I must be a SEBI datapoint for why F&O trades dont work with retail guys, but now i am interested to know what damage it has left behind from taxations stand point …
Story: So i traded F&O in current financial year and stopped with loss of 35K @ 1L turnover, with the applied rules of Income tax I need to file my ITR as Business Income with Tax Audit… i am clear till this point…
But in same financial year i also sold equity under 2L turnover and made 20K profit…
Question:
- Does the equity profit also fall under head Business income or i have choice that i can show it as STCG?
- As i also understand if i show it as Business Income in current financial year then in future i cannot show any equity buy sell as STCG is this true as per IT laws if i don’t trade in F&O again ?
- Is there anything from IT laws where we have to show that i am not doing this trading business any further in future?
- Also any rough price estimate of doing tax audit in mumbai?
I assume @Quicko can help here Thanks…
Hi @pyarlath
There’s no requirement for tax audit in this case. Turnover limit is 10 crore for applicability of tax audit.
It depends on how you want to interpret it, You can show it either as STCG or business income. General rule is, if there is significant churning and you want to treat as stock-in trade, then it can be treated as business income. else, you can show it as STCG. I would recommend you to consult with your CA on this matter.
Not true. There’s no rule as such.
There’s no such rule.
As tax audit is not applicable in your case, you can be relaxed about it.
If I’ve missed anything, @Quicko will help us out here
@pyarlath
Answer to your queries are:
a) Equity profit can be shown as Business income and STCG both subject to the conditions fulfilled in case of Gopal Purohit ( Bombay High court).
b) Technically no unless there is change in business and you will be filing Tax audit report next year.
c) Tax audit in Mumbai or any other city can start from Rs. 20000 onwards.
Regards,
Aditya
Thanks @Meher_Smaran for helping out but i think in my case there is applicability of tax audit 1) Since my profit is less than 6% 2) turnover is under 10cr and 3) Me being in old regime… this is what i read from @Quicko site according to section 44b or d… has that changed?
20K !! That price is too hard for a person who is beaten down by the system and turnover of 1L
@pyarlath That is a general price charged by any CA firm including mine so in that case. It might get reduced but then that is usual fees for a basic tax audit. But yes, you may not be required to have conduct a tax audit as well so better to take a professional call on that
Hey @pyarlath,
As correctly mentioned by @Meher_Smaran, the turnover limit is 10Cr for audit in case of trading as all transactions are digital and not in cash. Rest everything is clarified already:)
Is this link incorrect then? Section 44AB: Tax Audit under Income Tax Act – Learn by Quicko its from 2021 Section 44AB(e)
Is this recent rule change @Quicko? Earlier it was said that a trader with loss or less than 6% of turnover as profit needs an audit.
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