Tax Audit only for Digital Transactions above 10cr Turnover?

Hi all. The new limit for Tax Audit for Digital Transactions is 10cr plus turnover. Does this apply to online trading as well? So if our trading turnover is less than 10cr do we not longer need to be audited?

@Quicko Can You?

If turnover is upto 10 crore and profit is more than or equal to 6% of the turnover, then no need for audit. But if profit is less than 6% or you incurred an overall loss in trading (not STCG but trading as a business income is what we are discussing here; which include Intraday trading in equity, BTST trades in cash market and F&O), then you need to get your audit done by a CA (Considering you are earning more than 2.5 lakhs per year from all sources of income)

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Hey @Zubin

The tax audit limit has been 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. So, if the turnover is up to INR 10 crores and your profit is more than or equal to 6% of the turnover, then an audit is not applicable. But in case of losses or if profit is less than 6% of your turnover then a tax audit will be applicable.

Hope this helps!

Hey Quicko, yes this helps. Thanks for your reply.

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Hi @Quicko

If someone has loss in fno, BUT his total income including the loss is less than 2.5 lakh, THEN does he still need tax audit?

For example suppose someone has 2.5 lakh salary income and 50k fno loss, so total income 2 lakh. Is tax audit still needed in this case?


Hi @Praksy, our conversation in the other thread can seems relevant here.

Hope this helps :slight_smile:

Do we need to maintain book seperately ? I mean Zerodha already providing Tax PNL report.

If someone has only trading income. They can give tax PNL report from console to audit or if they received any notice from income tax department.

@ShubhS9 @siva

Hi @anon1649903,

The Income-tax Act does not prescribe any specific books of account for a person engaged in business or in non-specified profession. However, such a person is expected to keep and maintain such book of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of the Act.

Hence, You can give any supporting documents for the purpose of audit or notice from income tax department.

Hope this helps!