Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
This query is : Open
Suresh S. Tejwani
(Querist)
15 July 2026
I have a query regarding the reporting of Futures & Options (F&O) transactions in ITR-3 and the applicability of tax audit under Section 44AB.
The facts are as follows:
I am engaged in F&O trading.
The total traded value (purchase + sale contract value) exceeds ₹20 crore.
The absolute net profit from F&O transactions is ₹7,13,000.
I have filed / intend to file ITR-3.
My queries are:
Since the ₹20 crore represents only the total traded value and not the F&O turnover as per ICAI guidance, is a tax audit under Section 44AB applicable?
While filing ITR-3, should the purchase and sale figures represent the gross contract values, or should only the F&O turnover (computed as per ICAI guidance) be reported?
If the Trading Account schedule in ITR-3 contains fields for Sales and Purchases, what amounts should be entered for an F&O business?
The facts are as follows:
I am engaged in F&O trading.
The total traded value (purchase + sale contract value) exceeds ₹20 crore.
The absolute net profit from F&O transactions is ₹7,13,000.
I have filed / intend to file ITR-3.
My queries are:
Since the ₹20 crore represents only the total traded value and not the F&O turnover as per ICAI guidance, is a tax audit under Section 44AB applicable?
While filing ITR-3, should the purchase and sale figures represent the gross contract values, or should only the F&O turnover (computed as per ICAI guidance) be reported?
If the Trading Account schedule in ITR-3 contains fields for Sales and Purchases, what amounts should be entered for an F&O business?
15 July 2026
A tax audit under Section 44AB is not applicable because F&O turnover is calculated using absolute profits/losses (ICAI Guidance), not the ₹20 crore gross traded value, keeping it far below the digital business audit threshold of ₹10 crore. When filing ITR-3, do not report the ₹20 crore contract values in the standard Sales/Purchase fields; instead, report your F&O turnover/receipts or declare the net income directly under Schedule BP as Non-Speculative Business Income.
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