Tax Audit in case of Loss from F&O Trading

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  1. D.K.Rao

    D.K.Rao New Member

    Hi,

    I am a salaried employee and got a trading account with IIFL. We did some trading in Futures and Options; and ended up in losses in last couple of years. But total transactions done during the FY exceeded 1 Crore (though actual contracts bought are 10% of the value). Should we go for Tax Audit under section 44B?
    Thanks in advance for the response.

    Regards,
    -D.Rao
     
  2. ZED

    ZED Well-Known Member

    How have you computed the turnover?
    In case of F&O turnover is the aggregate of the +ve values and the -ve values.
    For eg if you made loss of 5,000 and profit of 2,000, your turnover will be considered as 7,000.
     
  3. D.K.Rao

    D.K.Rao New Member

    Thanks ZED for the response.
    Turnover in my case is 67,300 (profit:13,000, loss: 54,300).
    And as per my salary bracket, I am paying 30% tax.
    Regards,
    -D.Rao
     
  4. ZED

    ZED Well-Known Member

    Tax audit is not required.
    However, it will be required if in past you claimed profits as profit u/s 44AD , AND if you wish to declare the profit less than 8% of the turnover.

    If the loss are not to be carried forward, then audit is not required.
    Therefore, my advice to you is to not to carry forward the loss and show profit as 8% of 67,300.
     
  5. D.K.Rao

    D.K.Rao New Member

    Thanks ZED, for the advice. Will take care of it as suggested.

    Regards,
    -D.Rao
     
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