Tax Audit Applicability on F&O | CA Rachana Ranade



In this video, I am going to talk about the Tax audit applicability for F&O. I am going to elaborate the turnover calculations for futures & options in very simplified manner with the help of different examples.

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What is covered?
0:00 Introduction
1:12 Applicability of Tax audit
2:16 Example for tax audit applicability – Futures
8:32 Example for tax audit applicability – Options
18:19 Tax rate & ITR applicability for F&O

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25 thoughts on “Tax Audit Applicability on F&O | CA Rachana Ranade”

  1. ICAI has recently issued new guidance note, & as per that the premium received on sale of option is not to be added again in turnover if it is already included in Net Profit calculation. Thus, in our example, the turnover will be Absolute value of Net gain or loss, which is column H. Hence turnover for option seller will be Rs. 3,000 (09:11 to 13:10) & turnover for option buyer will be Rs. 3,000 (13:11 to 18:05).

  2. You are great Rachna. Simply superb, I must say.

    I am poor in understanding accounting aspects.

    Kindly clarify in simple terms:

    I am a salaried person (7 lakh) having LTCG – short as well as long-term gains (3 lakh) from sale of shares.

    Without understanding the implications, I traded in FnO and incurred huge loss of 2.5 lakh last year.

    As understood, my earning shall be treated as earning from business income and it would be ITR3 that I have to file.

    Please advise:

    Whether, I shall be able to get benefit of 80C, Standard Deduction, 50000 on Bank Interest (boing senior citizen) etc under salary head or not, besides application of a fixed 15%/10% Capital gains tax from sale of shares
    OR
    Whether all amounts shall now be added up & I Tax shall be charged on full amount as if all income being income from business due to my additional F&O trading.

    Please HELP.
    Iam WORRIED.

    Regards

  3. What is need for tax audit or books of account for below case … Salary 10L . Loss in f n o 2l with turnover 18 lakhs . So just itr 3 is enough or creation of books of account and tax audit is needed

  4. its so complicated didnot understantd at all. so many of trades executed in a year difficult to calculate in your way. is not there an easy method? as the broker gives us the straight amount as option turnover. can we take that?

  5. Just to let everyone know. This is NOT how you calculate turnover. I am surprised a reputed CA can make such a mistake. No issues, as per new guidelines of ICAI released 2-3 years back, the method has been changed and now the turnover is just the sum of absolute amounts of profits and losses. Be careful.

  6. Which ITR has to fill for below condition for age below 60 Years

    1. Income from salary Govt Job, buying/ selling debt or equity mutual fund, buying/selling shares (LTCG/STCG), Dividend income from shares, buying/ selling ELSS mutual fund

    2. Income from part time pvt job, buying/ selling F&O, buying/ selling debt or equity mutual fund, buying/selling shares (LTCG/STCG), Dividend income from shares.

    3. Income from Business & part time pvt job, buying/ selling F&O, buying/ selling debt or equity mutual fund, buying/selling shares (LTCG/STCG), Dividend income from shares.

  7. Mam i can you please clarify me about usd/inr currency trading through zerodha , whether it falls in F & O category and how the losses will be treated and it can be carried forward for how many years?

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