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Income from derivative transactions are taxed as business income irrespective of the volume or turnover. If you’ve traded in derivatives, ITR 4[1] (the form for reporting business income) needs to be filled. Even if you’re a salaried person, you’ll still need to fill ITR-4 if you’ve engaged in any F&O trades in the last FY.Under Section 43(5), a business is categorized as speculative or non-speculative.[2]Speculative business income: Income from intraday equity trading is considered as speculative.Non-speculative business income: Income from trading F&O (both intraday and carryforward) on is considered as non-speculative business. F&O is also considered as non-speculative as these instruments are used for hedging and also for taking/giving delivery of underlying contract.Maintenance of Books of accountsAll the transaction carried out need to be recorded. This includes buy/sell transactions, expenses like electricity bills, demat charges, phone bills, advisory fee etc. In case a trader is involved in multiple forms of trading in shares like intraday trading, F&O, making investments in MFs, holding shares for more than twelve months from the date of purchase, the business income from each of these must be declared separately since the tax treatment differs based on the type of dealing. The common expenses can be bifurcated depending on the proportion of time spent on the various types of trades.How do you calculate your trading turnover?For every trade, contract notes are issued which show the value of assets bought or sold. While for the recording purpose only the difference between is used. Take this example:Anurag bought one lot of Maruti ports at 2.0 lakhs and sold it for 2.8 lakhs (Profit = Rs 80,000)Anurag bought one lot of SBI at 3.5 lakhs and sold it for 3.00 lakhs (Loss= Rs 50,000)The turnover shall be calculated as Rs 80,000 + Rs 50,000 = Rs. 1.30 lakhs. [3]Also, any premium received when you’re writing a option must be added to the turnover value.When is an audit mandatory?When the turnover from F&O trading exceeds Rs 1 crore (Section 44AD)[4] or if profits are less than 8% of the trading turnover (and your other income is above taxable limit), the accounts need to be audited by a practicing Chartered Accountant.Tax Computation for AnuragLet’s say Anurag works for Minance and has earned a salary of Rs 15 lakhs in FY 2015-16 (yeah, I wish!)Anurag opened a trading account with a brokerage firm by paying Rs 5,000 as account opening charges. He has to pay 0.02% as brokerage charges for each F&O trade and paid a total of Rs 98,000 as brokerage charges during the year. He also attended a workshop for F&O beginners and paid the organizers Rs 7,000 for it.Anurag has mobile expenses of Rs 36,oo0 (because he talks a lot) for the whole year and a review of his past bills indicates about 50% of his bill is towards his F&O trade. His monthly internet bill is Rs 1,200. He met a consultant who specializes in F&O and had a dinner worth Rs 2,000 with him.His total turnover is Rs. 1.2 crores and since he’s a horrible trader, his losses are Rs 3 lakhs. Here’s what happened next:His F&O trades is treated as a business. He will have to file ITR-4 instead ITR-1 (form for income from salaries, house property, interest and other sources)[5] that he files normallyAnurag can claim expenses of F&O from his income (or loss), which are directly related to F&O his tradingLosses have tax benefits (they can be offset with certain other incomes and can be carry forwarded for 8 succeeding years)Since Anurag’s turnover is more than Rs 1 crore, he must get an audit done from his CA. He also has to maintain books of accounts for his trading activity.Table 1: List of expenses incurred for F&O trading by Anurag.Table 2: Net income from Anurag’s F&O trading business. Remember I made a loss of Rs 3 lakhs because I’m a horrible trader? That’s the first item. The second team is the net expenses brought forward from the grand total of Table 1.Table 3: F&O trading is considered as a non-speculative business, can be set off with other incomes such as rental income, interest income. Any loss which is unadjusted here (the Rs 14,000 portion) can be carried forward to 8 succeeding years. In these 8 years it can only be set off against non-speculative business income.Treatment of losses from the F&O trading business and how it affects tax liability?Reporting losses can help you bring down the tax liability. Since F&O trading is counted as a non-speculative business, loss from F&O trading is allowed to be adjusted against income from any other source (except salary income).Note: Losses from a speculative business such as day trading cannot be set off against any income other than income from a speculative business.If the loss is not fully adjusted it can be set off against income under any other source like Income from House Property, Income from Capital Gains etc, except under the head Salaries. If the loss still couldn't be adjusted fully in the year in which it was incurred, the unadjusted loss can be carried forward for next eight years immediately succeeding the year in which it was incurred and be set off only against the head Profit and gains of business and profession for non-speculative business.Consequences of non-compliancePenalty of amount upto Rs. 25,000 for not maintaining proper books of accounts.Penalty of 1.5 % of the turnover or maximum penalty of Rs. 1.5 lakhs for not auditing accounts before the specified date (Relevant date is 17th October 2016 for the FY 2015 16).Hat tip: Tejas Khoday and Apoorva Sahu (Chartered Accountant)[6]Footnotes[1] http://www.incometaxindia.gov.in/forms/income-tax%20rules/2016/itr42016.pdf[2] Income Tax Department[3] http://www.caalley.com/gn/30357dtc19988.pdf[4] http://www.incometaxindia.gov.in/Lists/Press%20Releases/Attachments/483/Press-Release-on-Presumptive-Taxation-21-06-2016.pdf[5] http://www.incometaxindia.gov.in/forms/income-tax%20rules/2016/itr12016.pdf[6] Chartered Accountants in Bangalore - Sahu & Associates

The form is not really that confusing. ITR 1 is actually quite simple. You only find it confusing because you are not aware of the terms used in Income tax parlance. Here is an answer I wrote previously on a similar question. I cannot link to it because for some reason Quora thought it was spam and deleted it (for the same reason I won't be including any links in my answer, you can take the help of Google for that).First of all, to file income tax return, you will need to have a PAN. Let us assume that you already have a PANTo file your income tax return yourself, the best way is to file it online.To do this, you need to register yourself on Income Tax India e-filing website. For registering you will need your PAN, an email ID and a mobile number apart from your personal details.The most basic thing you need to understand is the concept of financial year and assessment year.In India, for Tax purposes, a year starts in April of one year and ends in March of the next year. This is called a financial year. In Income tax terms, it is called Previous Year. So if you are filing the return for your income earned during April 2014 to March 2015, it will be called FY 2014-15 or PY 2014-15.The year following the financial year, is called Assessment Year. This is so because your income is "assessed" by the Income Tax department in the year after you actually earned your income. So if you are filing the return for your income earned during April 2014 to March 2015, it will be called AY 2015-16 because your income will be assessed during the year 2015-16.Now to actually filing your return.To file your income tax return, you need to know the following 3 things first:Your total incomeThe deductions you can claimThe tax that has already been paid by you by way of TDS and advance taxesLet us talk about these one by one.Your Total IncomeAccording to the income tax laws, your income is divided into 5 heads:Income from salary - This is the income you earn if you are employed. In the most basic sense, whatever money you receive from your employer is your salary income, no matter what it is called. But there are some allowances which are deductible, like transport allowance etc. You will receive form 16 from your employer. You can determine how much of your salary is taxable from form 16.Income from House property - This head includes rental income from houses. Keep in mind, income on sale of house is not included here, only rental income. You get a standard deduction of 30% on your rental income.Income from Business or Profession - if you are carrying on your own business or you are a professional, your income will fall under this head. Any business expense can be claimed as deduction from your revenue.Capital Gains - Income of sale of capital asset is included here. Capital asset includes property, gold, equity shares, bonds, mutual funds etc. It does not include personal movable assets like furniture, car etc.Income from other sources - Any income not included in above heads is reported here. This specifically includes interest income on your bank or corporate deposits and dividend income from unlisted companies. Any commission or tuition income you may earn can also be included here. Keep in mind that interest from your Savings account in the bank is not taxable upto Rs. 10,000After listing all your incomes as above, you total them. This, in Income Tax terms, is called Gross Total Income or GTI.Since you are salaried employee and are filing your returns for the first time, chances are, you will only have salary income and interest income. So you do not need to worry about heads 2, 3 and 4. You can simply ignore them for now.Deductions you can claimTo encourage investments and financial planning, the government offers various deductions. These are listed in Chapter VI A of the Income Tax Act.This is what sec 80C, 80D etc. are. These sections list the deductible investments. You can find an excellent summary of Chapter VI A on Taxguru. Just Google for the term "income tax deductions for salaried taxguru"For simplicity, I will give you a list here which is most likely to be applicable for you (I still encourage you to go through Tax Guru).1. 80C - This section contains, among other thingsPF - Your contribution to Employee's provident fund which is generally deducted from your salary by the employerLife insurance premium - If you have life insurance and you pay any premium for it, you can get deduction for it under this sectionPPF - If you have a Public Provident Fund account, the amount you contribute to it can be deducted in this section2. 80D - Medical Insurance premium - If you have medical insurance for yourself or your parents, you can deduct the premium paid from your income under this section3. 80E - If you have education loan, the amount you pay towards interest can be claimed as deduction under this section. Keep in mind, you cannot deduct the whole installment, just the interest portion. Your bank statement will give you the breakup.4. 80G - If you have made a donation to any registered charitable trust or NGO, you can claim it as deduction here. Your donation certificate will specifically say if the donation is deductible for Income tax purpose.Once you know your deductions, list them out and total them. Deduct this from your GTI. This gives you, what is called in Income Tax terms, your Total Income.The Tax that has Already Been Paid by YouTo prevent non-payment of income tax by assessees, govt has put in place Tax Deduction at Source provisions. This means, the person responsible for paying your income is supposed to deduct tax from the income and deposit it with your government.If you are a salaried employee, your employer must be deducting taxes from your salary. If you have bank deposits and your interest for a year exceeds Rs. 10,000 (in one bank), then the bank will deduct tax on your interest income. If you earn commission or provide any service to businesses, TDS will be deducted from your income on these.The easiest way to know what TDS has been deducted on your account, is to see your form 26AS. There are 3 ways to see view form 26AS:TRACES website - Just search for Income Tax traces. You will have to register here separately. It's a bit complicated, so best avoid thisRegister on efiling website (link at the top). You can see form 26AS from thereIf you have internet banking account and your PAN is linked with your bank account, you can view form 26AS from there. This is the easiest way, if possibleIf any tax has been deducted, download your form 26AS in PDF format so that it is readily available for reference.Now you are all set to file your return. Login to the e-filing website. It will ask to confirm your email ID and phone number. Just follow the instructions.On the left hand side, under quick links, click on Quick e-File ITR link. Fill out the form with all the details. This option can only be used if you are an individual with only salary and interest income. Some fields will already be filled. Just verify that the details in those fields are correct. When you are done filling out the form, save it. Now go through it once again and verify that all the details are correct.When done, submit the form. Your return is filed. However, there's just one more step. You will receive an acknowledgement of the return in your email. This is called ITR V. Print out this acknowledgement, put your signature in the space provided and mail it to the given address.Here's a video by the income tax department to help you out with the return filing process:There are a lot of other videos too which you can refer. Just search for it.

Best Places to Invest in Real Estate: DenverOne of the best places to invest in real estate is Denver. Denver doesn’t usually receive a lot of attention, but the city is actually a hidden gem. Home values in Denver have appreciated by 10% over the past year. The year-over-year home value appreciation is 10.7% which makes it the 4thhighest in the US, according to Zillow. Plus, the city does not suffer from a sever supply problem, meaning demand does not exceed supply by a great deal. And while there is a lack of inventory, Denver is seeing some construction of new property.Denver’s economy is growing and so is the population. Denver’s population is a highly educated one, consisting of mainly young entrepreneurs and Millennials who are moving to the city in search of job opportunities. There’s been a recent boom in the tech and energy industries, which has created jobs for a large number of people. Why does this matter? Because the more jobs there are, the more people are moving to an area, and the more they can afford to rent property and pay on time! The tech and energy industries still have room for growth. The latest job growth is occurring in healthcare and universities which are the new source of employment for the Denver population.Denver’s tourism and Airbnb industry are also doing very well. Recently, Denver passed a new law which legalized renting out short-term rentals (including Airbnb) for less than 30 days.This new legislation is making Airbnb investment even more appealing to Denver investors – yet another reason Denver is one of the best places to invest in real estate!Median Home Price: $558,975CoC ReturnAirbnb: 4.66%Traditional: 2.77%Average Rental Income/monthAirbnb: $3,472Traditional: $2,539Best Places to Invest in Real Estate: ChicagoNext on our list is Chicago real estate. Chicago has seen evident increase in home sales in 2016. Sales haven’t been as high as 2015, but the city has had a few strong months showing potential for 2017. And while there is a shortage of inventory in Chicago, the city has seen over $5.9 billion invested in construction of real estate properties in the past year, an increase of 72%.Chicago’s also witnessed a slight shift in income and therefore demand. Recently, there has been increased demand for apartments as opposed to single-family homes. Property prices are rather high compared to income, so more people are moving towards renting because they cannot afford to buy. This is your window. Chicago’s young demographic, majority of whom are Millennials, are your prospect tenants.We must also not forget to mention Chicago’s tourist significance. The Windy City is one of the most popular places to visit in the US, which makes it a top Airbnb city. Chicago is currently rater number three of cities with highest Airbnb revenue, and highest ROI. This is reflected by the increasing number of investors moving towards investing in Chicago Airbnb rentals.Median Home Price: $699,900CoC ReturnAirbnb: 5.8%Traditional: 2.59%Average Rental Income/monthAirbnb: $2,577Traditional: $1,790Best Places to Invest in Real Estate: SeattleFor one, Seattle’s got a booming economy. The city is home to many of the country’s huge companies such as Amazon, Microsoft, Starbucks, Costco, MSNBC, Nordstrom, T-Mobile, among many others. The high tech industry in specific is taking off. So you’ve got a city that’s creating jobs, and paying its employees high salaries. The effect on Seattle real estate? More people moving in who can afford to rent and buy property, and an opportunity for you as an investor. With unemployment at 4.0%, Seattle’s economy is expected further grow – a fact that is driving more investors into the city and making it one of the best places to invest in real estate. Additionally, property prices in Seattle are on the rise, and they expected to further increase in the next few years. So if you’re considering Seattle as your next investment, go for it now!Furthermore, Seattle is a very popular tourist destination, which makes it one of the best places to invest in real estate, Airbnb specifically. From the iconic Seattle Space Needle, to the Museum of Flight, to Lake Union, the Pike Place Market, and the array of outdoor activities, Seattle’s got so much to offer to tourists and locals alike. Seattle’s tourism industry has grown and is expected to see further growth in home-sharing services specifically. In fact, Mashvisor data shows that Seattle is among the top cities in terms of Airbnb occupancy rates.Moreover, Seattle is a rather flexible city in terms of Airbnb regulations and legislations – not many have been put into place – which puts Airbnb Chicago on top of an investors list.Median Home Price: $700,100CoC ReturnAirbnb: 0.09%Traditional: 1.4%Average Rental Income/monthAirbnb: $1,409Traditional: $2,308If you’re planning on investing in investing in Seattle real estate, or if you already have, make sure you acquaint yourself with the new Seattle tenant law.Don’t let it intimidate you, but make sure you’ve done your research and see how much the law will affect you as an investor.Related: What’s Up With Seattle Real Estate InvestingBest Places to Invest in Real Estate: DallasDallas is the fourth largest city in the US by population, and one that is growing at twice the US average. Dallas is a great investment opportunity for several reasons. To begin with, as all cities on our list, its economy is doing great. From the telecommunications industry, to healthcare, to energy, and the recent focus on business services and finance industry has made Dallas very diverse economy – a factor that has made Dallas a popular destination for young entrepreneurs and Millennials alike.Speaking of, Millennials make up the most of Dallas’ population, where the median age is 33. They are surging the Dallas market as they look for employment opportunities and renting and/or buying property. In fact, out of the 1200 people move to Texas every day, half go to Dallas–Fort Worth Metroplex – the biggest inland metropolitan area in the US. Because of this, prices are increasing in Dallas and are expected to continue to rise. Moreover, Rents are high compared to home prices, so it’s in your advantage to invest in a rental property.These are just a few reasons Dallas is one of the best places to invest in real estate in 2017.Related: The Millennial Effect on the Real Estate MarketMedian Home Price: $630,848CoC ReturnAirbnb: 2.48%Traditional: 0.88%Average Rental Income/monthAirbnb: $2,607Traditional: $1,860Best Places to Invest in Real Estate: San DiegoIt is well known that San Diego is an excellent location for both traditional and Airbnb investment. It is no secret that San Diego real estate is an expensive, competitive, well-positioned, and growing market – all reasons why it pays off in the long run. So if you have the financial ability to make the investment, what’s holding you back?The current trend in San Diego real estate is a high demand for rental property, increasing rents and property appreciation. Furthermore, the rise in property values in San Diego gives you, as an investor, the opportunity to receive high rental returns and cash flow. The above trends for San Diego real estate are expected to continue well into 2017, and even further ahead. And while the city does have limited inventory, 2016 has seen a rise in construction, with emphasis on single-family homes, of property in San Diego.Additionally, the tourist industry in San Diego is among the most successful in the nation. The city hosts 34.3 million visitors annually and is the fastest growing Airbnb rental market in the US. San Diego is definitely among the best places to invest in real estate. But we cannot stress this enough: Timing is key when it comes to San Diego real investment, and now is the optimal time to invest.Median Home Price: $2,195,000CoC ReturnAirbnb: 4.96%Traditional: 2.33%Average Rental Income/monthAirbnb: $3,422Traditional: $2,520Related: Top 4 Benefits of Investing in San Diego Real EstateFor more information on specific neighborhoods and properties in these cities, use Mashvisor’s investment analytical tools to view information on CoC return, cap rate, occupancy rate, rental income, and much more. Our interactive investment property calculator will help you decide in which city you will achieve the most returns.Source: Best Places to Invest in Real Estate in 2017