07 July 2023
Dear Experts Client has profit from his professional income being a doctor 6 lakh. Turnover is 10 lakh so profit from profession is more than 50% He has loss in F&O trading around 2 lakh. F&O turnover is 5 lakh However, while filing ITR, getting an error that net profit from profession is below 50% and you are liable to tax audit. as when we file combined P&L in ITR, Net profit is 4 lakh ( 6 profession and 2 F&O loss ) Turnover from Profession 10 lakh and F&O 5. ITR is considering Profession turnover of 10 lakh and giving a warning for tax audit as profit falls below 50% in P&L account Kindly guide with your opinions. Whether the tax audit is required ? But respective turnovers are below the applicable limit
07 July 2023
F&O transactions should be declared under business activity, while that of medical profession under professional activity. Don't combine both. Select respective codes of business and profession separately. The warning will go off.
07 July 2023
Yes Sir F&O Turnover declared under Other services of Business head and Professional receipts differently in P&L account. Respective heads selected under business activity still warning continues. but combined profit falls below 50% of professional receipts and warning is given. Legally i feel we are not liable to tax audit.
07 July 2023
Tax audit is not at all applicable as business TO is 5 lakhs and professional receipts are just 10 lakhs. Have you chosen different business codes for both these activities? Have you filled the TOs separately? have you declared profit in profession as 6 lakhs?
08 July 2023
Yes sir,....TOs are filled separately...different business code chosen...however, net profit got combined due to single P&L in ITR 3 - we cannot show bifercation how much is profit from profession and how much is F&O loss.
CAclubindia
