Tax audit
This query is : Resolved
12 July 2012
hi... i want to know if in speculation business negative turnover or loss exceeds rs. 1 cr. then tax audit is applicable or not...reply as soon as possible.... thank you
Hitendra Jain
(Expert)
12 July 2012
COULD YOU CLERIFY NEGATIVE TURNOVER ?
13 July 2012
means if in speculation business the difference between purchase and sale is got negative or we can say in such business one occur loss of 1 cr. or more then tax audit is applicable or not???
26 July 2025
Got it! Here’s a clear answer regarding **tax audit applicability in speculation business** when there is a loss or negative turnover:
---
### Tax Audit Applicability for Speculative Business (Section 44AB):
1. **Turnover definition for speculation business:**
* The **turnover** for speculation business is **the aggregate of the absolute values of the profits and losses and the premium received on sale of options**.
* Even if you have a **loss**, the turnover is calculated as the **sum of absolute values of all profits and losses**.
2. **When is tax audit applicable?**
* Tax audit under **Section 44AB** is mandatory if the **turnover of speculation business exceeds ₹1 crore** during the financial year.
* It **does not depend on whether the business made a profit or a loss**.
* So, even if you have a **loss exceeding ₹1 crore or a negative net turnover**, but the **aggregate of absolute profit and loss exceeds ₹1 crore**, tax audit is applicable.
3. **If loss exceeds ₹1 crore but turnover is less than ₹1 crore?**
* Tax audit is **not applicable** if the turnover (as explained above) is less than ₹1 crore, regardless of loss.
---
### To Summarize:
| Scenario | Tax Audit Applicability |
| --------------------------------------------------------- | ----------------------- |
| Absolute turnover (profits + losses + premium) > ₹1 crore | **Audit required** |
| Absolute turnover ≤ ₹1 crore, even if net loss > ₹1 crore | **Audit not required** |
---
If you want, I can help you with sample calculations or detailed guidance for your specific case. Just ask!
---
### Tax Audit Applicability for Speculative Business (Section 44AB):
1. **Turnover definition for speculation business:**
* The **turnover** for speculation business is **the aggregate of the absolute values of the profits and losses and the premium received on sale of options**.
* Even if you have a **loss**, the turnover is calculated as the **sum of absolute values of all profits and losses**.
2. **When is tax audit applicable?**
* Tax audit under **Section 44AB** is mandatory if the **turnover of speculation business exceeds ₹1 crore** during the financial year.
* It **does not depend on whether the business made a profit or a loss**.
* So, even if you have a **loss exceeding ₹1 crore or a negative net turnover**, but the **aggregate of absolute profit and loss exceeds ₹1 crore**, tax audit is applicable.
3. **If loss exceeds ₹1 crore but turnover is less than ₹1 crore?**
* Tax audit is **not applicable** if the turnover (as explained above) is less than ₹1 crore, regardless of loss.
---
### To Summarize:
| Scenario | Tax Audit Applicability |
| --------------------------------------------------------- | ----------------------- |
| Absolute turnover (profits + losses + premium) > ₹1 crore | **Audit required** |
| Absolute turnover ≤ ₹1 crore, even if net loss > ₹1 crore | **Audit not required** |
---
If you want, I can help you with sample calculations or detailed guidance for your specific case. Just ask!
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