'He should focus on his job,' advise netizens as CA says client filed 'ITR with Rs 12 lakh salary, Rs 14 lakh F&O loss'

The inherent risks associated with F&O trading came to the forefront yet again on social media when a chartered accountant said she filed an income tax return for a client who earned Rs 12 lakh salary and incurred Rs 14 lakh loss in F&O trading. 

"Filed a salaried ITR with 12 lakhs salary and 14 lakhs loss in F&O. Hope people realise that F&O trading and doing job simultaneously is not everyone's cup of tea," claimed CA Nilisha Mantri about one of her clients on Twitter, which was recently renamed as X.

The tweet struck a raw nerve among netizens who said trading futures and options is always a risky affair and those without enough capital shouldn't be venturing near it. 

"Better to leave trading altogether…..Just focus on your Job…. It’s not worth… once you’ve 1 crore to spare… then leave Job and do Trading," advised a Twitter user. 

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When a Twitter user asked if her client could adjust the loss along with taxable income, the CA said, "You can't adjust salary income with business income."

Netizens pointed to another CA also flagging most of the salaried ITR filers incurring F&O losses.

"99% of Salaried Income Tax filers who are also dealing in F&O derivative & shares trading have reported and made losses! Salaried make losses in F&O, invest so much time and effort in trading and at the same time may not be able to give 100% to their Job. Salaried should invest time in developing their core skills to increase their primary salary income and target passive secondary steady income from rent, MF, etc in the long run," tweeted CA Chirag Chauhan.

In an important analysis done by the capital markets regulator Securities and Exchange Board of India (Sebi), it has been found that while the number of individual traders in the equity derivatives segment registered an exponential rise between FY19 and FY22, a vast majority of the individuals experienced losses.

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According to the Sebi analysis, released in January, the number of individual traders in the equity F&O segment jumped 500 per cent in FY22, when compared to the number in FY19 - up from 7.1 lakh in FY19 to 45.2 lakh in FY22.

Nine out of 10 individual traders in the equity F&O segment incurred net losses during both the years -- FY19 and FY22 even as 98% of individual traders in the equity F&O segment traded in options during FY22.

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"On average, loss makers registered net trading loss close to Rs 50,000 in FY 2021-22. The average absolute net loss of a loss maker was over 15 times the net profit made by a profit maker," stated the Sebi release.

Meanwhile, CBDT chairperson Nitin Gupta said on Monday that over four crore income tax returns (ITRs) for the 2022-23 financial year have been filed so far and about 7 per cent of these are new or first-time filers.

He said that more than half of these ITRs have been processed leading to 80 lakh refunds till now.

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