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This discussion clarifies tax implications for full-time stock traders. It addresses how to differentiate business income from long-term capital gains/losses. A key point of confusion is whether a tax audit is necessary when turnover is high but profits are below the presumptive income threshold (6% under Section 44AD), especially if Section 44AD(4) is not attracted.

Patel

Patel (Querist)
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14 September 2021 If only business of shares trading (full Time) in all segment (FNO+Intraday+Delivery base trading i.e. Short term) taken as business income, but and if some sell of shares after one year as a different portfolio only that can I take as long term capital gain or loss ?

Second Question is If Turnover in Stock trading business only is 99,50,000/- and profit is less than 6% i.e. 3,95,000/- greater than basic exemption limit which is not chargeable tax and total transaction is digitally electronic mode (100 % ) but in past years never opted section 44AD as presumptive income ,so please know will need tax audit by CA ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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14 September 2021 1. Yes.
2. Not needed.

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Patel

Patel (Querist)
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14 September 2021 Dear Sir, How it is and please clarify in details. If do not audit, can receive notice from IT department ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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14 September 2021 If section 44AD(4) not attracted, then as per sec 44AB(1), tax audit not required if turnover in PY is below 1 Cr.

Patel

Patel (Querist)
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14 September 2021 I confused that is sec. 44ad(4) not attracted means profit is greater than 6% but in this case profit is less than 6% than will tax audit complusary ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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22 September 2021 As such the maintaining books of account is mandatory in this case, but audit not applicable, as sec. 44AD(4) not attracted.

Patel

Patel (Querist)
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22 September 2021 So please sir, tell about Sec.44AB (e) in details

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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22 September 2021 If Section 44AD(4) w.r.t. sec 44AD(5) gets attracted, the the assessee need to get his books of accounts audited u/s. 44AB(e) of the act.

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