Tax Audit for an Individual investor trading in Shares

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  1. Karunaks

    Karunaks New Member

    I am an Investor in Shares and Mutual Funds. I am doing trading (Shares, Mutual funds and Futures) as well. I have no other Income source. I have few questions.

    1. Is it necessary to audit my transactions for income Tax. Or shall I compute the capital gains on my own and pay Income tax accordingly.
    2. I am doing with my Savings Account only. Do I need to open a Current Account as business.

    I am following this forum for quite some time. I have gained lot of information from this.
    Thanks to all,
     
    Last edited: Mar 31, 2015
  2. Manoj Mehra

    Manoj Mehra Active Member

    Yes, tax audit would be applicable if your turnover exceeds Rs. 1 Crore. However, the manner of computation of turnover in case of traders who trade in stock market is done in a different manner and has been mentioned here - http://www.forum.charteredclub.com/threads/tax-audit-on-futures-trading-in-commodities.2301/

    It would be better if you open a current account and trade through that account. Banks say that you should not be doing any business through your savings account.
     
  3. Karunaks

    Karunaks New Member

    Thank you very much. Very valuable information for me. I appreciate your help.
     
  4. Karunaks

    Karunaks New Member

    Regarding LTCG on shares and mutual funds, what are the benefits of indexation on purchase value? I assume we shall take the higher value of either index or non-index cost for tax filing.
    Net selling value = 14410
    Net purchase value = 6500
    Exempted income = 14410 - 6500 = 7910
    (If Purchase index cost = 7455.50, exempted income would be Rs 6955)
    In this case, i shall take my LTCG Rs 7910 for tax filing instead of considering index value. Please correct me, if i am wrong. Thanks.
     
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