Tax audit applicability incase of trading of shares

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This discussion clarifies tax audit applicability for individuals trading shares, futures, and options, particularly when losses are incurred. The key takeaway is that a tax audit is generally not applicable if the total turnover (sum of gains and losses from each trade) in futures and options is less than 1 crore. The total capital gain or loss, not the overall sale value, is the determining factor.

DIVYESH JAIN

DIVYESH JAIN (Querist)

14 December 2021 Dear Sir,

One of my client has a salary income and loss on sale of shares in Futures and options. Is there any tax audit applicability for a person who does trading in Future and options or Derivatives and has incurred losses.

Please help me in this matter.

Regards,
Divyesh Jain

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

15 December 2021 Turnover of futures and options ( sum of gains and losses of each trade) is less than 1 crore tax audit not applicable.

DIVYESH JAIN

DIVYESH JAIN (Querist)

15 December 2021 That means if the total capital gain from Future and options and Total loss from future and options must be less than 1 crore (Not the total sale value is considered for deciding tax audit applicability)

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

15 December 2021 Yes you are right.......

DIVYESH JAIN

DIVYESH JAIN (Querist)

15 December 2021 Ok, Thanks for your reply sir

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

15 December 2021 You are welcome..

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