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Audit u/s 44ab in case of f&o loss

Chetan Sarawagi (CA) (35 Points)

12 July 2019

Hi All,

Facts:

1. There is a loss from F&O transaction which is considered as a business loss and the turnover is less than 1 Cr.

2. Income from Salary is 10 Lacs.

3. Income from House Property 2.4 Lacs

Question:

Is Tax Audit u/s 44AB applicable.

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10 Replies

Akhil (Student CA ) (966 Points)
Replied 12 July 2019

tax audit not applicable...

Mrugashi Nene (student) (133 Points)
Replied 12 July 2019

I think, tax audit liability arises u/s. 44AB(e) of the act.

1 Like

sujithavasa (176 Points)
Replied 12 July 2019

tax audit is not applicable

Arun Garg (HDPE pipes buss) (29 Points)
Replied 12 July 2019

kindly add the loss and profit of the each transaction through out the year, it will become your turnover of the year. if it cross 1 crore than audit is mandatory and if turn over is below 1 crore then u have to show 8% of the turnover. as u have said there is net loss for all the transactions then you have to for income audit us 44AD

1 Like

rahul karke (92 Points)
Replied 12 July 2019

Tax audit definitely applicable if there is loss due f&o and income exceed threshold limit ..you can avoid TA by paying 6% of turnover

1 Like

Suresh Thiyagarajan (Student) (3986 Points)
Replied 12 July 2019

1. According to sec 44AB tax audit is mandatory if a person's gross receipts or T.O exceeds Rs. 1 crore during the PY.
2. Trading in futures and options (F&O) will be a business and any gains or loss from the above business should be reported under the head PGBP.
3. With respect to the applicability of Tax audit under sec 44AB, it is only the T.O or Gross Receipts that should be considered and profit or loss is of no consideration in here.
4. Hence in your case, since your T.O is less than Rs. 1 crore Tax audit u/s 44AB will not be applicable for you.
Please correct me if the above solution has an alternative view.

rahul karke (92 Points)
Replied 13 July 2019

Dear Suresh ji , Since individuals are cover under section 44AD so don't you think tax audit due 44AD will be applicable to the assessee as his having profit less than 6% and his total income exceeds maximum amount not chargeable to tax