Fail to understand , need for an audit in F & O trading

Taxation
1

my common sense says auditing is carried out to catch understating/overstating of income , creative accounting, verification/ lack of transparency in books,/ financial documentation etc
( which are/can be easily done by normal businesses … everyone knows it )

but in F & O trades there is no scope for any of above malpractices . everything is in black & white with proper financial records & data checks by multiple authorities . everything is carried out digitally . there are no grey areas in other words or chance cooking of book .

why is there need for audit F & O trade ? are we getting the law right ?

2

I think it was only in recent times that CBDT has had an MoU with SEBI for data sharing. Till then the CBDT didn’t really have the trading data at its perusal. You can read more about this here.

@Quicko can add more about this.

3 Likes
3

Hey,

A formal Memorandum of Understanding (MOU) has been signed CBDT & SEBI, for exchange of data between the two organizations. This will facilitate sharing of data & information on automatic, regular, request & suo moto basis.

You can also determine your tax audit applicability here.

1 Like
4

thanks nakul for that link

5

explained very well in article .

with all data at their disposal can we expect requirement of auditing for F &O gone in future ?

6

Arvind, FinMin did increase the turnover limit from 2 Crore to 5 Crore in this year’s budget. However, we don’t think it’s enough. Since most Capital Markets transactions are digital, MOU with Market Regulators, hopefully, CBDT will take a more lenient view in the future.

1 Like
7

The limit for audit is same for all business whether its trading, manufacturing or services (except professionals). Unless there is amendment in Income Tax Act to incorporate special needs of F&O trading, you will have to get audit done. Which should be an easy task for F&O traders

1 Like