Do Not Ignore This Once You Start Day-Trading In India

It takes less than 2 days for some to open a new trading account and start daytrading in India.

After starting to daytrade, what many day-traders fail to do is, they ignore to file their Income tax returns from the very first year.

New traders assume, it is not required to file returns if you do not make profit from daytrading. This presumption can only lead to further complication.

At the End of the Assessment Year, The Income Tax department do not know if your trading account is in profit or loss. All they know is that you are engaged in stock trading activity in India.

The Tax Department aggregates this information from the different indirect tax records associated with your PAN card. Indirect taxes like GST, Stamp Duty etc you pay through your contract note.

If you do not file your Tax Return after you start daytrading, The computers at The Income Tax Department will flag your PAN number.

The computers will identify that you are engaged in trading activity but not filing the Tax Returns.

If you are new to daytrading in India, it is important to file your Tax Returns irrespective of whether your trading account is in Profit or Loss.

If you fail to file your Tax returns, there is a good chance, you will receive an Income Tax Return Notice from the Tax Department. They want to know why you have not filed your Tax returns while engaging in trading activity. The whole thing gets too complicated after you receive this notice. Too many communications is the required thereafter with the assessment officer, which takes too much time.

To avoid all these complications , file your Tax Returns even if you are in loss. Find a Chartered Accountant, peferably close to your house, where you can visit them easily every year. The basic charges for filing tax returns will be around 500 INR for a Year.

Also remember to forge a life long friendly relationship with your first accountant.