FNO Trading Section 44AD

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This discussion clarifies the applicability of Section 44AD for F&O traders with turnovers under £2 crore. It addresses whether traders can declare profits at the presumptive rate (e.g., 6%) even if their actual profit is higher. The conversation also delves into the correct method for calculating F&O turnover, confirming that a trade-wise calculation is the appropriate approach for tax purposes.

Yogesh Wadhwani

Yogesh Wadhwani (Querist)
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13 June 2021 As per my understanding after reading on section 44AD.

Business with a turnover of less than 2 crore can avail benefits
of sec 44AD. (Excluding commission, agency and plying).

I trade in FNO my turnover is around 1.5 crore,

Can I Declare my profit @ 6% i.e., 9 lakhs and pay tax accordingly.
Whereas my actual profit is around 20 lakhs.

What to do in such a case. Please Advise.

Thank you.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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13 June 2021 yes you can. please make sure that the turnover is calculated as per the guidance note on the tax audits.

Yogesh Wadhwani

Yogesh Wadhwani (Querist)
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14 June 2021 FNO Turnover calculation

Nifty MAY Bought Sold P/L : 25k P
Nifty MAY Sold Bought P/L : 10k L

Nifty MAY Contract Net P/L: 15k P

Nifty JUN Bought Sold P/L : 15k L
Nifty JUN Sold Bought P/L : 5k P

Nifty JUN Contract Net P/L: 10k L

So the Contractwise Turnover:

May 15k
Jun 10k
--------------
Total: 25k
--------------

OR a Tradewise

25k
10k
15k
50k
-----
55k
-----

Which one is correct?

Thank you.