ITR-3 Presumptive 44AD + Business income - Requirement of Audit

👉 Audit is required

✔ If total income exceeds exemption limit

✔ Because trading profit is < 6%

👉 Audit not required

✔ If total income is below ₹2.5 lakh

👉 Tuition under 44AD remains unaffected.

Thank you very much sir. What is exemption limit? Is it total income - 2.5 lakhs? or something else?

1) Intraday trading is to be reported as speculative profit under Business Income.
In your case it is a loss and you can carry it forward for 4 years

2) Short term stock trading profits (provided they are delivery based) are to be reported as capital gains

You do not need to get your books audited as long as you are within 1 crore threshold of your income and reporting presumptive income which is not less than requirements of Sec 44AD.

Thank you very much.

If intraday is shown under speculative business income, do I have to submit the balance sheet etc.?

What if my total income exceeds the basic exemption, do I require auditing?

If I dont want to show it under normal business income can I show it in the presumptive head?

Combining 44AD with stock trading complicates the audit test. Here is how it works:

The 44AD election exempts your business income from audit if turnover is under 3 crore and profit is 8% or more of turnover. But stock/equity/F&O trading income sits OUTSIDE 44AD ,  it has its own audit threshold under Section 44AB.

Key rule: You cannot club F&O income inside your 44AD presumptive declaration. They are taxed differently:
- 44AD business income: goes in the presumptive section of Schedule BP
- F&O income (non-speculative): goes separately in Schedule BP with actual books
- Intraday (speculative): goes in Schedule BP as speculative business

Audit trigger for F&O:
- Turnover above 10 crore: mandatory audit
- Turnover 1-10 crore with profit less than 6% of turnover: audit required
- If turnover is below 1 crore with loss or profit below 6%: audit required unless you declare profit at 6% or more

If you mix up the two streams in your return, you risk an audit trigger notice from the CPC. Keep them in separate schedules and compute turnover (absolute sum of profits and losses for F&O) separately.

This [F&O and intraday trading tax guide](https://taxgarden.in/blog/fno-intraday-trading-tax-itr-audit-india) explains the turnover computation method and audit threshold calculation.

Thank you. The intraday loss is shown under 65 in P&L which does not require to keep books. Here the turnover is 19025 and the loss is 4123. The ITR-3 form allowed to enter negative number under profit line of 65.