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Audit of Speculation Business-Shares, Futures and Options Trading

U.C Date : 25 Feb 2015

Audit under section 44AB is required when turnover exceeds Rs. 1 crore. But in case of speculation business, shares trading and futures/options, turnover is determined in the following manner.

1) Speculation Business – The aggregate of both positive and negative differences is to be considered as the turnover.

2) Intra day trading of shares –  The aggregate of both positive and negative differences is to be considered as the turnover.

3) Delivery based trading of shares – Sale value or purchase value whichever is high is considered as turnover.

4) Futures – The aggregate of both positive and negative differences is to be considered as the turnover.

5) Options – Premium received on sale of options is also to be included in turnover.

Eg:-

Purchases Sales  Difference (Profit or Loss)
Trade 1  2,00,000 2,50,000  50,000
Trade 2 1,75,000 1,50,000  25,000
Total of differences
considered as turnover
75,000

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22 comments

  1. S SAMBASIVA RAO

    I am doing Speculation business. please tell me how to calculate positive and negative i.e. weather day wise are commodity wise or transaction wise? If so My Positive figure is 80cr and negative figure is 70cr what is my turnover and how to prepare P&L A/C?

    • Prateek Agarwal

      Calculation is to be made tradewise. The word used here is favourable and unfavourable trades.

  2. Are the NRI’s attract tax for intraday or Delivery trade profits if they have done the trading out side india with Indian PAN.

    • Rohit Pithisaria

      Yes, you are require to file Tax Return in India even you are NRI as it is an income or loss generated in India.

  3. I had buy rs 3 cr share in intraday and sale rs 3.01 cr in fy 2013-14 but i had loss of 1.5 lac in fy 2013-14 would any audit will be done
    Please reply

  4. SIR, I INTRADAY TURNOVER IS THE DIFFERENCE BETWEEN THE PURCHASE VALUE AND SALE VALUE OF SHARE??

    • Rohit Pithisaria

      Calculate profit from intraday trading and then calculate loss from intraday trading. Sum of total profit and total loss will be treated as turnover for intraday share trading.

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