Option trading

Deepali Mittal (52 Points)

19 February 2023

is premium received on sale of options included for calculation of turnover in option trading

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (159788 Points)
Replied 19 February 2023

turnover-calculation-for-option-traders-to-determine-tax-audit

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (159788 Points)
Replied 19 February 2023

In a guidance note, the Institute of Chartered Accountants of India has said that options traders don’t have to include premium received on sale, while calculating the turnover for taxation purposes.

As per Income Tax laws, turnover for option trading is calculated by adding profit, loss and sale amount (premium received on sales) of all the trades done in a year.

This method of computation inflates turnover for options traders significantly and pushes the turnover over the Rupees Ten crore thresholds beyond which tax audit is mandatory. With the sale amount removed from turnover calculation, total turnover for options traders will come down and save many traders from mandatory audit requirements.

However, sale amount is to be omitted only when it has been already used to calculate profit or loss. It has been clarified that the Premium received on sale of options is also to be included in turnover. However, where the premium received is included for determining net profit for transactions, the same should not be separately included.

Deepali Mittal (52 Points)
Replied 19 February 2023

I have never filed an itr before because I had no income.
does that mean I come under presumptive assessment!?
also my turnover from options adding absolute profit losses is about 30 lakhs and I have a loss of 6.5 lakh do I need a tax audit!?

Eswar Reddy S (CFO- at NHTF) (56749 Points)
Replied 19 February 2023

Net positions should be added to arrive at turnover ( Profit + Loss ).

So premium will not be considered for turnover.

You may opt for Presumptive taxation

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