Turnover in case of Futures and options

Hi, I'm CA Aakarsh Jain. Turnover in case of Futures and Options is calculated by adding the profit and loss absolute value plus option premium.

If you need any detail advice and want to talk to me for full understanding then please check your inbox, I am leaving the details there.

Many people are misguided in case of audit in Futures and Options but I have dealt it earlier and know when and only when the audit is required. In most of the cases audit is not required but there are different criterias to check.

But Sir, why we need to add the option premium to the turnover? 

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In case of futures we calculate turnover the same way we do for speculation

in case of options turnover is the aggregate premiums on selling side

If you trade options and futures, the tax authorities consider it a business, which is why your F&O income is like business income. So, your F&O turnover is nothing but the amount calculated after taking into account all the profits and losses in a financial year.

For futures contracts, turnover is calculated in absolute terms, and it is nothing but the absolute profit or loss you make trading futures in the financial year. So, for futures, suppose you had to calculate the turnover of a single lot. It would be the difference obtained after subtracting the purchase value from the sale value, multiplying each value with the number of units in the lot.

On the other hand, for options, you calculate your turnover by adding the premium value to your absolute profit/loss. However, if you use a leading broker like IIFL Securities as your trading partner, your broker will calculate your turnover and have it ready for you.

 

https://www.indiainfoline.com/knowledge-center/derivatives/how-to-trade-in-futures-and-options