Requirement for tax audit for F&O traders with business loss to be carried forwarded


I have a turnover of between 50L to 1Cr with an F&O trading loss of around 10L that I wish to carry forward for future years. This is the first time, I will be filing ITR3 and do not have any other business, so presumptive taxation does not apply to me. Do I have to get a tax audit mandatorily?

Also, since I do not have another business and do not wish to continue F&O trading, can I offset the carried forward F&O losses with any other income such as equity dividends, equity capital gains, interest income, etc. in the future years?

Hey @abhi06,

In the case of businesses where more than 95% of the transactions are cashless, the turnover limit for a tax audit is ₹10Cr.

Hence, for F/O trading where 100% of the transactions are digital, a tax audit is mandatory only when your turnover exceeds ₹10Cr.

Moreover, in the current year, F/O losses can be set-off against all incomes except salary. However, once such losses are carried forward, they can only be set-off against other business incomes in the subsequent years.

My individual DMAT account is handled by one expert who is charging 30,000/- per month for me. Shall I claim 30,000/- as an salary expense against f&o gain ?

If your turnover is between 50 lakhs to 1 crore and you have F&O trading losses of around 10 lakhs that you want to carry forward, you may not be required to undergo a tax audit. However, it’s essential to consult with a qualified tax professional or chartered accountant to confirm your specific situation and obligations under the Income Tax Act.

Regarding offsetting carried forward F&O losses with other income in future years, you can generally set off F&O losses against any other taxable income, including equity dividends, equity capital gains, and interest income. However, it’s crucial to adhere to the rules and regulations outlined by the Income Tax Act and seek advice from a tax expert to ensure compliance with the law.