Do I need Tax Audit

Hi, Zerodha

Taxable income from salary 3.8L

profit made from F&O - 39,214.5 INR Considering to declare as Business income non-speculative
scriptwise Turnover - 7,82,305 INR
Tradwise Turnover is 17,09,053 INR

Tax audit is mandatory or not for this case

can you help with this please

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Hi @Ramrohitaws143

Tax audit is applicable if you have a turnover of more than â‚ą10 crores in a year.

As it is 17 lacs in your case, tax audit will not be needed.

as my profit is less than 6 %

Hey @Ramrohitaws143,

No, an audit will not be applicable as your turnover does not exceed â‚ą10Cr.

whether i have to maintain books of accounts
@Quicko

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It’s not needed as per the law as long as turnover limits aren’t breached. Only if tax audit is applicable, maintenance of books becomes mandatory.

On a optional note, it is always a good practice to maintain accounts as it helps in discipline :slight_smile:

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@Quicko

I have freelance income below exemption limit. ( profit is more than 50%)
I have loss in FNO. ( turnover below 5 lacs.)

Do I need to audit ?

Audit is not needed as long as the turnover limit is below the limit of 10 crore

for freelance income limit is 50 lacs and profit should be more than 50%.
I want to file under presumptive taxation. but I have loss in FNO. so I want to know can I file RETURN with presumptive taxation for freelance income and general for FNO.

@Quicko

Hey,

Yes, you can report your income from freelancing under the presumptive taxation scheme and the F/O profits can be reported as regular business income. You will have to file ITR- 3 in this case.

Hope this helps!

there is a loss in FNO.

@Jason_Castelino - Hi @Jason_Castelino I have read u posts and replies across multiple threads.

Read somewhere that assist in filling ITR, can pls share details how to contact you.

Hey. Shared details in private.

FY25

F&O TURNOVER: 6.5 lac
LOSS: 3 Lacs

SHORT TERM CAPITAL GAINS: 500 RUPEES

COMMODITY: 3000 LOSS

Do I have to audit accounts or I can just file ITR3 ?
I do not have any other income except interest from savings account.

As turnover is way below the threshold amount of 10 crores, Tax audit won’t be applicable in your case

I know that but what about loss ? Does audit is applicable if there is a loss.

  1. You can carry forward loss
  2. Tax Audit is not applicable in your case
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Can we report FNO loss under presumptive taxation ITR4 ?

@Private

No, recommend to file ITR-3 but If you have filed last year ITR-4 in Presumptive Scheme then audit mandatory.

Let me explain some background for your reference.

Carrying Forward F&O Losses and ITR Filing:

To carry forward losses incurred in F&O trading, you must file ITR-3, accompanied by a Profit and Loss account and Balance Sheet without audit if Turnover below 10 crore.

Here’s a breakdown of key audit considerations:

  • Audit Requirement Based on Turnover *:
    • A tax audit under Section 44AB of the Income Tax Act is generally mandatory for businesses, including F&O trading, when the turnover exceeds â‚ą10 crore. (95% of the transaction is done digitally, the audit limit is 10 crore.)
  • Switching from Presumptive Taxation:
    • If you previously opted for the presumptive taxation scheme (e.g., Section 44AD) and now wish to file under the normal business income rules (with detailed P&L and Balance Sheet), a tax audit under Section 44AB mandatory.
  • Combined Business Operations:
    • When F&O trading is conducted alongside other business activities, the calculation of turnover and profit/loss becomes more complex. The specific audit requirements and tax implications will vary depending on the nature and scale of each business.

Key Considerations:

  • Turnover Definition in F&O: The definition of “turnover” in F&O trading differs from traditional business turnover. It generally includes the absolute sum of profits and losses.
  • Section 43(5): F&O trading is considered a non-speculative business activity under Section 43(5) of the Income Tax Act.
  • Professional Advice: Tax regulations are subject to change, and individual circumstances can significantly impact tax liabilities. Consulting a qualified tax professional is crucial for accurate compliance.