Tax audit - f&o trading + salary + cap gains + ot
This query is : Resolved
17 August 2013
Hi, I have the following income for the FY 2012-13.
Loss on F&o: Rs 15,000/- (turnover Rs 1,00,000/-)
Salary: Rs 5,00,000/-
Capital Gains: Rs 15,000/-
Interest: Rs 10,000/-
Dividend: Rs 5,000/-
Is tax audit compulsory in my case?
Can i show Rs 8000/- profit on F&O to avoid tax audit?
How to fill ITR IV in such a case as ITR IVS doesnot accomodate capital gains
Regards
Loss on F&o: Rs 15,000/- (turnover Rs 1,00,000/-)
Salary: Rs 5,00,000/-
Capital Gains: Rs 15,000/-
Interest: Rs 10,000/-
Dividend: Rs 5,000/-
Is tax audit compulsory in my case?
Can i show Rs 8000/- profit on F&O to avoid tax audit?
How to fill ITR IV in such a case as ITR IVS doesnot accomodate capital gains
Regards
18 August 2013
ITR 4 does have CS & OS page and you can fill up that page for capital gains.
As regards showing profit on F & O whether it is short term or long term. It is to be shown as capital gain or if you are doing on regular basis for less than 30 days then yes it is a business income but generally in F & O you do not take deliver of scripts and therefore the department is taking the view as speculation loss and the same can be adjusted only against profit and in that case no Tax Audit is required and you need show 8% profit.
As regards showing profit on F & O whether it is short term or long term. It is to be shown as capital gain or if you are doing on regular basis for less than 30 days then yes it is a business income but generally in F & O you do not take deliver of scripts and therefore the department is taking the view as speculation loss and the same can be adjusted only against profit and in that case no Tax Audit is required and you need show 8% profit.
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19 August 2013
Thank you Agarwal sir,
1) I am doing regular trading in FnO and hence would like to categorise it as business income.
2) I read somewhere on this site that, FnO trading on NSE is not "speculative".
3) If i have to show profit of 8% even if i have loss just to avoid the headache of maintaining of books and tax audit, i have to fill ITR 4s.
4) But since i have Capital gains also, is it okay if i fill ITR 4 and show 8% as profit.
1) I am doing regular trading in FnO and hence would like to categorise it as business income.
2) I read somewhere on this site that, FnO trading on NSE is not "speculative".
3) If i have to show profit of 8% even if i have loss just to avoid the headache of maintaining of books and tax audit, i have to fill ITR 4s.
4) But since i have Capital gains also, is it okay if i fill ITR 4 and show 8% as profit.
26 July 2025
Got it — here’s a clear breakdown based on your situation:
---
### Your income heads:
* **F\&O Loss: Rs 15,000 (Turnover Rs 1,00,000)**
* **Salary: Rs 5,00,000**
* **Capital Gains: Rs 15,000**
* **Interest: Rs 10,000**
* **Dividend: Rs 5,000**
---
### 1. **Is Tax Audit compulsory?**
* For business income (F\&O trading as business), **Tax Audit under Section 44AB** applies if turnover exceeds Rs 1 crore (FY 2012-13 limit).
* Your **turnover in F\&O is Rs 1,00,000 only, well below Rs 1 crore limit**, so tax audit **not mandatory**.
* However, you should maintain proper books if reporting as business income.
---
### 2. **Can you show 8% profit to avoid tax audit?**
* Section 44AD (presumptive taxation) allows declaring **8% (6% if digital transactions) of turnover as profit** for small taxpayers, avoiding audit & detailed books.
* But, **Section 44AD is applicable only if turnover is less than Rs 1 crore and business is eligible.**
* F\&O trading is considered business income but is sometimes excluded from presumptive scheme. This is debated, but generally, F\&O is treated as business income, not eligible for presumptive scheme.
* If you opt for presumptive scheme and declare 8% profit, you **cannot claim losses or capital gains separately** — you must declare this as total profit.
* Since you have **capital gains income**, you can still file that under capital gains section in ITR.
---
### 3. **Which ITR to file?**
* You mentioned **ITR-4S (Sugam)** does **not accommodate capital gains**. True — it only supports business income under presumptive scheme, salary, and other income.
* If you have **capital gains**, you need to file **ITR-3** (for individuals/business owners with income from business and capital gains).
* ITR-4 is for presumptive business income, but **does not allow you to declare capital gains separately**.
---
### 4. **How to show income in ITR?**
* Since you want to treat F\&O as business income and have capital gains, file **ITR-3**.
* Show business income (actual profit/loss on F\&O), salary, capital gains, interest, dividend, all in respective sections.
* No tax audit required if turnover < Rs 1 crore.
---
### **Summary & Recommendations:**
| Scenario | Advice |
| ----------------------------------------------- | -------------------------------------------------------------------------- |
| F\&O as business income with turnover <1 cr | No tax audit required, file ITR-3. |
| Want to use presumptive scheme & show 8% profit | Usually not applicable for F\&O trading. Avoid if you have capital gains. |
| Have capital gains & salary | File ITR-3 to accommodate both capital gains and business income. |
| Want to avoid tax audit by showing 8% profit | Possible only if presumptive scheme applicable, but F\&O usually excluded. |
---
---
### Your income heads:
* **F\&O Loss: Rs 15,000 (Turnover Rs 1,00,000)**
* **Salary: Rs 5,00,000**
* **Capital Gains: Rs 15,000**
* **Interest: Rs 10,000**
* **Dividend: Rs 5,000**
---
### 1. **Is Tax Audit compulsory?**
* For business income (F\&O trading as business), **Tax Audit under Section 44AB** applies if turnover exceeds Rs 1 crore (FY 2012-13 limit).
* Your **turnover in F\&O is Rs 1,00,000 only, well below Rs 1 crore limit**, so tax audit **not mandatory**.
* However, you should maintain proper books if reporting as business income.
---
### 2. **Can you show 8% profit to avoid tax audit?**
* Section 44AD (presumptive taxation) allows declaring **8% (6% if digital transactions) of turnover as profit** for small taxpayers, avoiding audit & detailed books.
* But, **Section 44AD is applicable only if turnover is less than Rs 1 crore and business is eligible.**
* F\&O trading is considered business income but is sometimes excluded from presumptive scheme. This is debated, but generally, F\&O is treated as business income, not eligible for presumptive scheme.
* If you opt for presumptive scheme and declare 8% profit, you **cannot claim losses or capital gains separately** — you must declare this as total profit.
* Since you have **capital gains income**, you can still file that under capital gains section in ITR.
---
### 3. **Which ITR to file?**
* You mentioned **ITR-4S (Sugam)** does **not accommodate capital gains**. True — it only supports business income under presumptive scheme, salary, and other income.
* If you have **capital gains**, you need to file **ITR-3** (for individuals/business owners with income from business and capital gains).
* ITR-4 is for presumptive business income, but **does not allow you to declare capital gains separately**.
---
### 4. **How to show income in ITR?**
* Since you want to treat F\&O as business income and have capital gains, file **ITR-3**.
* Show business income (actual profit/loss on F\&O), salary, capital gains, interest, dividend, all in respective sections.
* No tax audit required if turnover < Rs 1 crore.
---
### **Summary & Recommendations:**
| Scenario | Advice |
| ----------------------------------------------- | -------------------------------------------------------------------------- |
| F\&O as business income with turnover <1 cr | No tax audit required, file ITR-3. |
| Want to use presumptive scheme & show 8% profit | Usually not applicable for F\&O trading. Avoid if you have capital gains. |
| Have capital gains & salary | File ITR-3 to accommodate both capital gains and business income. |
| Want to avoid tax audit by showing 8% profit | Possible only if presumptive scheme applicable, but F\&O usually excluded. |
---
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