Is tax audit compulsory in case of F&O Lossess

F&O
1

Hello everyone,

Query 1

I have F&O Losses of -104187.50 on F&O turnover of 250897.
My total income from salary (around 504000) , FD Interest ( around 40000) etc will be around 5.5 lakh.
I want to carry forward losses from f&O. Is tax audit compulsory for me?

I had forwarded the query to Lodha CA group and received two replies as below:

i) As per my view tax audit is required since the reported profit is less than 8% of the turnover. Rather in this case it is a loss

ii) In my opinion tax audit is not compulsory as there is amendment in section 44AD(4),44AB(e) and 44AA(2)(iv) by Finance Act ,2016.

Further they said this…

In my view File return without tax audit before 31st july, If assessment get done before 20 Sep 2018 then its ok otherwise get tax audit certificate between 20 Sep to 30 Sep and file tax audit report again before 30 Sep 2018.

Please guide the right procedure to follow in light of section 44 AB and 44 AD (4), 44 AD (5), 44AB(e) and 44AA(2)(iv).

Query no 2 : Please suggest if short term gain or losses from delivery based stock trading can be reported under STCG gain or losses rather than showing them as income from business as i am retail investor and trading is not my day to day activity.

I look forward to a suitable reply from your side. Thanks for your help.

Regards

Vikash Mantry

2

Yes, Tax Audit is necessary as you have incurred losses in F&O

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3

Thank you for your reply. But what about this opinion of CA firm that says
“In my opinion tax audit is not compulsory as there is amendment in section 44AD(4),44AB(e) and 44AA(2)(iv) by Finance Act ,2016.”

They say section 44AD(5) is not applicable to me as section 44 AD (4) is not applicable to me. hence I am not bound by tax audit.

Please tell your take on this.

Tax audit for an individual like me will be a costly affair. Can I choose presumptive scheme and declare 6 percent profit on F&O turnover of ~250000 and pay tax on 15000 rupees income @ 5 percent (my tax slab is this, tax comes to 750 ) rather than declare actual loss of 118000 and incur extra audit fee of 10000.

Please advice.

Regards

Vikash mantry

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4

I visited the income tax department in Blore. They said turnover > 1Cr, get audited. Loss or profit is not concerned with auditing. I am in a quandary now :frowning:

5

Then which section is applicable according to your CA ??

6

Thats very strange ! They send you notices if you show loss !

7

I think the tax dept is a bit clear in their rules. These CAs milk us during tax season thats all !
It is better to read actual govt rules.

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8

I think presumptive income scheme (Section 44AD) may be adopted in this case .

9

I think his CA is right. I just went through all the rules. It seems like lot of CAs are using outdated rules. So much for being compliant.

10

Hi,
TAX AUDIT APPLICABILITY FOR FY2020-21,TURNOVER TILL 5 CRORE , NO TAX AUDIT REQUIRED.

1 Like