https://help.cleartax.in/hc/en-us/a...lculating-turnover-for-Future-Option-traders-
Calculating turnover for Future & Option traders
Calculation of turnover in case of F&O Trading
Determination of turnover in case of F&O is one of the important factors for every individual for the income tax purpose. Turnover must be firstly calculated, in the manner explained below:
- The total of positive and negative or favourable and unfavourable differences shall be taken as turnover.
- Premium received on sale of options is to be included in turnover.
- In respect of any reverse trades entered, the difference thereon shall also form part of the turnover.
Here, it makes no difference, whether the difference is positive or negative. All the differences, whether positive or negative are aggregated and the turnover is calculated.
For computation of turnover of futures, the total of positive and negative or favourable and unfavourable differences shall be taken as turnover.
Similar will be the case pertaining to speculation income the total of positive and negative or favourable and unfavourable differences shall be taken as turnover.
Expenses
Expenses such as postage, conveyance and telephone, incurred for carrying on the business can be claimed as business expenses. You can also claim depreciation on assets used for the business or profession.
A clear Cut Example is also provided by CAClubIndia:
https://www.caclubindia.com/experts/calculation-of-turnover-from-trading-in-options--2362384.asp
Please review my calculation of turnover from option trades for the purpose of applying provisions of sections 44AB and 44AD.
All the trades assume quantity traded as one.
1. Short Sell option contract1 for value Rs 100. The option expired worthless (hence effective buy price = 0). Turnover = ABSOLUTE (100 - 0) =
100
2. Buy option contract2 for value Rs 50. The option expired worthless (hence effective sell price = 0). Turnover = ABSOLUTE(0 - 50) =
50
3. Short Sell option contract3 for value Rs 100. Five days later, Buy it back for Rs 10. Turnover = ABSOLUTE(100 - 10) =
90
Total Turnover =
100 + 50 + 90 = 240 Please provide the correct calculation if I am making a mistake.
A: You have correctly calculated the turnover.