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Turnover in case of day trading

Alpana (Consultant) (91 Points)

15 July 2011

Hi! What would be deemed to be the turnover for the purpose of 44AD in case of a day trader in both cash as well as F&O segment??

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U S Sharma (glidor@gmail.com) (21056 Points)
Replied 15 July 2011

the amount deducted / credited by bank towards margin + charges is the basis of calculating turnover for retail traders.

contract value is to be taken for institutional traders.

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CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 15 July 2011

Originally posted by : U S Sharma
	the amount deducted / credited by bank towards margin + charges is the basis of calculating turnover for retail traders. contract value is to be taken for institutional traders.

AGREED

PREMKKUMAR (RETIRED) (30 Points)
Replied 15 July 2011

According to Section 44AB of the Income Tax (IT) Act, 1961, tax audit applies if turnover exceeds the limit of Rs 60 lakh from assessment year (AY) 2011-12 (up to AY 2010-11 it was Rs. 40 lakh).

For calculation of turnover for tax audit, the aggregate amount of positive and negative differences arising from dealing in such transactions is the turnover for speculative transactions.

For F&O the above rule should be applied.

For non-speculative business, i.e., delivery-based transactions, the turnover is calculated as total amount of sales.

Ref: Capital Market magazine