ITR Filing: When a salaried person starts trading in the stock market with a part of his income, he has to file ITR 2 or ITR 3 for his capital gains.
ITR Filing: Are you a salaried person and also earn money from the stock market? If yes, then ITR-1 form is not for you. Because when a salaried person starts trading in the stock market with a part of his income, he has to file ITR 2 or ITR 3 for his capital gains. Now there may be confusion about ITR-2 or ITR-3.
Alok Agrawal, partner, Deloitte India, told Business Today, “In case of day trading in the stock market, there is no underlying delivery of shares. Under the tax law, ‘speculative transaction’ means a transaction in which a contract for the purchase or sale of any commodity, including shares, is settled from time to time or eventually in any manner other than by actual delivery or transfer of the commodity or scrips. However, this provision should apply only if the underlying nature of income is business income.”
Aggarwal explained, “In case of salaried taxpayers, the main source of income reported on the tax return will be salaried income. The number of trading transactions and resultant income will not be very significant. Also, such persons will undertake such transactions to obtain investment income, given that their primary occupation is as an employee, and they will not be permitted to carry on any business activity as per the terms of their employment. Keeping this in mind, they should file ITR-2 assuming that such income is in the nature of capital gain and salaried income. In exceptional circumstances, if the person has such trading income as business income, they should file ITR-3.”
Who cannot use ITR-2?
This return form should not be used by a person whose total income for the assessment year 2024-25 is from business or profession. To declare these types of income, you may have to use ITR-3 or ITR-4.
ITR-3
The current ITR-3 form should be used by an individual or Hindu Undivided Family (HUF) having income from a proprietary business or carrying on any profession. Such as…
If you have invested in unlisted equity shares at any time during the financial year. The return may include income from house property, salary/pension and other sources or income as a partner in a firm.
