Chartered Accountant

1. Interest from savings account which is less than Rs. 10,000/- in FY 2015-16
2. Interest from FD  which is less than Rs. 10,000/-in FY 2015-16
3. Income from trading in futures & options (Derivatives).

1. Which ITR form to be filled up?
2. Should she inform her employer about the anticipated income from trading
   in F & O?
3. Her income from FD is less than Rs. 10,000/-. Is it mandatory for her to inform her employer about the FD interest amount? [An Army Veteran- -sisir_misra@yahoo.com]

1. Which ITR form to be used by taxpayer doing trading in Future & Options:
   Applicability of ITR forms depends upon the nature of income of the taxpayer. Income from futures & options (F&O) is normally treated as business income & so will be taxable under the head “Income from Business & Profession” whether or not the taxpayer is carrying on any other business or profession. It may be noted that the transactions in derivatives are specifically excluded from the category of “Speculative transaction” if the transaction is carried out (a) on a recognized stock exchange (b) the securities transaction tax is paid and (c) trade is supported by contract note. Profit/Loss in derivatives (futures and options) is treated as non-speculative business even though delivery is not there in such transactions. No special tax rate is applicable for taxing profit from derivatives transactions & tax at normal rates shall be leviable on such profit.
   Option to file the return in ITR-1,2, 2A or 3 is not available to any individuals if they have income under the head “Income from Business”. In such case, return could be filed either in ITR-4 or 4S. If the turnover from F & O transaction is less than 1 Crore and profit from such transactions is not less than 8% of the turnover, the return can be filed in ITR-4S. However, if the turnover in F & O transaction exceeds 1 Crore or profit from such transactions is less than 8% of the turnover, then tax audit provision would be applicable (i.e., the books of account would be required to be maintained & audited and audit report is also required to be uploaded) & return would be required to be filed in ITR-4.
   An important question that emerges now is the calculation of “Turnover” so as to know whether or not the profit is not less than 8% of the turnover or to know the applicability of tax audit provision (Rs. 1 Crore & above). Turnover, in the case of F & O transactions, shall be the total of profit and loss (i.e., positive and negative figure). In short, aggregate of both the figures, whether positive or negative is considered as “turnover”. If it exceeds Rs. 1 Crore or if the income from derivative is less than 8% of the turnover as referred above, taxpayer should take precaution to maintain the books of accounts & also get it audited.
2.  
3. Whether it is mandatory to inform the details of other income to the employer:
   a] If an employee is receiving salary from more than one employer, he is required to furnish [u/s 192(2), in Form No. 12B] to one of the employer, as may be selected by the employer, the details of salary due/received by him from other employer. Only after submission of information in Form No. 12B, it becomes an obligation of the employer receiving such declaration to deduct tax at source (TDS) considering such other salary income of the employee.
   b] Other than salary income as mentioned above, there is no obligation on the employee to report his other income to the employer. An employee may or may not intimate his other income to his employer. If intimated, employer has to consider such income while working out TDS (Tax deduction at Source) liability of the employee. Else, employee would be required to compute the income (including other income) and tax thereon at the time of filing his individual income tax return and would be required to pay the tax accordingly.
   
   In your specific case, it is not mandatory to report the income from F & O and FD to the employer. However, non-reporting doesn’t absolve the person from the tax liability. Your daughter would be required to pay the tax before filing her income tax return & would be required to incorporate all the income while filing her tax return.