File ITR-3

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This discussion clarifies tax audit requirements for F&O traders filing ITR-3. For businesses with over 95% digital transactions, the tax audit threshold is Rs. 10 Crores. If you were liable for a tax audit in a previous year due to declaring less than 6% profit (under Section 44AD(4)), you may be required to continue with tax audits for the next five years, unless your total income falls below the taxable limit.

Patel

Patel (Querist)

10 April 2023 Dear Sir,
Please tell me about Tax Audit, My business is only F&O trading and 100 % digitally.
In Fy 2022-23 Option trading premium received is 79 Lakh and premium buy is 80 Lakh so my net losses is 1 lakh and carry forward loss to next year, so know whether I am liable for tax audit or not ?
If not, can I file ITR-3 file without tax audit without error? Is it applicable In my case 6 % profit of Gross Receipt criteria in my case I have no any income ?
If I file ITR -3 without a tax audit and show error what can I do?
Please know me in detail about it.
Thanks,
Warm Regards,

Can I face a problem at time of ITR 3 file because of loss? Previous year this problem is occurring because of profit is less than 6% of gross receipt then I was go wit audit in fy 21-22

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

10 April 2023 You can file ITR 3 with books of accounts maintained. without TAX AUDIT, as the limit for tax audit u/s. 44AB(a) of IT act, for businesses with more than 95% digital transactions, is Rs. 10 Crs.
You can carry forward losses.

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Patel

Patel (Querist)

10 April 2023 Can I face a problem at time of ITR 3 file because of loss? Previous year this problem is occurring because of profit is less than 6% of gross receipt then I was go wit audit in fy 21-22

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

10 April 2023 As you had already audited books of accounts in preceding year, and if audited u/s. 44AB(e) of IT act, then whatever be the condition this year, you have to continue the audit of books for next FIVE years u/s. 44AB(e) of the act.

Patel

Patel (Querist)

10 April 2023 Sir,
I had file ITR-3 from last 10 year and in past never I file under 44AD, so what happen in FY22-23

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

10 April 2023 As you have said you were liable to tax audit in FY 2021-22, due to profit margin less then 6%; the audit would have been u/s. 44AB(e) r.w.s. sec 44AD(4 &5) of IT act.
Read sec. 44AD (5) for its confirmation.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

10 April 2023 Provisions to be applied if a person does not opt for the presumptive taxation scheme of section 44AD and declares income at a lower rate, i.e., at less than 8%
A person can declare income at lower rate (i.e., at less than 6% or 8%), however, if he does so, and his income exceeds the maximum amount which is not chargeable to tax, then he is required to maintain the books of account as per the provisions of section 44AA and has to get his accounts audited as per section 44AB.

Consequences if a person opts out from the presumptive taxation scheme of section 44AD
If a person opts for presumptive taxation scheme then he is also require to follow the same scheme for next 5 years. If he failed to do so, then presumptive taxation scheme will not be available for him for next 5 years. [For example, an assessee claims to be taxed on presumptive basis under Section 44AD for 2021-22. However, for AY 2022-23, if he did not opt for presumptive taxation Scheme. In this case, he will not be eligible to claim benefit of presumptive taxation scheme for next five AYs, i.e. from AY 2023-24 to 2027-28.]

Further, he is required to keep and maintain books of account and he is also liable for tax audit as per section 44AB from the AY in which he opts out from the presumptive taxation scheme. [If his total income exceeds maximum amount not chargeable to tax]

Patel

Patel (Querist)

10 April 2023 sir,I audited in FY 21-22 because of as time of ITR-3 file error due to 6% criteria and in past also i have loss 50k and gross receipt is 83 lk and no other income.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

10 April 2023 Check your audit report for FY 2021-22, i.e. AY 2022-23, under which section the audit was carried out?

Patel

Patel (Querist)

10 April 2023 8. Indicate the relevant clause of section 44AB under which the audit has been conducted
Sl. No. Relevant clause of section 44AB under which the audit has been conducted
1 Clause 44AB(e)- When provisions of section 44AD(4) are applicable

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

10 April 2023 So, now it must be clear to you about the reason of mandatory tax audit u/s. 44AB(e) for next FIVE years. (provided you declare less than 6% profit and total income be above taxable limit)

Patel

Patel (Querist)

10 April 2023 My total income doesn't exceed 2.5 lk ie not above taxable income.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

11 April 2023 Check your aggregate total income, if its below taxable limit, then tax audit u/s. 44AB(e) IT act, will not be mandatory.

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