Dear expert please guide with the relevant section number.
How to derive the turnover of the assessee in case of trading in futures and options.
As seen in different articles, the turnover is usually the profit earned during the year from trading in F&O. But the explanation regarding the same couldn't be found in the ACT. Please specify the relevant section and clause under Income Tax Act.
The meaning of turnover for in case of transactions in Futures and Options of shares is not defined under the I T Act.
In case of derivative trading-Futures and Option- the difference on which the contract is purchased or sold is important. Although the value of contract is number of contract multiplied with the shares price , yet what is actually given or taken is differential amount in contract.
For the purpose of determining the turnover in case of future and options, based on the guidance note of ICAI , following items should be considered to constitute turnover:-
- The total of positive and negative differences , plus
- Premium received on sale of options is also to be included in turnover ,plus
- In respect of any reverse trades entered, the difference thereon. But not the total value of contract.
Refer:: 2014/11/Guidance-Note
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