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.
And,

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

Hi
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.

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.

  1. I get pension around 3,00,000 in a year
  2. business under 44AD of Turnover of 35,000,00 and and in cash is turnover is 6,00,000. profit for both is 3 lakh.
  3. I have speculative profit and Short term capital gain of 1.3 lakh
  4. Loss for F&O is 5 lakh.
  5. Whic ITR form need to be filed .
    and whether taxaudit is applicable.
    If possible some can contact from ur side.

@Kaushal_Soni @Divya_Singhvi @Laxmi_Navlani @AkashJhaveri can you?

Will Tax Audit be applicable if my Trading Turnover is more than INR 2 Crore?

Hi,

As per the section 44AB and 44AD of the Income Tax Act - Tax Audit is applicable if:

  1. Turnover is above INR 1cr up to FY 2019-20 or INR 2 cr from FY 2020-21
  2. Incurred losses
  3. Profit is less than 6% of the turnover.

Read more for Income Tax Audit Applicability

Check Tax Audit requirement using the Determine Tax Audit Applicability tool

I have a question:

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

Quicko team, any advice you my have on this?

@Kaushal_Soni @Divya_Singhvi @Laxmi_Navlani @AkashJhaveri can you help?

Hi @bajramber85

Since you have traded in Derivatives and Intraday, ITR 3 has to be filed.

Quicko is a tax filing platform, but in case the assessee has audit requirements we can connect you with our network of chartered accountants.

You can use our tool to determine Tax Audit Applicability

You can reach out to us here on https://quicko.com/contact-us for your tax filing requirements.

Hope this helps!

Hi @Veejayy

You can opt for the Presumptive Scheme for FY 2020-21.

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.

You can reach out to us here on https://quicko.com/contact-us for your tax filing requirements

Hope this helps!

Thanks for your response.

1 Like

The link which you are provided for determining tax audit not working… showing some error