CALCULATION OF TURNOVER FOR STOCK MKT. TRADER /INVESTOR.

 



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CALCULATION OF TURNOVER FOR STOCK MKT. TRADER /INVESTOR.

Any person having income from trading in shares and securities should report it as income from business and profession. To determine the applicability of Tax Audit as per the Income Tax Act, we should calculate Trading Turnover for such income.

Equity Intraday Trading: For all speculative transactions, the aggregate or absolute sum of both positive and negative differences from trades is considered a turnover.

  • On 5/12/2021 you buy 100 shares of TATA MOTOR at Rs. 500 and sell them on the same day at Rs. 490. Loss = (490-500)*100 = Rs. -1000
  • On 15/01/2022 you buy 20 shares of RBL Bank at Rs. 600 and sell them on the same day at Rs. 620. Profit = (620-600)*20 = Rs. 400
  • Trading Turnover = Absolute Profit
  • Trading Turnover (1000+400 ) = Rs. 1400.
  • NOTE: IN THIS CASE INCOME FROM THE SALE OF SHARES IS TAXABLE AS BUSINESS SPECULATIVE INCOME.

Equity Delivery Trading: For all delivery-based transactions: where an investor or buyer holds his stock for more than one day and then sells them at any time, the total value of the sales (Consideration) is to be considered as turnover.

  • On 01/04/2021you buy 100 shares of TATA MOTOR at Rs. 450 and sell them on 16/04/2021 at Rs.480. Profit = (480-450)*100 = Rs.3000
  • On 14/05/2021 you buy 100 shares of ICICI BANK at Rs. 784 and sell them on 8/05/2021 at Rs. 750. Loss = (750-784)*100 = Rs. -3400
  • Trading Turnover = Sales Value
  • Trading Turnover Rs.123000 (48000+75000).
  • NOTE: IN THIS CASE INCOME FROM THE SALE OF SHARES IS TAXABLE UNDER THE CAPITAL GAIN HEAD.

 

Equity / Currency / Commodity Futures Trading.

  • On 10/01/2022you buy 50 units of Nifty Futures at Rs. 15,900 and sell them on 15/01/2022 at Rs. 15,800. Loss = (15800-15900)*50 = Rs. -5000
  • On 05/04/2022 you buy 25 units of Bank Nifty Futures at Rs. 35000 and sell them on the same day at Rs. 36000. Profit = (36000-35000)*25 = Rs. 25000
  • Trading Turnover = Absolute Profit
  • Trading Turnover (5000+25000) = Rs. 30000
  • NOTE: IN THIS CASE INCOME FROM THE SALE OF SHARES/DERIVATIVES IS TAXABLE AS BUSINESS INCOME.

Equity / Currency / Commodity Options Trading:

  • On 11/04/2022 you buy 50 units of Bank Nifty Options at Rs. 30 and sell them on the same day at Rs. 60 Profit = (60-30)*50 = Rs. 1500
  • On 12/04/2019 you buy 100 units of Bank Nifty Options at Rs. 100 and sell them on the same day at Rs. 500. Loss = (100-95)*100 = Rs. -500
  • Trading Turnover = Absolute Profit + Sales
  • Absolute Profit = 1500+500 = Rs. 2000
  • Sales = 50(60) + 100(95) = 3000 + 9500 = Rs. 12500
  • Trading Turnover = Absolute Profit + Sales
  • Trading Turnover (2000 + 12500) = Rs.14500.
  • NOTE: IN THIS CASE INCOME FROM THE SALE OF SHARES/DERIVATIVES IS TAXABLE AS BUSINESS INCOME.

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