Tax audit is applicable when your turnover is above the threshold or you have losses and your total income is above the basic exemption limit.
If your total income is below the basic exemption limit of INR 2.5 lakh and your turnover is below the threshold - Tax audit is not applicable. You can carry forward the losses by reporting them when filing your ITR.
You can use this tool to determine if tax audit is applicable to you.
You can carry forward the losses by filing ITR within due date without going through tax audit when your total income from all sources is below 2.5 lakhs and total turnover from trading activities does not cross the threshold limit of 5 crore.
No other way except filing ITR. If you do not want to carry forward the losses while filing ITR, you can make the losses to be carried forward as 0 in “Schedule CFL”, but there is no way to report losses to ITD except filing ITR.
F&O Income or Loss is a non-speculative business income or loss as per the Income Tax Act. Since you had options trading, ITR form applicable shall be ITR-3.
Since your total income is less than Basic Exemption Limit i.e. INR 2,50,000 there seems to be no tax liability. You can check our Income Tax Calculator.
For audit applicability, you can check the applicability here.
I have Nil salary income, around 12.5 lakhs in Short Term Capital Gains from shares sales and around Rs. 30000 of other short term capital gains (at slab rates) and around Rs. 10000 loss in Intra Day trading with a turnover of just Rs. 1.3 Lakhs.
Do, I really need to get a tax audit done just for the 10K losses. Should I instead show a 6% gain from business and profession or is there is some other way.
Further, if I say opt for presumptive taxation then how do I show my Capital Gains.
I started F&O trading in the last couple of months of FY 2020-21. My turnover in FY 2020-21 is really small (<5 Lakhs), and profit is in around 15% of turnover. Since I was just starting trading, my record keeping is also really haphazard, with multiple bank accounts and brokerage accounts. Given both these factors (high profit% and haphazard book-keeping) , it makes sense to go for presumptive taxation for this FY under S.44AD.
Now, I’ve ramped up my trading in FY 21-22. My turnover in the last 3 months is already around 50 lakhs, and profits are in the 2-3% of turnover range. I think my trading style will be high turnover going forward, as a result of which the profits will remain lesser than 6%. As a result I’ll probably have to get an audit done next year.
If I opt for 44AD this year and stop doing so next year, will this be a problem? I know there’s a 5 year limit, but not sure how best to approach this. Will be awesome if one of you folks can give your perspectives before I file my returns in July
Looking forward if you are looking for a High Turnover, you have to maintain books and cannot opt for presumptive scheme. So if you think turnover limit will exceed in the FY 2021-22 itself and you will not be able to opt for the scheme, you should file ITR 3 with books of accounts in FY 2020-21.