"Attention -----------, the Income Tax Department has received information about certain transactions reported by you in Form 60/61 for FY 2021-22. If you do not have a PAN Number, please apply for Form 49A immediately. Otherwise, submit your PAN Number to the Reporting Entity within 15 days from the campaign execution date. - Income Tax Department"

Several individuals who received this message have reached out to us with questions, and my responses are outlined below:

What does this message mean?

This message is in accordance with the Income Tax Act, which mandates the use of a Permanent Account Number (PAN) for specific transactions. Examples of such transactions include purchasing a vehicle, opening a bank or DEMAT account, or investing in Mutual Funds etc.

In a scenario where an individual, like Mr. Arvind, does not possess a PAN number but wishes to buy a vehicle valued at Rs.8,00,000, he can still complete the purchase by providing a declaration using Form 60.

If Mr. Arvind were to provide such a declaration to a car dealer like XYZ in Bangalore, the dealer would then fill out the details of this declaration in Form 61 and submit it online to the tax department.

The recent message from the tax department signifies that they have received information via Form 61 from dealers indicating the use of Form 60 instead of PAN numbers in these specified transactions. As these transactions necessitate a PAN number, it is imperative to obtain one promptly and submit it to the relevant reporting authority, such as the dealer, within 15 days of receiving this message.

I have not engaged in any such transaction and do not recall submitting any form. I already possess a PAN number. How can I determine where I submitted Form 60?

If you already possess a PAN number but have not shared it with the dealer or sub-registrar's office during particular transactions, it is possible that Form 60 was inadvertently submitted. We recently identified a similar case for one of our clients. During FY 2021-22, our client sold an agricultural property near Karkala village. It is likely that, during this transaction, the real estate agent managing the process might have had Form 60 signed alongside other registration documents and submitted to the Registrar.

I have a PAN number, but I received this message. What should I do in this situation?

Your question is valid. If you already possess a PAN number and cannot recollect engaging in a specific transaction, no immediate action is necessary. You can await any follow-up messages from the department, if applicable. Alternatively, it may be possible that you would have received the message due to software glitches or incorrect filings by the dealer or reporting authority.

In case you require any further discussion on this, please write to This email address is being protected from spambots. You need JavaScript enabled to view it. 

As per Section 43(5) of the Income Tax Act 1961, derivatives, futures and options trading will be treated as normal business income (not speculative transactions) though such transactions are completed without actual delivery of shares or securities or commodities etc. These are squared up by receipts/payments for the differences only. The contract notes are issued for the full value of the underlined shares or securities or commodities, etc. purchased or sold but entries in the books of account are made only for the differences. The transactions may be squared up any time on or before the striking date. In the case of Option trading, the buyer of the option pays the premium and the seller of the option received the premium amount. If an option contract is physically settled, there is no profit or loss.

In this scenario, questions arise on how to calculate turnover for the purpose of Tax audit. As you are aware a Tax audit is not mandatory if F&O turnover is less than Rs. 10.00 Crore subject to few conditions listed in 44AB of income tax act.

The turnover in the above types of transactions is to be determined as follows:

  • The total of favourable and unfavourable (Profit or Loss) differences shall be taken as turnover.
  • In the case of options trading, If an option contract is physically settled, there is no profit or loss. In such cases, the premium received on the sale of options will also be included in calculating turnover.

F&O Profits are treated as normal business income and tax is calculated as per the normal slab Rate.

F&O Loss is treated as a normal business Loss that can set off against any income other than Salary Income ie F&O loss can be set off against other business income, rental income, capital gain, income from other sources. Unadjusted loss can be Carry Forward for 8 years which can only be set off against normal business income.

In case any professional help is required, you can always write to me at This email address is being protected from spambots. You need JavaScript enabled to view it. or WhatsApp to 86182 59712

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