Future and option income

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This discussion clarifies how to file income tax under Section 44AD when you have both business income and income from future and option (F&O) trading. It explains that F&O turnover is calculated differently, including all favourable and unfavourable differences and option premiums. The key is to ensure the aggregate turnover for both businesses does not exceed ₹2 crore to be eligible for presumptive taxation under Section 44AD, and the minimum profit is declared on the total turnover.

Mayank dave

Mayank dave (Querist)

09 November 2021 Dear sir,
I am filing my income tax under 44ad
this year I got income of rs 15 lacks in future trading
can i filed my buisness income(45lacks)+ future trading(15 lacks)=total 60 lacks under 44ad and show net profit of 8% of 60 lacks
kindly provide guidence

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

09 November 2021 What is your turnover in both the businesses?

Mayank dave

Mayank dave (Querist)

09 November 2021 EQUITY DERIVATIVES
F&O TRADING SUMMARY
A STT Paid (₹)=25257
B Other Charges (₹)=215773
C Net PurchaseValue (₹)=238373092
D Net Sale Value (₹) =241050072
E(D-C) total Turn Over 2676980

F Turn over of construction buisness= 4390563

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

09 November 2021 First of all ....
The turnover in case of F&O transaction to be computed as below:

(i) The total of favorable and unfavorable differences (Profit/Loss) shall be taken as turnover.
(ii) Premium received on sale of options is also to be included in turnover.
(iii) In respect of any reverse trades entered, the difference thereon, should also form part of the turnover.

So, check if the turn over of both the businesses in aggregate is below 2 Cr. If, yes, you can opt for presumptive assessment u/s. 44AD of the act.

Secondly, 6/8% minimum profit declaration is over Turnover and not over profits, as stated above.

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