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Stock traders’ September 30 tax filing deadline nears; Should you file if you have trading losses?

If you are an active stock trader, you will need to file your tax returns showing gains or losses made from your trading activity, deadline for which is September 30.

By: | Updated: September 16, 2016 10:39 AM

Stock traders' September 30 tax filing deadline nears; Should you file if you have trading losses?

Tax filing: Many investors who are active in the equity market,including those in the Futures and Options (F&O) segment, end up making mistakes on tax returns filing, including avoiding the entire exercise in case there are losses in their portfolio. (Photo: Reuters)

If you are an active stock trader, you will need to file your tax returns showing gains or losses made from your trading activity, deadline for which is September 30.

However, many investors who are active in the equity market,including those in the Futures and Options (F&O) segment, end up making mistakes on tax returns filing, including avoiding the entire exercise in case there are losses in their portfolio.

FeMoney spoke to two leading tax advisors, Sudhir Kaushik, Co-Founder & CFO, TaxSpanner.com and Archit Gupta, Founder & CEO ClearTax.com to bring to you the tax returns filing mistakes that you should avoid as a stock trader.

“A lot of taxpayers avoid filing tax return when they have F&O trades or intra-day activity, specially when they have a loss. Losses must be reported since losses come with tax benefits, which can be adjusted from current year’s income from other sources(for non-speculative business),” Archit Gupta says.

Gupta said that it is wise to file your tax return if there are losses since it can actually bring down your tax outgo. “Speculative loss can be adjusted from speculative income and remaining balances can be carried forward and adjusted in succeeding years. In view of this filing your taxes can actually reduce your tax outgo, when you have a loss,” Gupta said.

Kaushik agrees with Gupta. “Since many salaried people now have started investing in equity/derivatives/F&O segment, they are actually unaware about the term tax audit itself and they are in an assumption – “since it is loss, there is no need for tax audit” and they file ITR showing only salary income.

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