F & o transactions accounting

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Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2013 I bought an option contract at Rs 25000/- & Sold same at Rs 20000/- Thus incuring Loss of Rs 5000/-.

What will be considered as Turnover for Income Tax purpose Rs 25000/- or Rs 45000/-(25000+20000) or Net Difference Rs 5000/-

Also should i show Rs 25000/- sales & Rs 20000/- as purchase in ITR4

Please help

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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28 July 2013 Rs 5000/ will be considered as Turnover.
.
In case you have sold the option for Rs 21000/- and let it expired, 21000 would be the turnover.
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You can show the loss under -36.Other Expenses if you do not find any other suitable head.
.

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Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2013 Thanks Sir but i have one more query.

I have multiple option contracts, some having profit & some having loss as stated

for eg Contract 1 - Loss of INR 5000/-

Contract 2 - Profit of INR 4000/-

Net Loss from F & o INR 1000/-

Can i show inr ITR4 , Sale as INR 4000/- & Purchase as INR 5000/- so Net Loss is INR 1000/-

I am not having any other business Income of any other category

Please guide

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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28 July 2013 Actually , ITR 4 is not an ideal return form. Many important items are still left and do not find a suitable place. We have to adjust these items any how, buy using own requirement based skills. Only important thing is we must be in a position to explain the data filled in. Prefer- other expenses.
In case your turnover is not significant (1.00 crore), you may go with your own idea.
.

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Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2013 Thanks a lot sir.... one final query...

My turnover is below 1 crore , but i am having net loss of about 2 lakhs from f & o transactions....

so will tax audit be compulsory for carry forward of loss under sec 44AB , 44AD or any other section required

CA PARAS BAFNA

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28 July 2013 Section 44AD(5): when income is not taxable -tax audit is not required.
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44AB(a): Audit is not required.
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My view:
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F&O loss is 2.00 lacs. It could be 2.10 lacs also. So, if audit can be conveniently carried out, do not hesitate and get it done assuming the audit fee as option premium paid for purchasing "piece of mind".
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Loss claim will be easier for you after arriving at the assessment stage.
.

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Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2013 Hi Sir,

Due date for filing of IT return is 31st July & not much time is left for audit...

Can i file IT Return on or before 31st July & get my books audited later .. say in Aug 2013... will it be ok

CA PARAS BAFNA

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28 July 2013 The date for Audit case is 30.09.2013.

Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2013 Thanks...

in short if i get books audited , due date for filing will be 30.09.2013 (even if audit may not be compulsory under any section)

please confirm

Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2013 please confirm

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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28 July 2013 The Auditor has to cover you under Section 44AB (d) as you are showing profit lesser than 8% of the turnover. Department can not
object if you get carried on audit on this ground.

.
Still , your idea to file return first as on 31.07.2013 is a better idea, so go ahead
with this only.
.

Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2013 Thanks a lot Sir... for your guidance provide d on various aspects relating to F & O Transactions...

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