Is tax audit applicable in case of F&O transaction

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felix thomas (Querist)
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29 August 2021 would like to know the tax audit applicability of a resident individual having the following source of income for the AY 21-22
Business income
Non speculative loss- 1,00,000
Speculative profit- 20,000
Income from other sources- Interest from FD- 90,000

I would like to know whether i need to get my account audited u/s 44AB to carry forward the business loss.

Please note that i have not claimed any benefit under section 44AD in any of the preceding previous years even though i was eligible assessee and nor am i planning to opt for section 44AD during this PY as well. Kindly advice

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 August 2021 As your total taxable income is below the limit, i.e. maximum amount not chargeable to tax, tax audit not applicable

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felix thomas

felix thomas (Querist)
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29 August 2021 @dhirajlal rambhia
sir what if my total income comes to say Rs, 6,00,000 after considering the loss from futures and option. Still i would be not applicable for tax audit right as the limit u/s 44AB is 1 crore right?

The provisions of 44AB, what it says is that for persons whome 44AD(4) are applicable and the income exceeds the basic amount chargeable to tax then tax audit is required.

whereas 44AD(4) provides for any person who has opted to pay tax in any PY u/s 44AD(1) has shown a total income less than 8% of turnover, then such person shall be liable to audit if the sum exceeds the basic taxable amount.

However in my case since i have not opted for 44AD(1) in any of the PY hence 44AD(4) would be applicable right and only 44AB(1) will be applicable for computing whether tax audit is required or not. Which is the limit of 1 crore?

Is my view correct?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 August 2021 There are many professionals who have same opinion. Even ICAI has asked for clarification on the issue. But main issue is that the software is developed based on 'Deemed income' as mentioned in sec. 44AD; hence the such ITRs are not accepted without Tax Audit report. You may wait for any clarification/rectification from department.

felix thomas

felix thomas (Querist)
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29 August 2021 Thank you @ dhirajlal

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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22 September 2021 My Pleasure ...

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