Tax audit applicability for losses incurred in F&O business for a salaried person.

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This discussion clarifies whether a tax audit is necessary for a salaried individual who has incurred losses in their Futures & Options (F&O) trading business. The key factors considered are the individual's salary income, the turnover from F&O trading, and the amount of loss. The consensus is that for a turnover of ₹6.5 crore with a loss of ₹1.9 lakh, a tax audit is generally not applicable. The applicability might change if the turnover is below ₹1 crore, potentially requiring a check against Section 44AD(4) of the Income Tax Act.

harikrishna

harikrishna (Querist)

24 December 2021 Dear Sir/Madam, please provide a solution for this.
Salary income: 7.50 Lacs
Turnover of F&O: 6.5 Crore
Losses in F&O: 1.9 Lacs
Is tax audit applicable for the above case.
Will your answer differ if the turnover is below 1 crore.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 December 2021 As per the available figures, tax audit not applicable.
Hope the turnover 6.50 Cr is aggregate of absolute values of trades.
Yes, the answer may differ for turnover below 1 Cr.

harikrishna

harikrishna (Querist)

24 December 2021 Yes sir the turnover is the absolute values of profit & losses of the trades.
And thanks for the reply.
Even if the turnover is below 1crore the tax audit still does not apply right.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 December 2021 There it is required to check applicability of Sec. 44AD(4) of IT act, if any.

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