What is tax audit? Why it is required? What are the key points we have to focus if tax audit is required?

General
1

Hi am a housewife and i have been learning option trading in banknifty so here my question is if my turn over is crossed 1cr and my profits are less than 6% and salary is above 2.5lk as per i know tax audit is required so why it is required. What i have to focus if i under tax audit. What are the consequences i am going to face. Am i doing any thing wrong because of that tax audit is required. See i am learning option trading from online source what i have understood that am doing. Like a spectulative kind. Is it illigal in terms of income tax point of view. Please answer my questions. Am really worried about it? Because i may earn good profits in option trading before investing my precious time and foucs i need to know whether am doing right or wrong?

2

Read these

  1. Income Tax Audit under Section 44AB - Criteria, Audit Report & Penalty
  2. Tax Audit - Income tax audit in India: Rules & types
  3. Everything an F&O trader should know about return filing
    @Quicko
    Also check with your CA.
3

No need to worry. Audit doesn’t mean anything is illegal.

It is accounting verification from a CA according to rules. You can learn and trade BankNifty options and pay tax on your profits according to tax computation done by your CA if your turnover is too high.

4

@Hanuma_Soumya mam whoever told you that it is illegal it is wrong info

nothing wrong in trading / Speculative income and it is not illegal at all .

basically its one more layer of verification with a professional as it involves complex tax calculations infact you will benifit alot with that verification.

it will be treated as business income with that you can put all the related bills such as 1. internet bill 2. mobile bill 3. your lap top / ipad depreciation bill 4. any other related bills ( conference and related stay bills ) all these are exempted fromt tax so try to do audit and will find more ways to reduce your tax liability.

5

It is required as per IT Act

Nothing. You will incur additional fee by the CA for auditing services, which you can claim as business expense.

Definitely not. Don’t worry.

No. Speculation is not illegal. It is not like sports betting. Did you know even Horse racing income has a subhead in the Income tax act.

As long as you are declaring all income and expenses honestly, There is nothing wrong. But get a good CA who understands.