Traders who are trading in derivatives or day trading in equity are not taking the purchase/sale value but just the difference. And they don't post scripwise entries, just one entry irrespective how many scrips they trade.
For eg: Buying 100 shares of Reliance @ 1000 and selling them @ 1010, resulting Rs. 1000/- profit. Here the entry doesn't include the price of buy or sell, just the difference.
Broker a/c Dr. 1000
To Margin a/c Cr. 1000
Note: They don't pay Rs. 100000 when buying, just around 10%-20% of it's total value. So we can't take the whole contract value as purchase/sale value.
Here is my doubt. Without a clear purchase/sale value, how could one prepare trading account (in final accounts). I get that, as their turnover calculation has to go like this. But when preparing ITR, the trader is not liable to audit as his turnover is less than 1 crore. Entering the contract value under sale/purchase in ITR (P/L account), prompting that this case is liable to tax audit.
Couldn't figure out how to find purchase/sale value or what's the value has to be entered under Sale/Purchase.
Any help will really appreciated.
CAclubindia
