Is an audit needed for the following fno profit?

[tech96]

In FY2019-20, I made a profit of 15000 with a turnover of around 3 lakhs. Now, I would like to offset some of my expenses in this income .e.g broadband connection costs, purchase of smartphone which I use for trading etc.

Basically, adding all these up, I am left with a profit of just 1000. Do I need to have a tax audit for claiming these expenses, or can I file ITR3/ITR4 myself? Also, which one should be used - ITR3 or ITR4?

[abhishek.vg]

@Quicko

[Quicko]

@tech96

In FY2019-20, I made a profit of 15000 with a turnover of around 3 lakhs. Now, I would like to offset some of my expenses in this income .e.g broadband connection costs, purchase of smartphone which I use for trading etc.

Basically, adding all these up, I am left with a profit of just 1000. Do I need to have a tax audit for claiming these expenses, or can I file ITR3/ITR4 myself? Also, which one should be used - ITR3 or ITR4?

Is Tax Audit required?

Since the profit is less than 6% if turnover,

• Tax Audit under Section 44AB is applicable if the Total Income for FY 2019-20 exceeds the basic exemption limit of INR 2.5 lacs
• Tax Audit under Section 44AB is not applicable if the Total Income for FY 2019-20 is less than the basic exemption limit of INR 2.5 lacs

You can also check out our Determine Tax Audit Applicability tool

Which ITR Form to file?

You should file ITR-3 since income from trading is business income. ITR-4 is for presumptive business.

For any further queries, write to us on [email protected]

[curiousvi]

@Quicko

Tax Audit under Section 44AB is not applicable if the Total Income for FY 2019-20 is less than the basic exemption limit of INR 2.5 lacs

You said income less than 2.5 lacs - audit not required under Section 44AB but is this audit required under any other section of IT?

[Quicko]

@curiousvi

You said income less than 2.5 lacs - audit not required under Section 44AB but is this audit required under any other section of IT?

Income Tax section for tax audit is Section 44AB. There is no other section to determine tax audit. However, the Income Tax Department has details of trading transactions of the taxpayer from various sources. Based on this, they may send out a notice for getting audit done.

For any further queries, write to us at [email protected]

[curiousvi]

So if IT dept has trading transactions - so what? if income is still less than exemption …one does not need to file ITR correct?

[Quicko]

@curiousvi

So if IT dept has trading transactions - so what? if income is still less than exemption …one does not need to file ITR correct?

@Quicko

For FY 2018-19, the IT Department has started sending out emails under voluntary compliance scheme to the taxpayers who have done trading activity but not filed the Income Tax Return. The IT Department has started this campaign to provide an opportunity to taxpayers to validate the information and avoid tax notices.
If you have received such email, you need to login to your income tax e-filing account and validate the transactions on the e-compliance portal. If you validate such transactions, filing ITR is not mandatory.
However, it is always a good practice to file your ITR. In case the total income is less than the basic exemption limit you can file a Nil return.

Hope this helps, For any further queries, write to us at [email protected]