Is Audit required on F&O trading loss?

Taxation
1

Hi Guys,

I made a loss in F&O trading for lass financial year. I have few doubts:

  1. Can I offset F&O loss with my short term capital gains from equity delivery?

  2. If F&O loss cannot be adjusted with STCG, if it is considered as business income and since I have made loss then I guess an audit is required for sure.

  3. If audit is required as I made loss in F&O then can I avoid auditing by carrying forward the loss?

Please advice.

Thanks in advance.

2

Answered on Varsity as well

No you can’t offset against STCG, but you can show your equity investing as business income and do it. Do go through the module above. Yes, you would need an audit to carry forward and offset the losses.

1 Like
4

Hi Nitin,

Thanks for your response.

Spoke to my CA and he said as per latest rules audit may not be required, he said I just need to provide details of all transactions done in FY. Is that true.

Thanks.

5

What was your total income? If you fall in the taxable bracket, you will need an audit.

1 Like
6

My taxable income is >6 lakhs from salary and interest. The main issue with audit is CA fee, almost all the CA charge hefty fee for audit no matter the effort taken. Wish there’s some relief from audit for small traders like me whose turnover is very less, just because I made loss I have to get my account audited :frowning:

Will clarify again with my CA to see if there is any such update as he claims that give relief from audit.

Thanks.

7

and how much is that?

8

A minimum of Rs 10k even if it takes just an hour effort of them.

9

Hi Ajax,

In reference to your question:

  1. F&O Loss is a non-speculative business loss which can be set off only against non-speculative business income. Thus, it cannot be set off against short tem capital gains.

  2. The applicability of tax audit in case of F&O loss must be verified based on your turnover, number of transactions and the amount of loss.

  3. Tax Audit cannot be avoided by carrying forward the loss. Infact, if you want to claim the loss and you wish to carry forward the loss to future years, Tax Audit is compulsory.

If you need further assistance regarding applicability of tax audit and ITR filing, write to me on [email protected]

2 Likes
10

What if I do fno trading in wife’s account and there is no other income. Do it need audit? While my income is above 2.5 lacs which is exempted from tax.

11

@Pawan_Singh1

If there is no FNO income in an individual’s demat account; no requirement of audit.
Your income will be assessed and taxed separately and as well as your spouse’s income, if any.

12

If There is no fno income but there is fno loss and turnover is less than 1 cr

13

@Pawan_Singh1

No requirement of audit as your turnover is below the threshold limit