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)

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)

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)

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.