Typical trading turnover for BTST trader

I am just curious to know about typical trading turnover for BTST traders. Lets us assume capital amount around 25 Lakhs.
Does high trading turnover has any implications from taxman’s point of view.


With regards to BTST, there are both schools of thought; one which considers it to be speculative because no delivery was taken and the second school considers it as non-speculative/STCG as the exchange itself charges the security transaction tax (STT) for BTST trades similar to regular delivery based trades.

A factor to consider is if such BTST trades are done just a few times in the year show it as STCG, but if done frequently it is suggested to show it as speculative business income.

If you are showing STCG as business income, you need to continue the same in subsequent years as well.

Please go through these circulars for better understanding…https://www.incometaxindia.gov.in/communications/circular/910110000000000316.htm

Hey @San78, thanks for the swift reply. Thanks for giving clarity on this topic. Is there is any upper threshold for trading turnover like max 5cr/10cr/15cr? Is there any kind of implication with such high turnover which we should think before performing such high turnover activity by retail investor?


There is no such upper threshold for trading turnover.
However, if your turnover crosses threshold limit of Rs 5 Crore or 1 Crore as the case maybe ; then tax audit becomes applicable.

Rs 5 Crore limit is applies if your cash receipts are less than 5% of your turnover or gross receipts and if your cash payments are less than 5% of your total payments. Since, stock market transactions are 100% digital - the limit is Rs 5 Crore.

Tax audit will be done by a qualified Chartered Accountant.

Turnover will be calculated as follows:

A] Speculative Transaction : Turnover will be absolute profit i.e sum of all positive and negative differences
B] Derivatives : Turnover will be absolute profit i.e sum of all positive and negative differences
C] Shares : The total sale value of shares shall be considered as turnover.

More about turnover and tax audit…https://zerodha.com/varsity/chapter/turnover-balance-sheet-and-pl

@San78, Excellent. Appreciate your support. Thanks for clearing all of my doubts.

1 Like