Afters hours of research found this.
1.If you are a Fno trader classifying this income under business for a salaried person. The limit has been increased to 10Cr provided you donāt make any cash transactions >=5%.
Only turnover more than 10cr you will need an audit(should not have opted for sec 44ad presumptive tax scheme for last 5 years).
- If you have opted for presumptive tax scheme you need to show the profit of 6%(since we are presuming the income and paying tax only on this income at fixed percentage).
In this case you make a loss then you have to go for audit - also the turnover should be less than 2Cr - here the audit is applicable.
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Also that your net income if is more than 2.5 LPA and you opted for presumptive tax scheme then audit is applicable.
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If your net income is more than 2.5LPA but you have not opted for presumptive scheme and have incurred loss then just file ITR-3 - NO need for audit until 10Cr limit. You can carry forward and set off losses.
The only catch here is donāt opt for the 44AD until you make 6-8% returns on fno for 5 years consistently.
If you make a loss the next year and turnover is less than 2 cr then you have to get the audit done.
For business income less than 400cr the tax are also less. So donāt fall in trap of 44d if you are making losses.
Hope we can end this thread here.
@Jason_Castelino Thanks. Now I understood what 44ab and itās subsection are.
And How CAās benefits from this by suggesting to opt 44AD and get people into auditing mess.
Hope you are on the other side of the page.
Now I clearly understand why all these websites have given as applicable just to pressure people for audit.
BE WISE PEOPLE DONāT GO FOR 44AD unless you have consistent return of 6%
Refer this YouTube video this from ICAI members and CAās are explaining the clauses start from 50.00 mins.
Thank you bro for your inputsā¦
Have understood almost everythingā¦
If you make a loss the next year and turnover is less than 2 cr then you have to get the audit doneā¦can you elaborate on this please?
If your Profit is less than 6% of your turnover, irrespective of value of Turnover, Audit is required.
Yes as i mentioned audit is not required.
I will tell you also how CA tricks you,
First, if you live in a small town or far from urban places they will charge you an exorbitant amount of money just in the name of ITR-3.
Second, they will tell you audit is necessary for fno loss and if your turnover is small they would just report 6% profit and for presumptive tax this year and once your turnover is big enough then you have no option but to go for audit.
Also,People have a misconception regarding 44AD, It was implemented so that small businessmen do not have to maintain books of Account(44aa) it is not a way to save tax, it says you have to report MINIMUM 6%/8% profit not maximum so if you are making say 20% profit you have to mention 20%, not 6/8% so if you only have fno as a business there is no need to opt for 44AD as maintaining books of account is pretty straight forward for fno.
Attaching this video for better better understanding. No need of audit for section 44AB if you have not opted for 44AD and income is more than 2.5 LPA and turnover is less than 10cr. Since Fno trading is done via banking channel.
Yesterday broke my head into the walls understanding this.
So if one is profitable then he has to choose 44AD for five years to declare profit at 6% when the turnover is less than 2cr.
Donāt go for 44AD If there are losses starting this year.
Many new traders are in alot of confusion.
Please refer the below video. It is clear that 44AD is optional.
Only if you have opted for 44AD Presumptive scheme and turnover less than 2 cr and profit less than 6% and tax liable income is more than 2.5LPA the. Audit is required.
Else limit of 10CR is applicable for FnO traders starting this year.
Many people are misleading for an audit If they have made a loss and turnover is less than 2Cr. Even though they didnāt opt for 44AD(as this is not compulsory)
Yeah, I think audit is required only if your turnover is over 10cr or if your cash payments/receipts are more than 5% of turnover.
Yes I second the same. Lot of people are misleading. Thank you for the prompt reply. Learnt a lot about taxation just in a day
Now I am aware of how CA can trick people into opting 44AD and profit out of audit for no reason.
This is only applicable if you select for 44AD presumptive tax scheme. If this is your first time. I suggest donāt declare anything in 44AD. If youāre salaried. Just go with no audit option. Since the turnover is less than 10Cr
I am not opting for 44AD why do I need to go for audit pls elaborate.
@nithin request you update the varsity module with this particular example as many people have confusion in this section.
Refer the summary points 2 & 3. Your case falls under Point 2 ( Turnover less than 5/10 cr , Profit < 6% ).
44AD is introduced to provide relief to small businessmen from maintaining books of accounts and presumes your profit to be 6% of T/O. Just not opting for 44AD does not releive you from not undergoing an Audit.
Please. The limit is increased to 10CR I am not opting for 44AD I will fall under 44AB now my limit is 10Cr as i donāt have any transaction for cash that is more than 5%.
@Anikethan I donāt care if my profit or loss is 6 or 8 percent starting this FY.
If i opt out of 44AD then the limit is automatically increased to 10Cr. Still I donāt see a reason to get audited.
When I say opt out I have never opted for the 44AD section in first place
Are you a CA by any chance?
Please first read the new rules and applicable limit. I have only filed ITR-1 and not ITR 4 or ITR 3 in previous year as I did not do any trading. I will not opt for 44AD
In that case the limit is 10CR from this year.
So for new asseess the limit will be 10Cr if they donāt opt for 44AD.
And start freshly with ITR3 and carry forward losses.
Not sure why you guys are making it complex by suggesting to go for audit.
I am going with limit of 10Cr as all the transaction are through the Bank channel and digital
bro he is doing research and coming to you and saying that it not required. if u have knowledge in it tell us where he is wrong. his source is wrong? he understood it wrongly? or income tax dept will not accept because u told its not worth explaining?
we have completely 0 knowledge. tell us exactly u have ur source and he has his source. u keep talking about what u know and he is keep saying about what his source says.
TELL HIM WHY HE needs to go for audit CONSIDERING HIS POINTS.
