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Querist : Anonymous

Querist : Anonymous (Querist)

25 October 2015 hi Sir
My Loss in F & O Rs. 175000/-
How to show in itr and Balance sheet audit is compersery or not

Querist : Anonymous

Querist : Anonymous (Querist)

26 October 2015 Please resolve my question

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2024 If you have incurred a loss of Rs. 175,000 in Futures and Options (F&O) trading, here’s how you should show it in your Income Tax Return (ITR) and whether audit is required:

### Showing F&O Loss in ITR:

1. **Schedule CYLA**: In your ITR (Income Tax Return), losses from F&O trading are typically reported under the head "Income from Business or Profession". Specifically, you should fill out the "Computation of Income and Tax" form (ITR-3 for individuals engaged in business or profession).

2. **Profit & Loss Account**: Prepare a Profit & Loss Account detailing all your income and expenses related to F&O trading. The loss of Rs. 175,000 should be shown as a negative figure in the "Profit & Loss Account" under the appropriate head for F&O trading.

3. **ITR Form**: Depending on your other sources of income and the complexity of your financial affairs, you may need to file ITR-3 if you are an individual earning income from business or profession. Ensure that you accurately report your F&O loss in the appropriate schedules provided in the ITR form.

### Balance Sheet and Audit Requirement:

1. **Balance Sheet**: If you have significant F&O trading activity, you might need to prepare a balance sheet as part of your financial statements. The loss should be reflected in the balance sheet under the appropriate head of expenses.

2. **Audit Requirement**:
- **Tax Audit**: As per the Income Tax Act, if your turnover from F&O trading exceeds Rs. 2 crores in a financial year or if your loss in F&O trading exceeds Rs. 1 lakh, you are required to get your accounts audited by a Chartered Accountant.
- Since your loss is Rs. 175,000, which exceeds the threshold of Rs. 1 lakh, you would need to get a tax audit done for your accounts.

3. **Form 3CD**: The tax audit report is submitted along with Form 3CD, which is a statement of particulars required to be furnished under Section 44AB of the Income Tax Act. This form is prepared by your Chartered Accountant and submitted to the Income Tax Department.

### Summary:

- **ITR Filing**: Use ITR-3 to report your F&O trading loss under the head "Income from Business or Profession".
- **Balance Sheet**: Include the loss in your balance sheet under the relevant expense head.
- **Audit Requirement**: Yes, you need to undergo a tax audit by a Chartered Accountant due to the F&O trading loss exceeding Rs. 1 lakh.

Ensure you maintain all necessary documents, including statements of F&O trading, bank statements, and other financial records, to support your ITR and audit process. It’s advisable to consult with a tax professional to ensure compliance with all tax laws and regulations applicable to your specific situation.

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