The basics are clear - One is aware that income from derivatives and options are classified as non speculative business income with a further requirement of tax audit for turnover above 1 crore.The queries arising are specific and as under : Which specific official tax law/rule/notification mentions that turnover from derivatives is the summation of the absolutes of contract wise profits and losses ? I have seen the CA institute guidance note but is there official sanction for such a view ? Is this view not entirely illogical for a derivative options business where such calculation of "turnover" has no basis at all to indicate the "effort" involved to obtain the income ? In my view the turnover must be the net profits obtained since this business has HUGE draw downs - so to get a profit of 1 lac the turnover might be 10 lacs if calculated under the method of aggregating losses and profits ! Can ITR 4S be used to declare profits under derivative income for turnover below 1 crore ? What is the "ideal " or industry standard for showing the profits on turnover if one opts for the ITR 4S route instead of the ITR 4 route ? Yes understood that minimum has to be 8% profit on sales but the question is is there any industry benchmark which is accepted by the department on a no que asked basis In last budget Finance minister categorised FII Income from derivatives and options earned in india as capital gains to be taxed at 15% and not as business income at slab rates .While the motive is understandable (since earlier when it was classified as business income FIIs were still paying zero tax since their business is registered under DTAA friendly nations ) the point is that small traders in india who make small money in futures and options are mandated to pay tax at applicable slab rates whereas big foreign traders are officially allowed to pay only 15% even which they are not paying by using the DTAA route . So the que is does any one know if this has been legally challenged on grounds of equity and fairness in taxation in any court or IT tribunal ?