Are you an employee and do you also trade on the stock market? Although the income tax return (ITR) will not be extended this year, you cannot deduct your stock trading losses from salary income, according to a tax expert.
The deadline for filing the ITR for the financial year 2021-2022 (AY 2022-2023) for salaried employees whose accounts do not need to be audited is July 31, 2022. The government does not foresee an extension of the ITR due date this year as he expected that most returns would be filed before the deadline.
Revenue Secretary Tarun Bajaj said on Friday that the government was not considering extending the deadline for filing ITRs.
Employees who have not yet filed their ITRs can still offset their losses on the stock markets and file their returns before the due date.
In accordance with income tax rules, stock market transactions are grouped together as “capital gains” or “business income” depending on various factors, such as transactions, investment, volume and frequency of transactions, their holding period, etc.
Capital gains are further classified as long-term and short-term capital gains based on their holding period.
Business can also be classified as speculative income, for example in the case of intraday trading. Therefore, trading/stock losses are allowed to be adjusted according to the rules applicable to these income items.
If it is a long-term capital loss, it can only be adjusted for long-term capital gains. However, a short-term capital loss can be adjusted against both short-term and long-term capital gains.
“Suppose such a loss cannot be adjusted in the current year, it can only be carried forward to the next 8 assessment years if the ITR is timely filed by the due date” , Archit Gupta, founder and CEO of Clear, told FE PF. Desk.
If you had a loss in intraday trading, it could only be adjusted based on speculative income from commodities or intraday trading in the current year or the next four years.
“Any business loss from stocks other than intraday trading can be adjusted against all other income except wage income. Therefore, taxpayers cannot deduct their business/stock losses from their wage income,” Gupta said.