f&O taxation rules

?? Are you sure? He have profit of -3.65lac which is below 6% is 48lac turnover . And he have carryforward loss with auditing.


@247NH pls no offense. but seems like you are posting half-baked stuff all around the Forum.

by the way, Jason is a practicing CA.

And you keep holding onto this 6%. In Accounts case, there is no 44AD and no 6/8% so just get the facts right. Plus Audit Turnover threshold for filing AY is 10 Cr OR greater than 5% of TO in cash paid/recd.
Why do you want to force Audit narrative.


Good. He is promoting audit. :sweat_smile::sweat_smile::sweat_smile:
I don’t think I should be complaining :stuck_out_tongue_closed_eyes:

Actually there isn’t much difference. The work involved in maintaining books is same as audit. Difference is just a signature.

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Okay sure we all three are correct in our decision that audit is applicable and audit is not applicable but note that he didn’t disclosed income from salary head in his statement if income from this head falls under basic exemption or its more than that we would say audit is applicable as written on : -

whose turnover is less than basic exemption that is 2.5lac.
Actually mistyped income with turnover but everyone who understand will basic exemption will know it

I don’t think I should be complaining :stuck_out_tongue_closed_eyes:
absolutely right no complaining

Good. He is promoting audit. :sweat_smile::sweat_smile::sweat_smile:
Was not promoting but it’s okay if you practicing CA :smile:

@Jason_Castelino @Chirag1 @Viswanath_Kadiyala

But the point is, the Amendments brought from 2019 onwards have some relaxation which allows an individual to self-assess which was earlier not the case, esp. when this type of business income is non-cash.


Why force audit again because of Salaried income ?

Earlier you were roflling, and are you sure ?? and all…
now that you know he’s a CA you want to play nice.

Nah its not the case that whether someone is CA or not. The matter is that we dont have to wrong in our decision. :sunglasses: Playing honestly is not my habit:grin:.

Just because on your comment, nothing much more than this.

@ZD0886 Why so angry :sweat_smile:

@Jason_Castelino since you are a CA, what is the final verdict here ? @Viswanath_Kadiyala has a turnover less than 2 Cr. He is at a loss. So if he has total income above basic exemption limit he is liable to get audited isn’t it ? He can escape audit only if he doesn’t have any other income. What am I missing here ?



Hi ,

How to maintain books of accounts without auditor or ca? I dont know about this! In clear tax there are templates under books of accounts not maintained so there i have to fill in other case

If you have file in no account case but you itr will be defected u/s 139(9) and you will have 15 days for correcting this mistake. Why to carryforward this burden , I should say you should revise income tax return. If you have salary income that you will have to go through audit with CA. Some CA would charge you more for not maintaining books of accounts. Apart from it if you don’t have salary than audit is not liable for audit but you are under book of account case. Tax computation excel sheet can be easily made through quicko , you have to make capital account , expense(all administrative expense and indirect expense) , and trading detail ( intraday,futures, options, delivery and their trading charge too). There will be contract note from broker on you mail id that provide to the broker , just copy details and you are free to go.

Turnover computation be like :

Intraday:- sum of absolute profit and loss in a day
means that on 12feb 2021 you have trade HDFC and face loss of 12k in that trade and on another trade you get profit of 8k then your turnover for intraday would be 4k

Delivery:- sell value is your turnover

Future:- sum of absolute(sell-buy)
if you loss 80k in trade 1 and in trade 2 you get profit of 1lac then you turn will be 180k.

Option:- sell-buy+premium receive
here premium receive means sell value.

Also books of account has been to in hand for next 6 year otherwise there is penalty on this.

@Jason_Castelino correct me if i will be wrong

You mean salary income, it’s correct as it can’t be set-off against head but can claim deduction Apart from it Income from other source can be set-off with non-speculative loss.

It was a very long day yesterday and hence it took some time for me to reply here. Usually I let these topics open because there are many contrary views.

Before I give my view let me tell you that this is the most debated topic in all the WhatsApp groups we professionals have. There are multiple views and I shall not post them over here and confuse you guys more. I shall only post my view purely on reading the bare Act.
I shall take few relevant parts of few sections and try to explain.

Every person carrying on business shall get his accounts audited if the total turnover exceeds Rs.10 crore (in the case of F&O 95% or more are digital transactions, hence a threshold of Rs 1 crore is not applicable )

I do not think anybody has any doubt about this section and so let’s move forward.

The audit is required to be done If subsection (4) of section 44AD is applicable & taxable income exceed 44AB(e) basic exemption limit

On careful readying you see that there are two parts to the above section.

  1. Sec 44AB(e) should be applicable.
  2. Income above basic exemption limit.

Both the above mentioned parts are separated by ‘and’ which would mean only if both the conditions are satisfied then audit shall be applicable.
So if your income is below basic exemption limit then don’t even bother checking the other condition.

If it’s above basic limit, then let’s see what subsection 4 of 44AD says.

In case, he wants to opt-out and declares losses or income at less than the presumptive rate in the current year, the audit is required to be done under section 44AB (e )


  1. He should have opted for presumptive rate in the previous year.
  2. Now has loss or less than 6 percent profit.

On collective reading of all sections. If you meet all the conditions then audit is applicable.

  1. Your income is above basic exemption limit.
  2. Previous year you had opted for presumptive rate.
  3. Current year you have loss or profit less than 6 percent.

Other questions.

  1. Is maintenance of books compulsory even if audit is not applicable ?
  2. Is we opt for presumptive rate do we have to maintain books?
  3. Is 44AD compulsory ?

Conclusion: Either maintain books and declare the actual profit or do not maintain book and declare 6 percent of turnover as profits.
But then next year if you want to show less than 6 percent then you will have to go for audit.

There are so many other views also. To be on the safer side most CAs recommend audit. The moment the books are audited AO places higher reliance on your tax assessment. So to avoid unnecessary notices most of the CAs take this stand. Returns are processed under most of the other stands taken. Having shared my view above the safest route is definitely to go for audit. U can’t be wrong there. Remember if audit is required and you had not got them audited then penalty is much higher than the fees you shed out for audit. It may look to you like your CA unnecessarily recommends audit. Most of the time it’s not true. We know the practical difficulties which follow if your AO doesn’t agree with our opinion. That’s why we take the safer route. And I did mention this in some other post as well.
Ultimately it’s your call.

Disclaimer: The above views are purely my personal views on reading and interpretation of bare Act and needn’t necessarily be right. Kindly consult a Tax expert before you file your returns.


The above reading should answer your question. If it still doesn’t, then let me know.

If you have accounting knowledge you can do it your self. Otherwise get in touch with a CA. If you all do it by yourself then what should we do? Toh Meir Job chodhoon? When you are not well you don’t buy your medicine from medical all the time. You go to a doctor. Why treat us differently. Come to us. :joy::stuck_out_tongue_closed_eyes::stuck_out_tongue_closed_eyes::stuck_out_tongue_closed_eyes:

I have posted my view. If you do not agree kindly post relevant section numbers and I shall get back again.

Jason has answered very well and im writing same thing from my first post.
All these Quicko wala and have to put big banner upfront, the image you posted is in context of NO Accounts case.

When you are not maintaining accounts, how can actual p&l be known ? so thats why it has 6% Presumptive taxation.
But given his other income etc, he comes under Accounts case.

So once accounts case kicks in, and you are liable to maintain Books of Accounts, it make no sense to go for 44AD (Presumptive taxation).
Therefore, whatever chart you posted up and same red quote will not be in the right context.

And Audit, ie. 44AB, is 10 Cr in this case, which anyway he didnt hit.
So with simple Books, OP can carry forward the losses that he wants without Audit and some costs he wants to save. But why CA suggested 44AD in the beginning is something which still is a mystery when he is most likely liable to maintain books.


I told you. Nobody wants to take a chance of receiving notices. See if a patient consults 2 doctors he will get two different medicines. Some doctor may even suggest surgery. Ultimately doctor wants to cure the patient.
If the client can’t maintain books on his own, and expects a CA to help him with that, he would rather go for audit. It’s almost the same. Audit just has an extra signature. At the same time AOs reliance on audit is much more. If he had any other reason, then I do not know.


Thanks @Jason_Castelino. Well written.

I tend to align to your thought. With respect to taxation laws I would prefer to err on the safer side. If I can go through the hassle of book maintenance I wouldn’t mind to get a CA signature too with an audit. The audit fee can also be shown as a business expense. Audit part is hardly the pain point in the whole process when one indulges in a business activity. Nothing like the AO smiling at me with whatever I have given to him for his consideration.

Exactly what I was saying. When it comes to FNO business, maintenance of books and audit are almost the same. May be he will charge extra 2k for his signature.

Wrong. Turnover is 20k. It’s trade wise not daywise.

Sale value of premium plus absolute difference

With all due respect, your interpretation of tax laws are not correct and it can really mislead others. Before you post, kindly take due care.

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Earlier it was as the same but after taking leverage in the consideration it was given the guideline for taking turnover as day-wise by ICE ( whatever is that I didn’t able to recall) on Intraday trade( speculative stuff). Income tax dept. didn’t clear this about turnover until now, I guess may be you are dearest friend of I-T dept. and have deepest friendship with them, so you know what’s upto in their mind. :sweat_smile:

hmm… right, forgot abs() to put. :slightly_smiling_face:

Sure, will not try to burn LANKA in this KALYUG. :grin:

Because it takes less than 10 Minutes to prepare a file under 44AD and he can easily pocket 4K-10K for that 10 minutes and also being on the safer side of the law because the chances of receiving notices under 44AD is very rare if turnover is declared properly.

Whereas to go with Accounts Maintenance route and filing ITR-3 with all the necessary details about your bank accounts, balances in bank accounts, all of your fixed assets, investments, your loans and liabiliies computation takes time and for that he can’t demand more money so he is just taking the easiest route of filing returns and do note that whats easier for tax practicioner or CA may not be in the best interest of the client.


Yes, could be but no Account case also has criteria and OP didnt look like he is exempt from that so if you are liable to maintain Books of A/Cs and you dont, then that is also a violation :slight_smile: