My trading turnover for futures is around 8 crore for FY 2019-20. But most of the trades are intraday and if I use method of taking turnover as profit/loss of intraday then the turnover will be less than 1 crore. So, in this case tax audit is necessary or not?
And further I want to ask whether is there any turnover limit over which tax audit is mandatory.
Thanks
Tax audit shall be mandatory if turnover exceeds the limit of Rs. 1 crore or Rs. 5 crore (if digital business is less than 95% of total business). However, one more criteria which needs to be taken care of while checking its applicability is the rate of actual profit earned during the financial year. In other words, if you have earned profits lower than 6% of the total turnover and your gross total income exceeds the limit of Rs. 2.5 lacs, tax audit will get mandatory.
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About this query, I have a question. Is the turnover on the basis of contract value or on the basis of margin value?
So just to get things straight, it’s on net profit right, for Fno I mean? Also, what does sell side of option contract mean?
Hey @Aditya_Gupta,
The trading turnover calculation should be done only when the income from shares is considered as a business income and not when it is considered as capital gains income. You can check the method of calculating trading turnover from trading income for tax audit applicability on this article.
Tax Audit under Sec 44AB(a) is applicable irrespective of profit or loss if trading turnover is more than 5 crore.
You can check out this Quicko tool to know your tax audit applicability based on your income situation.