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

DIVYESH JAIN

DIVYESH JAIN (Querist)
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15 December 2021 Ok, Thanks for your reply sir

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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15 December 2021 You are welcome..

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