Audit applicability on F&O

F & O is considered as normal business.

1. You may opt for 6% under 44AD.
2. Audit is applicable even if it is less than threshold limit but it may not consider for ceiling on number of audits

F&O is normal business and specifically excluded from the definition of speculative business.
If this is the first time your filling the return for F&O, you may file it throught ITR 3 by giving the details of balance sheets and P&l. If you have already opted for 44ad in previous years then you have get it audited for the current year and automatically you will not be able to otp in again. for 5 years and also if total income exceeds basic exemption you have to get books audited. so consider the tax savings on the loss and audit fee required to be paid and you may opt to show 6% profit (though actually loss) and move on and avail the benefit of 44ad for coming years.

3. Audit is applicable

This is first time that the assessee has F&O. So what I understand is that if I give details of balance sheet & P&L & show loss then there will be no implications of tax audit as turnover is less than Thesehold limit. Right?

Yes exactly. Also the turnover to be considered would be 10 crores and not 1 crore.