Part 2: 5 Ideas to Save Tax on Your F&O Income!
Expenses Related to Trading
Expenses you incur to carry out your trading activity are also eligible for deductions. You obviously need an internet connection to trade, claim that bill. To improve your skills, you might plan to join a webinar/seminar, buy some books, join a paid podcast etc. In fact, you might even buy some stationary to maintain your trading journal, all these expenses can be deducted from your profits. If you use your phone for trading, your bills for data/calls are also deductible (partially, if they are not solely used for trading).
These days, traders also have a vast number of subscriptions to magazines, business newspapers, derivative analytics platforms, advisory services, premium stock screeners such as InvestingPro, etc. don’t forget to deduct these expenses as well.
If any of your trading equipment gets damaged, such as if you bang your laptop on the wall after a long streak of losses, you can claim the repair cost 🙂
Take Advantage of Lower Tax Slabs
Many traders have family members who are either not earning are have less income. After the Budger 2023, the tax exemption limit has been increased to INR 3 lakh (in the new regime). If your tax liability is high, then you can think of trading from the accounts of your family members which will noticeably reduce your tax liability on the same profit.
For eg, the amount of tax you would pay on INR 8 lakh profit from 1 account would be more than INR 4 lakh profit from 2 accounts. This idea is obviously for high-income earners.
If you think simultaneously trading from multiple accounts is very difficult, which actually it is, then here’s a hack. You can trade solely from 1 account till the time you hit a decent profit figure, say INR 4 lakh then completely stop trading from this account and altogether switch to another one.
Always remember, being tax-smart means finding legal ways to minimize your tax burden. Using unlawful or illegal ways for it is never recommended and must never be done.
If you can think of more such ideas, please comment down below to help your fellow traders.
Read More: Part 1: 5 Ideas to Save Tax on Your F&O Income!