please explain me whether a person dealing in the derivative requires his books of accounts audited if gross receipts from the business exceeds 60 lacs and how the transaction to be reflected in itr form whether all the details of purchase & sale hav to be shown or only net figures are to be shown.what is the meaning of turnover in this regard and how is it shown while filing the form and while auditing of accounts?
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Speculative business...
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Derivatives, futures and options:
Such transactions are completed without the delivery of shares or securities. These are also squared up by payment of differences. The contract notes are issued for the full value of the asset purchased or sold but entries in the books of account are made only for the differences. The transactions may be squared up any time on or before the striking date. The buyer of the option pays the premia.
The turnover in such types of transactions is to be determined as follows:
(i) The total of favourable and unfavourable differences shall be taken as turnover.
(ii) Premium received on sale of options is also to be included in turnover.
(iii) In respect of any reverse trades entered, the difference thereon, should also form part of the turnover.
Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961
The Institute of Chartered Accountants of India
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