For the financial year I have 2.7L Salary + IFOS Income.
I have around 5L F&O Loss for the year.
is Tax audit compulsory? Also what will be the applicable ITR to file in the given case?
Hi @Yash11.
Although it is not compulsory, I strongly advise you to get audited so that these losses can be carry forwarded for the next 8 years. Basically, this loss would offset any (non-speculative) income in the next 8 years.
Suppose you made 1 Lakh in F&O segment for next five years. You won’t have to pay taxes on them because this loss of 5 Lakh will keep offsetting the profits.
Without getting audited you would lose this offsetting benefit. Hire a Charted Accountant who has good experience in filing tax returns for traders. There’s always Clear Tax if you couldn’t find any.
Hope this helps…
-Neha (vrdnation.com)
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Are you saying that cleartax should not be used as a first choice?
I like Clear Tax team and the work they do.
The only limitation I found was that you don’t know beforehand which CA they would assign to your case. The CA may happen to be a great one but you kinda have to rely on the CT to decide.
I prefer working with a CA whose credentials I have verified prior to engaging. But again, Clear Tax is doing a great job and highly advisable as well.
thank you for your response.
if i dont get it audited i would lose offsetting benefit??
Yes, that’s correct.
Read through the “5.3 – Carry forward business loss” section of this article.
it doesn’t mention that i cant offset loss if I dont audit. I believe offset is possible even if there is no audit.
Depends on the turnover. Better to check with a CA/expert.
turnover is for audit, not for offsetting or c/f losses. Can anyone else pls guide accurately?
not helpful. It says audit required which is contradicting Zerodha’s explanation. It is more about advertising to sign up for their service.
But thanks for the effort 
Meet a consultant you know and share the details for better and long term relationship as well. Sharing financial information online is not a good idea. You can read material online and then understand from person available locally who can represent when required
Mr. Yash
You have to file ITR3 for F.Y 2017-18.
It is not necessary to get tax audit for carry forward of losses, filling of return within due date (i.e 31st July) is sufficient.
If your turnover in F&O segment is more than 1cr. then you are required to get tax audit.
If you fail to get tax audit done and don’t provide reasonable reason then IT department may impose penalty.
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There have been so many contradicting views within the professionals and on the internet as well. But I guess its now clear that tax audit is not required because turnover isn’t exceeding the limit.
Thanks a lot manish
if your profit is less than 6 % ( for digital transactions) of all turnover combine ( cash, fno , intraday) & total income under all heads exceeds tax exemption limit ( may be 2.5 L) you need audit & require to file before 30th September. If late no losses will be get carry forward.
If a person fails to comply with the provisions relating to the Income Tax Audit (Section 44AB), there is a penalty of 0.5% of the total turnover or Rs. 1,50,000 whichever is less.
Thanks a lot tomy. That makes it clear now
Audit requirement are governed by section 44AB which reads as
I think there is bit of confusion among traders about presumptive income and audit requirement. IF business turnover is more than 40lacs and less than 2crore, business can still opt to not maintain books and not audit , if they pay tax on presumptive income of 8% of turnover. U/Sec 44AD
Still doubt persists if tax audit is necessary or not, since Salary income is around 2.5L to around 2.7L (Total Income)
5L F&O Loss for the year will get carried forward since that cannot be adjusted against salary.
so total income will exceed 2.5L. (Around 2.7L). However rebate u/s 87A will create Nil Liability.
So now tax audit is necessary? Getting a lot of conflicting answers from CA’s themselves.
any someone confirm please urgently?
Yeah, I think best to get an audit.
i understand it’s a convenient approach to get it audited, but there are financial constraints already having suffered a massive hit at the markets. So if it is compulsory, I would definitely have no choice… but if its not compulsory, it would be some relief to save up those 5k-10k CA fees. Please guide sir