Are you a full-time trader, trading in the Intraday or F&O segment? Did you check your total turnover? If the turnover exceeds ₹10 crores then you might require one additional compliance of Tax Audit along with filing the income tax return.
Tax Audit is the review of books of accounts by a Chartered Accountant (CA).
Let’s say, you are a full-time trader and your F&O turnover is ₹11.5 Crores. In this case, you are required to get the books of accounts audited as it crosses the limit of ₹10 Crores.
Apart from mandatory audit which is applicable when the turnover crosses the limit, you can always opt for a voluntary audit to check if you have complied with all the tax laws. This will also allow you to carry forward your losses in case you have missed the due date.
Let’s understand if tax audit is applicable to you or not by referring to the below table:
Note: If you are not eligible to opt into the presumptive taxation scheme as per 44AD then you have to get the tax audit done. This means thereby, if you have opted out of the presumptive taxation scheme before the completion of 5 subsequent years or 5 years have not completed since you opted out, you will have to comply with a tax audit.
From the above table, one can determine according to the Turnover and Income situation whether Tax Audit is applicable or not.
If a Tax Audit is applicable, there are some additional compliances that need to be fulfilled:
Get your books of accounts related to the trading business audited by a CA in Practice.
Get the audit report uploaded by the Chartered Accountant and approve the same before 30th September of the immediate next financial year, failing which a penalty will be levied.
File your Income Tax Return before 31st October of the immediate next financial year.
The amount of turnover is small but there might be a certain situation specific to you, because of which it is asking for Audit. I cannot give a view based on incomplete information.
However you can Ask an Expert and get your queries answered.
In F.Y. 2022-23 I started my job and have salary of 10 lakh, and started doing F&O trading (turnover 70k), with a loss of 50k. Is Tax audit applicable to me for this AY 23-24 filing?
Hi @HIREiN
ITD have not yet enabled filing of ITR 3.
However, you can prepare ITR on Quicko (DIY) as well as book a MEET where tax expert shall prepare the ITR and keep JSON ready! As soon as ITD enables filing, we can go ahead and file the same.
What you mean when you say opted out of Presumptive Taxation?
I had started trading in previous year . I have not opted for Presumptive Taxation previous year. This year my T/O from trading is Rs 3 Lakhs and there is loss.
Opting out of the presumptive taxation scheme means either you have voluntarily opted out or your turnover has crossed the threshold limit and hence you will be paying tax as per the regular taxation scheme.
For FY 2023-24, the limit for the presumptive scheme is 3 crore for business.
For a turnover of 3 lakhs and a loss, an audit u/s 44AB is NOT mandatory.
But as per the information shared by your site , if a person’s income is less than 6/8% or the person has a loss in a particular year , Tax Audit is mandatory (Total Income more than basic limit).Also the image shared on site , if income is below 1cr and profit is less than 6% , Tax Audit is applicable so does less than 6% includes loss too?
Can you please clarify the same as there is lots of confusion.
Since you have not opted out of the presumptive tax scheme in any of the last 5 years and your turnover is below 1 crore, a tax audit is not applicable.
Also, if you have opted for the presumptive scheme, and your profit is less than 6%/8% (including loss) of the turnover, then a tax audit is applicable.
Assuming you’re opting for the regular taxation scheme since your turnover is less than 1 crore, and the total income exceeds the basic exemption limit, a tax audit is not applicable as per the Income Tax Act under both situations.
A presumptive scheme is introduced to give relief to small taxpayers from the tedious job of maintenance of books of account and getting the books of account audited.
? I mean it’s just one trade that too a very small amount. Can I file without having it audited?
for your answers and patience