Is tax audit mandatory if there is a loss under F&O and turnover is < 2 crores ? Also if its not can someone site the necessary IT provisions. Also which ITR needs to be filed 9ITR 3 or ITR 4)?
In my understanding Profit below 6% tax turn over rules all turn over amounts.(1/2/5 crores etc)
So in your case loss Tax audit is a must I think.
You have to file ITR-3 with F&O trading as a business with balance sheet , & P&L statements .
Tax Gurus will give a more defenitive answers soon. @quicko
If profit is below 6% of turnover then audit is necessary. However, the only exception is when your total income is below the basic exemption limit of 2.5 lakh , in which case audit is not necessary. Let’s see if Quicko replies.
When Trading Turnover is up to INR 2 Cr
- Tax Audit as per Sec 44AB(e) is applicable if there is loss or profit is less than 6% of Trading Turnover and total income exceeds the basic exemption limit.
- You need to file ITR-3 if you want to declare the losses and carry forward them for next years.
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thanks. i just want to declare loss as there is enough income from other sources to set off…no need to carry forward. can quicko help with tax audit ?
Thank you…can you refer to ca who can file the audit report ? It’s all online and reports downloaded from zerodha so quite simple.
Further I have been trading with my own capital but from the trading account of my mother. I have a contractual arrangement (undertaking) under which all losses and profits on trading would be passed on to me by my mother. So as far as the loss is concerned on F&O who takes that in the IT return me or my mom…?
@Quicko as per my reading threshold Limit for Tax Audit has been increased to Rs. 5 crore…pls check & confirm Threshold Limit for Tax Audit increased to Rs. 5 crore [Applicable from Assessment Year 2021-22]
Hi @CoolBird
The limit for tax audit u/s 44AB(a) was initially increased from INR 1 Cr to INR 5 Cr in Budget 2020. Further, this limit is increased from INR 5 Cr to 10 Cr for taxpayers who carry out 95% of their transactions in the digital mode as announced in the budget 2021 by the FM.
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Is this limit irrespective of profit or loss ? Or if someone has a loss then audit mandatory, I have not opted for presumptive scheme in the past
The limit u/s 44AB (a) when turnover crosses 10 crores is irrespective of the profit or loss.
This is contradictory to the earlier response from Quicko " Tax Audit as per Sec 44AB(e) is applicable if there is loss or profit is less than 6% of Trading Turnover and total income exceeds the basic exemption limit."
Both the sections are different and have different criteria for their applicability. For further clarification, you can refer to the below article which mentions both sections in detail.