F & o transactions
This query is : Resolved
11 August 2015
One of my client did F&O transactions in FY 2014-15 and having few amount left on 31/03/2015 as margin money.
I checked in web and found that these transaction have to be considered as normal business and need audit.
For calculation of turnover, as per detail found in various sites, total of both credit (profit) as well as debit (loss) will be added.
My queries are:
1) Whether to treat the F&O transactions as normal business or speculation business?
2) If considered as normal business, then whether to audit the accounts of the assessee?
3) If audit is needed, then what will be turnover? If agreegate of both debit and credit is considered as turnover, then how P&L can be framed? If you have any audit of F&O accounts, please send me format for needful.
Thanking you.
Waiting for your early reply.
Smriti
I checked in web and found that these transaction have to be considered as normal business and need audit.
For calculation of turnover, as per detail found in various sites, total of both credit (profit) as well as debit (loss) will be added.
My queries are:
1) Whether to treat the F&O transactions as normal business or speculation business?
2) If considered as normal business, then whether to audit the accounts of the assessee?
3) If audit is needed, then what will be turnover? If agreegate of both debit and credit is considered as turnover, then how P&L can be framed? If you have any audit of F&O accounts, please send me format for needful.
Thanking you.
Waiting for your early reply.
Smriti
11 August 2015
F&O transactions are accounted for as normal business transactions
audit will apply only where 44AD is applicable and profit is less than 8% of turnover or where turnover exceeds RS 1 cr and hence 44AB applies.
for The third question refer to ICAI guidance note on tax audit
audit will apply only where 44AD is applicable and profit is less than 8% of turnover or where turnover exceeds RS 1 cr and hence 44AB applies.
for The third question refer to ICAI guidance note on tax audit
11 August 2015
1 It is only a normal business.
2 Only credit is considered as turnover and it exceeds 1 crore audit is required. In case of less than 1 crore turnover and declaring less than 8% profit and total income is above basic exemption limit then audit is required.
2 Only credit is considered as turnover and it exceeds 1 crore audit is required. In case of less than 1 crore turnover and declaring less than 8% profit and total income is above basic exemption limit then audit is required.
11 August 2015
Dear Seetharaman,
Please check ICAI guidance note.
Please check ICAI guidance note.
11 August 2015
Dear Nikhil,
On what point you differ with my reply.
On what point you differ with my reply.
11 August 2015
definition of turnover....
12 August 2015
Only for checking the applicability of 44AB, the absolute value of profit and loss has to be considered.
For preparing profit and loss a/c, the gain and loss only has to be disclosed in the respective sides of P&L a/c.
For preparing profit and loss a/c, the gain and loss only has to be disclosed in the respective sides of P&L a/c.
12 August 2015
In case of options trade credit is to be taken as turn over but in case of futures trade the difference between credit and debit has to be taken as turnover.
12 August 2015
heartiest thanks to everyone for giving their precious time on resolving my question.
Smriti
Smriti
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