

    For example, the registered person while filing Form GSTR-1 for the month of January 2021 has failed to declare some supplies. The missed supplies were reflected by the registered person while filing Form GSTR-1 for the month of February 2021. Correspondingly, the details of such missed supplies will be reflected in Form GSTR-2A in the month of February 2021.

    However, in the case of Form GSTR-2B, the details of inward supplies will be reflected in a static manner. It will reflect the details of outward supplies reflected by the supplier between two due dates of either Form GSTR-1 or Invoice Furnishing Facility.

    For example, suppose the registered person furnishes the details of outward supplies for the month of January 2021 after the due date. In such a case, the corresponding details of inward supplies and the input tax credit will not be reflected in Form GSTR-2B in the month of January 2021.

    1. Bifurcation of eligible and ineligible Input Tax Credit-

    Form GSTR-2A doesn’t provide bifurcation of eligible input tax credit and ineligible input tax credit. Whereas, Form GSTR-2B briefly bifurcates the eligible and ineligible input tax credit.

    1. Data source-

    Form GSTR-2A collects/ complies data on the basis of returns filed by the supplier in Form GSTR-1; Form GSTR-5; Form GSTR-6; Form GSTR-7 and Form GSTR-8.

    Whereas, Form GSTR-2B complies data from Form GSTR-1; Form GSTR-5 and Form GSTR-6 filed by the supplier.

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CA Vishnu Ram
Enlightened
Asked: In:

  1. Ramesh Sharma Enlightened

    In the case of HUF, the Aadhaar number of Karta shall be linked with the PAN card of HUF. In the case of other non-corporate organizations, Aadhaar number of the principal person of the organization shall be linked with the PAN card of the organization.

    In the case of HUF, the Aadhaar number of Karta shall be linked with the PAN card of HUF. In the case of other non-corporate organizations, Aadhaar number of the principal person of the organization shall be linked with the PAN card of the organization.

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