LIVE GST Audit Course by CA Sachin Jain. Register Now!!

Applicability of tax audit

utsav (CA Final) (99 Points)

16 August 2019

Hi All,

Please help explain if tax audit is applicable for below situation ? And what income tax return should be filed ?

1) Turnover from share trading (delivery+intraday) is less than 1 crore.

2) Profit from share trading (delivery+intraday) is 3% of turnover.

3) No books of accounts is being maintained.

4) Assessee has income from salary which is eligible to taxation.

Reply
Follow
Share

7 Replies

Kapadia Pravin (17249 Points)
Replied 16 August 2019

File ITR3
show share trading delivery based as business income . Books of Account must. Or go for 44AD where minimum 6% profit of turnover is required to be declared. if 44AD ok then no Audit

show intra-day as speculation business.

Jaydeep pedhadiya (5 Points)
Replied 16 August 2019

If you claim Income less than deemed income i.e. less than 8%, than tax audit is applicable.
If you claim Income @ 8% as deemed income than the tax audit is not applicable under section 44AB.

Kapadia Pravin (17249 Points)
Replied 16 August 2019

share trading transactions are by cheque or digital mode only. And 6% applies and not 8%

1 Like

rama krishnan (12234 Points)
Replied 17 August 2019

there's no necessary for tax audit... file ITR 3 by filling requisite details..

1 Like

utsav (CA Final) (99 Points)
Replied 17 August 2019

Thanks for the responses. I have some further queries reading the responses:

1) If I show the delivery trades as STCG, then I'm getting a loss in my speculative income (intraday). Will tax audit be applicable for the speculation business since the turnover is under 1cr and the profit is also under 8% (actually it's a loss) ? I'm confused if this falls under tax audit requirement.

2) Also I don't maintain any books of accounts. I don't mind opting for presumptive scheme and showing income @ 8% of turnover, but it will only be a negative figure. Should I opt for presumptive scheme ? If yes, how to show profit with negative figure ?

3) Lastly, which ITR to be filed in my case ?

I basically want to avoid tax audit as it will only lead to more cost and time. But I also want to ensure my ITR and taxes are correct and as per statutory laws. Hence the confusion reading multiple IT sections. Thanks for the responses in advance.

utsav (CA Final) (99 Points)
Replied 17 August 2019

Thanks for the responses. I have some further queries reading the responses:

3) Lastly, which ITR to be filed in my case ?

RAMAKRISHNAN R (INCOME TAX OFFICER) (1736 Points)
Replied 17 August 2019

There's no necessity for tax audit. Intraday transactions is to be charged under speculative business and not under capital gains Turnover in speculative business to be computed by adding up the net profit and net loss (ignoring the symbols(+ / -). So turnover can't be negative. So if the turnover is greater than 1 cr but within 2 crores, then you can opt for 44Ad by showing 6% else audit under 44ab You can obtain financial statements, global position statement etc from your depository account holder and that will be your books of account in respect of speculative business