F & O Loss Audit Requirement

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This discussion clarifies the requirement for a tax audit when claiming Futures & Options (F&O) losses for AY 2025-26. Generally, a tax audit isn't mandatory for F&O losses unless your turnover exceeds 10 crore rupees. However, if you previously declared income under Section 44AD for five consecutive years, you cannot claim F&O losses in subsequent years without a tax audit. You can either opt for a tax audit to claim the loss or choose not to claim it to avoid complications.

Javed Memon

Javed Memon (Querist)
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05 August 2025 Respected Sir,
I have Filled ITR 3 For A.Y. 2024-25 For Salaried Person
Declared income
Salary income after standard deduction 4,92,000 and Claim 90,000 F & O Loss
and one More other income i.e. small Business income of Rs. 2000 (10,000*20% u/s 44AD)
So Net Taxable Income For A.Y.2024-25 is Rs. 4,90,000 and 88000 loss of F& O carry Forward

My question is for A.Y. 2025-26

F & O loss is 1,50,000 so for claiming Loss audit is Mandotory or not because Prevoius year i have declared small business income u/s 44ad and also that income declared under 44ad is not related with F & O business

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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05 August 2025 You are filing the business income under 44AD this year also. While for F&O loss the books are maintained, hence tax audit is not mandatory unless turnover of the F&O is more than 10Crs.

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Javed Memon

Javed Memon (Querist)
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06 August 2025 Respected Sir , Kindly confirm that Audit in case of loss in F & O there is one another thing other than turnover i.e 10CR , if you had Filled Previous Year Return u/s 44 AD and Delcare income more than 6% and total income is more than threshold limit then next year you cant claim F & O Loss without Audit irrespective of F & O Turnover .

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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06 August 2025 That is true if you had declared the F&O income u/s. 44AD in any of preceding FIVE years. So, you cannot declare loss in F&O (i.e opting out of sec. 44AD) without tax audit (including for next five years). Advisable to forgive loss or go for tax audit.

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Javed Memon

Javed Memon (Querist)
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09 August 2025 So if we can't declare F & O Loss In ITR is there any Notice in Future Year

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 August 2025 Unless you declare at least 6% profit over F&O trade; every chance of query.

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Aashok Kumar Sharma

Aashok Kumar Sharma

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12 August 2025 What You Should Do:
If you want to claim F&O loss in AY 2025-26, you must get your accounts audited and file audit report with ITR.
Alternatively, you can choose not to claim the loss to avoid audit complications.
Maintain detailed books of accounts and ensure proper documentation.
Consult your tax advisor for audit compliance and to file properly.
Final Note on Notices:
If you claim loss without audit when required, IT Dept can issue notices under scrutiny.
Repeated failure to comply may attract penalties or disallowance of loss.

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Javed Memon

Javed Memon (Querist)
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20 August 2025 Thanks For Your quick Replies Dhirajlal Rambhia Sir and Asha kanta Sharma Sir

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