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I am a trader. Is it mandatory that I file income tax returns for the profits and losses in trading that I booked? What is the process involved?

—Sainath

It is assumed that the profits and losses have arisen in FY21. Generally, an individual taxpayer is required to file the India tax return if his/her gross income chargeable to tax in India (before specified deductions) exceeds 2.5 lakh.

Income or loss on account of trading in stocks or derivatives transactions may be considered as business income or capital gains (depending on a detailed examination of factors such as volume of trade, frequency of transactions, average holding period and mode of funding).

In case income from trading in stocks or derivatives is considered as business income, the income tax return form applicable to you will be either ITR-3 or ITR-4 (depending on satisfaction of all the other conditions). In ITR-3, the details of sale and corresponding purchase would need to be disclosed in “Schedule P&L" and “Schedule BP" and in ITR-4, details of sale and corresponding purchase would need to be disclosed in “Schedule BP".

However, in case the income from trading in stocks or derivatives is considered as capital gains, the ITR form applicable to you will be ITR-2 (assuming you satisfy all the other conditions). The details of sale and corresponding purchase in relation to capital gains would need to be disclosed in “Schedule CG".

Furthermore, depending on the turnover, gross receipts, income of the business, and nature of business, the applicability of tax rates (normal or presumptive tax rates); applicability of goods and services tax, and compliance thereunder; the applicability of maintaining books of accounts, and conducting tax audit would need to be evaluated.

If an employee retires, then for the next three years the PF account accrues interest. Will that also be the case when an employee leaves an organization but has not transferred his/her account as he/she has not taken up a new job?

—Hemant Koppikar

As per provisions of the Indian Provident Fund (PF) law, a PF account becomes “Inoperative Account" and does not earn further interest when an employee retires from service after attaining the age of 55 years or migrates abroad permanently or dies and does not apply for withdrawal of his accumulated balance within 36 months. Until such time, interest will continue to accrue on the PF balances. However, no interest will accrue once the account becomes inoperative.

Where an employee has ceased employment before completing 55 years of age and no contribution has been made to the PF account thereafter (as he doesn’t transfer his account as he/she has not taken up a new job), the employee should be able to earn interest in the PF account till the age of 58 years or until the date of withdrawal, whichever is earlier.

Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India.

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