Accounting & Taxation Issues relating to Capital Market Transactions

indicating in the contract note the unique client identity number
allotted under any Act referred to in sub- clause (A) and permanent
account number allotted under this Act;
(ii) recognized stock exchange means a recognized stock exchange as
referred to in clause (f) of section 2 of the Securities Contracts
(Regulation) Act, 1956 (42 of 1956) and which fulfils such conditions as
may be prescribed and notified by the Central Government for this
purpose;]
(B) Turnover for the purpose of Tax audit u/s 44AB as
per Para 5.11 of guidance note on tax audit by ICAI.
‣ The total of favorable and unfavorable differences shall be taken as
turnover.
‣ Premium received on sale of options is also to be included in turnover.
‣ In respect of any reverse trades entered, the differences thereon, should also
form part of the turnover.
(C ) All usual business expenditure are deductible.
(D ) Interest on borrowed money is deductible.
(E) (i ) Security Transaction Tax – Rebate U/s 88E
(Rebate of STT U/s 88 E discontinued w.e.f. Assessment Year 2009-10)
‣ Deduction from the amount of income-tax on such income arising
from such derivative transactions of any amount equal to the
securities transaction tax paid by him in respect of the taxable
securities transactions entered into in the course of his business
during that previous year.
‣ No deduction under this section shall be allowed unless the assessee
furnishes along with the return of income; evidence of payment of
securities transaction tax in the prescribed form (sec.) Tax Rule 20
AB and Form No. 10 DB and 10 DC).
‣ The amount of deduction under this section shall not exceed the
amount of income-tax on such income.