“But note that if your total income for the year (trading + Salary+ any other income) is less than Rs 2.5lks (the minimum tax slab), this would mean that there is no tax you have to pay, and hence no need of an audit.”
Last year, my turnover from F&O trading was around 1 crore 30 lakhs and I had a loss of 80K. My sole income was from an FD (around 2 lakhs for the last year.) I want to know whether I need a tax audit ( i am not interested in carry forwarding my losses).
You won’t need to go for tax audit if you declare a profit of 8% on F&O trading turnover of Rs1.3 cr which comes to Rs.10,40,000 and pay axes accordingly. You should go for tax audit as the cost of audit would be far lower than paying tax on 8% of the turnover.
I visited the income tax department bangalore, they were a bit clueless about rules. Finally they said if turnover > 1Cr have an audit, or else dont get audited. In the rule book they opened, only 1Cr was mentioned.
I am trying to access those section 44 webpages but its not opening.
Simple thing is… if u are having more than 2 cr turnover in business u have to get ur accounts audited irrespective of profit… and if the turnover is less than 2 cr tax audit is mandatory if and only if the profit declared by u is less than 8 percent of turnover…
I have traded in banknifty options and according to my profit and Loss account from the broker the loss is 1.75 lakhs and turn over 3 crore.
I have no other income
Do i need to file IT return
I am confused as people say that if turn over is more than 2 crore one has to get books audited for filing.
I do not know even where can I get the account books to be audited
With Options trading, you’re essentially running a Business and the same should be reported as Business Income. And naturally, you’d require to get your accounts Audited for the same as Turnover exceeds 1 Crore. Trust me, getting an audit is worth it because in case the Income Tax Department decides to scrutinize you, it’ll cause a headache. Apparently, Commissioners get incentives for ruling cases in favor of the ITD, so I’d advise against skipping an audit just for the sake of saving some money. Check platforms like cleartax quicko etc for pricing, they’re usually cheaper than others. You can also claim the audit fees as part of expenses against other income sources and carry it forward for 8 years - So it’s not much of a loss compared to the risk involved.
@canismajoris - THIS. You can’t say no to tax filing simply because your net income falls below 2.5L. With your turnover exceeding 1 Crore - how do you think the Income Tax dept will treat some business owner with a turnover of 1.3 Crore skipping filing taxes/audits?
With digitisation of records, Department probably knows the fact you’re an active trader and will come after you in case you don’t file. Penalties will be much more than what a simple audit will cost you today.
A fellow trader recco’d me quicko last year, costed me same. It’s a smaller firm based out of Ahmedabad and they treat you really well, for what its worth. Cleartax got back after two days after I paid for their plan
I would like to know how you guys are calculating the turnover in FnO. There is a lot of confusion regarding the same. Some say that the squared profit or losses are added to calculate the turnover. Infact zerodha also calculates it that way. But some CAs say that the total buy and sell values are added to find the turnover. If this is the way then the turnover will cross 1 crore in just 2 or 3 days.
ICAI guidelines on tax audit are clear and accountants follow the same. In case of F & O its settlement losses and profit itself is turnover. for the tax audit to be done or not , you need to add sum of Settlement profits and losses.