Accounting and taxation in scalping

Taxation
1

Hi all, I have a query.

I am basically a scalper and does major scalping in nifty and banknifty. I usually takes 7 to 10 trades with a lot size of (10-12) in nifty and 20 -25 in BNF.

I usually scap around 5% and close my positions on a same day.

My question is

I understand that the turnover is calculated as total sell side + absolute value of profit. As my number of trades are frequent with some bigger lots I would be having more turnover running into some 7 crores by year end. But my profits are less compared to these turnover. (Assuming it is less than 1%)

From taxation perspective what could be the impact if I take more trade with less profits. What would be the impact of such higher turnover in taxation.

Does anyone have any practical example?

Thanks

2

Tax audit would suffice. Tax department may recheck your accounts as someone (individual) with let’s say 100 cr turnover is making 10L profit is hard to believe. However I don’t see any complications, provided audit is correct and appropriate tax is paid.

3

Thanks

4

Hi @Sreeram_Ganeshan1

If your turnover is high and your profits are less than 6% of turnover, you can file your ITR along with an audit report with help of any chartered accountant and that would suffice.

Reference - Tax Audit under Section 44AB of Income Tax Act | Learn by Quicko