Tax audit for intraday equity and options trades

  1. Intraday equity turnover : 255.5
    Net realised loss : 640

Options turnover : 5380
Net realised loss: 1482

Tax slab : under 2.5L

Do I need an audit to claim these losses?

If no then what is the extent of loss before which an Audit is applicable considering I’m still under the 2.5L tax slab?

Hi @saik,

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.

Learn more about tax audit

Hope this helps :slight_smile:

Thanks for the reply, few more doubts…

  1. So I can carry forward as much loss as I want till the time turnover is less than threshold without going through audit?(salary income less than 2.5L )

  2. Is there a way on the e filing website where I can just declare my losses in the above case without wanting to carry them forward?

I’m asking this because this is going to be my first time

Hey @saik

  1. 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.

  2. 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.

Hope this helps!

1 Like

Thank you for the detailed response!!!

Please also clarify the rule wherein if " Income is less than n% of a certain amount of turnover , audit is required" , and if there is an exception if income from all sources is less than 2.5L

Hi @saik,

In case of Income Tax on Trading, since all the trading transactions are digital, the prescribed rate under Sec 44AD would be 6% of the turnover to determine the applicability of tax audit.

You can use this tool to determine if tax audit is applicable to you or not :slight_smile:

For FY 2020-2021
I have made a loss of 2,36,532 with Turnover of 4,56,545 in option Trading
I have a salary income of 1,30,000

Should i pay tax
which ITR should i file
whether Audit is required.

Please help.

Hi @Muru

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.