Fire your tax related queries and i would get it solved!!!
Please answer my these queries, I put down some scenarios of some of the friends-
All Full Time Trader Cases-
1)F&O Turnover is below 1Cr,(only Futures contracts,thus turnover is below 1Cr)
Income from trading is only 3 lakhs,
FD interest I receive is 1 lakh,do I need audit?
2) F&O Turnover is above 1Cr,(Option Trading increases the turnover figure
)Income from trading is only 3 lakhs,
FD interest he received is 1 lakh,does he need audit
3) F&O Turnover is above 1Cr,
Profit made is only 1.15 Lakhs
FD interest he receives is 80k, does he need audit?
4) F&O Turnover is above 1Cr
Loss made 1 Lakh.
FD interest is 1.25 Lakhs.
Do I need audit? I don’t want to carry forward this 1 Lakh loss.Just a plain ITR return of interest received on FD we will show,it it ok?
5)If I take only futures trades with a nice strategy,I could make(may be) 10 Lakhs profit,but my turnover will be below 1 Cr,when we take option trades then only this turnover figure rises and we have to pay a big amount to CA.
Thats the reason I avoid taking option trades
your views on this please.
-Kabir A
Last edited:
Please answer my these queries, I put down some scenarios of some of the friends-
All Full Time Trader Cases-
1)F&O Turnover is below 1Cr,(only Futures contracts,thus turnover is below 1Cr)
Income from trading is only 3 lakhs,
FD interest I receive is 1 lakh,do I need audit?
2) F&O Turnover is above 1Cr,(Option Trading increases the turnover figure )
Income from trading is only 3 lakhs,
FD interest he received is 1 lakh,does he need audit
3) F&O Turnover is above 1Cr,
Profit made is only 1.15 Lakhs
FD interest he receives is 80k, does he need audit?
4) F&O Turnover is above 1Cr
Loss made 1 Lakh.
FD interest is 1.25 Lakhs.
Do I need audit? I don’t want to carry forward this 1 Lakh loss.Just a plain ITR return of interest received on FD we will show,it it ok?
5)If I take only futures trades with a nice strategy,I could make(may be) 10 Lakhs profit,but my turnover will be below 1 Cr,when we take option trades then only this turnover figure rises and we have to pay a big amount to CA.
Thats the reason I avoid taking option trades
your views on this please.
-Kabir A
All Full Time Trader Cases-
1)F&O Turnover is below 1Cr,(only Futures contracts,thus turnover is below 1Cr)
Income from trading is only 3 lakhs,
FD interest I receive is 1 lakh,do I need audit?
2) F&O Turnover is above 1Cr,(Option Trading increases the turnover figure
)Income from trading is only 3 lakhs,
FD interest he received is 1 lakh,does he need audit
3) F&O Turnover is above 1Cr,
Profit made is only 1.15 Lakhs
FD interest he receives is 80k, does he need audit?
4) F&O Turnover is above 1Cr
Loss made 1 Lakh.
FD interest is 1.25 Lakhs.
Do I need audit? I don’t want to carry forward this 1 Lakh loss.Just a plain ITR return of interest received on FD we will show,it it ok?
5)If I take only futures trades with a nice strategy,I could make(may be) 10 Lakhs profit,but my turnover will be below 1 Cr,when we take option trades then only this turnover figure rises and we have to pay a big amount to CA.
Thats the reason I avoid taking option trades
your views on this please.
-Kabir A
I have posted a detailed note covering various scenarios on this somewhere else in this forum. Kindly refer to that. With respect to your specific query, I have already answered it. I am myself a CA and don't mind the big amount! It is called professional fee. You should look at business not from the perspective of fees you pay out for compliance but as a profit generating activity. Now if you make profits on options then there won't be any problem...right? it all happens because we make wrong bets and accumulate losses and once you are in red, every cost looks big!
Kabir. Follow a simple principle:
1. If the turnover exceeds the tax audit limit (till Fy 2015-16 Rs 1 cr, Fy 2016-17 Rs 2 cr), then audit is applicable irrespective of profit/loss
2. If the turnover is below the tax audit limit, then:
A. If the profit is less than 8% of the turnover and total income before providing for 80C deduction, exceeds the basic exempted limit ie Rs 2.5 lakhs, then audit is applicable. eg: salary income Rs 3 lakhs, turnover Rs 10 lakhs, profit: Rs 50,000, then audit will apply as income is in excess of Rs 2.5 lakhs but the profit is below 8% of the turnover
B. If the profit is less than 8% of the turnover but total income before providing for 80C deduction is less than 2.5 lakhs, then no audit is applicable. Now in this case a lot of CAs will contend that audit is applicable. But according to law it isn't.
C. If the profit is in excess of 8%, then no audit is applicable.
1. If the turnover exceeds the tax audit limit (till Fy 2015-16 Rs 1 cr, Fy 2016-17 Rs 2 cr), then audit is applicable irrespective of profit/loss
2. If the turnover is below the tax audit limit, then:
A. If the profit is less than 8% of the turnover and total income before providing for 80C deduction, exceeds the basic exempted limit ie Rs 2.5 lakhs, then audit is applicable. eg: salary income Rs 3 lakhs, turnover Rs 10 lakhs, profit: Rs 50,000, then audit will apply as income is in excess of Rs 2.5 lakhs but the profit is below 8% of the turnover
B. If the profit is less than 8% of the turnover but total income before providing for 80C deduction is less than 2.5 lakhs, then no audit is applicable. Now in this case a lot of CAs will contend that audit is applicable. But according to law it isn't.
C. If the profit is in excess of 8%, then no audit is applicable.
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