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Accounts for fno trading

Lila (Job) (490 Points)

26 July 2018

Till last year, I have filed salaried return. This year I have FnO profit as well. So filing ITR 3. Now my queries are:

1. Do I need to maintain books of accounts (This year FnO profit above 2.5 lacs. However, last year no transactions).

2. If at all I have to maintain books of accounts, do I need to take into account my personal assets as well. There is a separate bank a/c for FnO transaction. So can I prepare considering only that statement.

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17 Replies

Lila (Job) (490 Points)
Replied 26 July 2018

Kindly reply on the above, incase someone has done that earlier..

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 26 July 2018

File ITR 4 & declare the F&O transactions u/s. 44AD (provided turnover below 2 Crs, & 6% deemed profit margin). No books required to be maintained.

Lila (Job) (490 Points)
Replied 26 July 2018

Is sec 44AD allowed for FnO transactions? If we follow that profit would be much lower than actual profit. Read at lot of places that it is not allowed for FnO

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 26 July 2018

It is eligible business for F&O transactions; but once opted....... you have to stick to it for 5 years, to avoid tax audit & books maintainance.

1 Like

Lila (Job) (490 Points)
Replied 26 July 2018

Ok Thanks.

So in case we want to opt out next year, as a penalty we cant choose the scheme again for 5 yrs. Is there anything else in this.

Lila (Job) (490 Points)
Replied 26 July 2018

Also, in case i decide to file return under normal scheme:

1. Do I need to maintain books of accounts (This year FnO profit above 2.5 lacs. However, last year no transactions).

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 26 July 2018

What is the turnover of F&O? As per broker's statement?

Lila (Job) (490 Points)
Replied 26 July 2018

Turnover in accordance with IT rules for FnO transactions is 52 lacs for this year. Last year no such transaction.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 26 July 2018

If you declare 6 % i.e. 3.12L as profits from F&O, no audit mandatory u/s. 44AD.....

Otherwise audit mandatory.....

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 26 July 2018

If you declare 6 % i.e. 3.12L as profits from F&O, no audit mandatory u/s. 44AD.....

Otherwise audit mandatory.....

Lila (Job) (490 Points)
Replied 26 July 2018

But audit is required only if turnover is above 1 Cr.

The reason we dont want to opt for 44AD is continuity required for 5 years. If we opt for it and lets say next year there is a loss or lower profit, at that time we will have get the accounts audited.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 26 July 2018

In your case, the audit u/s. 44AB is mandatory, when you do not declare 6% profits over F&O.

Lila (Job) (490 Points)
Replied 26 July 2018

This is the first year and we are not opting for 44AD. In that case regular provisions and limits should apply which is 1 Cr and there is no fixed percentage of profit to be declared in such case.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 26 July 2018

That is the interpretation arrived at after the amendment in sec. 44AD vide finance act, 2016; which is still debatable; and I partially agree to it until clarification obtained from CBDT.