Tax Audit Query

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  1. gunpurna

    gunpurna New Member

    Dear Sir,

    I am an individual Sr.Citizen do trade regularly in stock market including equity,F&o, and Intra day trades.
    My annual turnover is around 20 to 50 laks per annum during the last 3 assessment years.
    I have incurred losses raging from 20-80 thousand per annum during the said period.

    I have a pension income of around 1.4 lac per annum.
    I request you to answer the following queries.

    1. Do I need to file a tax return at all? because my annual income taking into account my pension and
    the losses from trading in stock market is far below the taxable income.

    2. If I should file a return since I am involved in stock trading even though I don't have taxable income,
    Then is Tax Audit mandatory?
    3. Which form should I use ITR4 or 4S ?
    4. Should I use ITR4s and pay tax at presumptive rate of 8% on turnover to avoid Tax Esquires even though
    I don't have any taxable income?(Just to buy peace of mind)
    kindly advise.
  2. rudrabose

    rudrabose Active Member

    Dear Sir

    1. Although you dont have any taxable income, filing return is not mandatory.

    However, you have incurred a loss in trading which you can carry forward to next year and claim as set-off next year. But Loss can only be carried forward if it has been disclosed in the income tax return. Therefore, to carry forward the loss - you would be required to file income tax return.

    2. Tax Aduit is not mandatory as your turnover is below the specified limit for tax audit.

    3. Use ITR 4 as you have incurred a loss which would be carried forward to next year.

    4. If you file ITR 4S you would be required to pay tax on your income @8% of turnover. Therefore, better to file ITR 4.
  3. gunpurna

    gunpurna New Member

    dear sir,

    many thanks for your prompt reply. But kindly clarify one more doubt.
    I was told that there was an amendment a couple of years ago to the section which requires tax audit to the affect that in such cases where the turnover falls below one crore but profit on such turnover is less than 8% then also Tax audit is mandatory.
    In my case since I incurred a loss which I may technically fall under the above clause and has to undertake audit of my books.
    Since I have not maintained any books for the past many years and also Tax audit is costing me around 20 thousand per annum which compounds my losses I contemplate filing my return under ITR4S declaring non existent profit at 8% since the IT DEPT is sending notices to non filers with significant transactions. I don't know exactly whether there is such an amendment or not. Since I don't want to continue trading further carry forward of losses is not of any use for me.
    Kindly advise.
  4. rudrabose

    rudrabose Active Member

    Tax Audit is not mandatory in your case.
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