Is tax audit required for loss in fno?

Hello need guidance,

I have traded in FnO for the Financial year 2019-20 till dec 19 turnover is 1.30 crore and loss of 2.5 lakh should i get it auditied or can i write off as loss in my income.income is 8 lakhs approx deducting my other expenses comes below 5-6 lakhs approx.


@imavii I think you would have to classify loss of 2.5lakhs into speculative business loss and non-speculative business loss. Intraday trading would fall under speculative business loss and such losses can be set-off only against speculative business income either in current year or in following 4 years. Non-speculative business loss can be set-off against any income other than salary income. So. I hope 8 lakhs is not a salary income. You might need to get it audited as the limit is Rs.1Crore and have to file the return within time limit to carry forward the losses.

Hi @imavii,

Tax audit is applicable in either of the following cases:

  • Losses from business income (Intraday & F&O trading)
  • Turnover of more than INR 2 crore
  • Profit is less than 6% of the total turnover

Secondly, F&O trading is treated as a non-speculative business activity for Income Tax purposes, so you can carry forward this loss to the next 8 financial years.

  1. Current Year: The loss can be set off against any income except salary
  2. Future Year: The loss can be set off only against Business Income - both Speculative and Non-Speculative


  1. Tax Audit is required
  2. Prepare financial statements - Balance Sheet and P&L
  3. You can claim expenses if they are directly related to your F&O Trading business
  4. Report income under head Business Income
  5. Carry forward loss for next 8 financial years

You can refer to Quicko’s Help Center for a detailed article on Tax Treatment for F&O Traders

Hope this helps :slight_smile:

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