Are You Covered Under Tax Audit

[jassinko]

7)if we have an income above the tax slab(2.5L),we have to do an audit anyhow?
No Audit unless any of your income falls under Business Income.
This includes professionals, freelancers etc
If your income is purely from Salary, Bank Interest (FD etc) or income from one house property(unless loss brought forward) then no Audit required.

Travi and Nikhil.... any guideline or article or sec which states above point. I have suffered loss but earning salary greater than 2.5 lakh but dont have any other business income etc.... so audit required or not??

further....i want to understand word book of accounts...... what we trader has to keep.... is ledger, trade book, bank statement, cash flow is sufficient or any other document fall in "book of accounts"

 

[canikhil]

Travi and Nikhil.... any guideline or article or sec which states above point. I have suffered loss but earning salary greater than 2.5 lakh but dont have any other business income etc.... so audit required or not??

further....i want to understand word book of accounts...... what we trader has to keep.... is ledger, trade book, bank statement, cash flow is sufficient or any other document fall in "book of accounts"

Yes, you are required to get the audit done.

more or less these documents constitute the books of accounts. Add to it the capital account and a few other accounts depending on case to case basis (I assume when you say ledger, you mean the ledger with the broker).

Also, you may have to reverse all the documents shared with you by the broker as they are maintained from the perspective of the broker ie his liability is your asset..his income is your expense...So that also has to be looked into.

 

[travi]

Travi and Nikhil.... any guideline or article or sec which states above point.

This is basic definition b/w ITR-1, ITR-4 and ITR-4S.
ITR-4S is special, as in you don't audit, declare 8%+ profit and no income outside India.

I have suffered loss but earning salary greater than 2.5 lakh but dont have any other business income etc.... so audit required or not??

YEs, Audit reqd. In one way look at the bright side, next yr, if you're in profit then you can offset loss and save tax.

further....i want to understand word book of accounts...... what we trader has to keep.... is ledger, trade book, bank statement, cash flow is sufficient or any other document fall in "book of accounts"

All documents that show Income or Loss )or relevant expense are needed.
Rest the auditor will help you enter it.

 

[jassinko]

Yes, you are required to get the audit done.

more or less these documents constitute the books of accounts. Add to it the capital account and a few other accounts depending on case to case basis (I assume when you say ledger, you mean the ledger with the broker).

Also, you may have to reverse all the documents shared with you by the broker as they are maintained from the perspective of the broker ie his liability is your asset..his income is your expense...So that also has to be looked into.

what is capital account?? by reverse documents you mean contract notes and NSE/MCX transactional statements which come daily?

 

[Satya.]

I had posted earlier, can you first specify how you computed the turnover?

Most people make mistake in calculating turnover. Assume he is not making any mistake and please answer some of the queries....

for futures-sum of all profit+sum of all loss=turnover
in option we add premium rcvd on sell side also.

tht is how I calcuated(now trading wid zerodha,so no prb with p& reports)

 

[Satya.]

4)f&o turnover is 35L,8% of 35L is 2.80L
Profit made is 4L
But tax is nil after deduction,Do we need audit?
Yes

5) f&o turnover is 35L,8% of 35 is 2.80L
Profit made is 6.68L
Do we need audit?
No But advisable to maintain books of accounts.

6)f&o turnover is 1.25Cr,8% of 1.25Cr is 10L
Profit made is 14.33L
Do we need audit?
No But advisable to maintain books of accounts bcos since this FY, 1Cr limit is raised to 2Cr. For previous years and late filing audit required.

in ex 4,56 profit is abv 8% then how come Yes for 4th and No for 5&6?

so,the conclusion is if the profit is abv 8%(bt blw 2cr mark),audit is not required and no ITO will ask you a reason for not doing audit.

but as a trader,we dunno we'll be positive or negative next yr,so if we do audit,it'll be beneficial for managing our tax.

 

[travi]

for futures-sum of all profit+sum of all loss=turnover
in option we add premium rcvd on sell side also.

tht is how I calcuated(now trading wid zerodha,so no prb with p& reports)

Nice :thumb: you are on the right track.

 

[travi]

in ex 4,56 profit is abv 8% then how come Yes for 4th and No for 5&6?

For point 4, Govt. wants to know what means you used to end-up making TAX liability NIL. IT wants tax.
Plz remember, in the +8% scheme, you can't bring forward previous years loss and offset in current year.
IT says declare 8% of TO upto 2Cr(earlier 1 Cr) and sort of pay a flat tax continuously.

For 5&6, you'll end up paying tax as per their scheme.

so,the conclusion is if the profit is abv 8%(bt blw 2cr mark),audit is not required and no ITO will ask you a reason for not doing audit.

but as a trader,we dunno we'll be positive or negative next yr,so if we do audit,it'll be beneficial for managing our tax.

Right.

 

[tarun1313]

For calculating TurnOver, we don't consider taxes and other charges paid?

Also, can someone give some examples of Options TurnOver calculation?

Futures TurnOver calculation is clear to me if we consider only buy and sell price for individual contracts.


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[bpr]

I am able to understand the Tax Laws part of it, but never been able to digest what that less than 8% is supposed to signify.

Anyway, since Traders are considered as business income ppl, its like having big TO and increasing expenditure to evade tax
Then you can travel first class to attend trading course 2 days and party(for 5 days), then go back home :clap:

then audit the deductions ....