Set off F&O Loss -Audit Requirements

I had a loss of 1 Lakh in F&O and STCG loss of 70000 during FY18-19. I had filed ITR3 with audit for FY18-19 and carry forwarded the loss.

Now, in FY19-20 I made profit of 1 Lakh in F&O. My turnover is less than 1 Crore and profit is >6% of turnover. As per my understanding audit is not required based on turnover and profit.

I am going to setoff 1 Lakh profit with carry forwarded loss of 1 Lakh from previous year. I am going to carry forward the STCG Loss of 70000 to next year.

Is audit required for FY19-20 along with ITR3


For FY 2019-20, since the turnover is upto INR 1 Cr and the profit is more than 6% of turnover, Tax Audit as per Sec 44AB is not applicable. The brought forward non-speculative business loss from FY 2018-19 can be adjusted with the F&O Profits of FY 2019-20. You can also carry forward the STCG loss of INR 70,000 for 8 years.

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Thank you Quicko

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Not required


Hi Quicko, in the case described by the original poster where one has made fno loss in FY19 and equal profit in the next FY20, was the person liable to pay advance tax each quarter for the fno profit he was making in FY20 and then claim refund for the paid taxes after filing the ITR for FY20? Or since he already made a loss previous FY he need not pay advance tax until he has made an equal amount of profit in next FY?

Please let me know if my question is not clear. I will try to explain again.

F&O loss is a Non-Speculative Business Loss. The brought forward Non-Speculative Business Loss can be set off against Non-Speculative Business Income for 8 years. The taxpayer should pay Advance Tax if there is a tax liability for a quarter. Thus, if you have an F&O profit that can be adjusted with previous year F&O loss, there would be no tax liability and thus advance tax need not be paid.

You must calculate the total income after adjusting losses for each quarter and pay advance tax if there is any tax liability. While filing ITR, if taxes paid are more than tax liability, you can claim refund for the same.

For further help, write to us at [email protected]

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