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Audit of Speculation Business-Shares, Futures and Options Trading

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.

  5. Hi I have loss Rs 129k in Speculation ( intraday trading) do I need to get this audited by CA.

    • Rohit Pithisaria

      In speculation business, turnover is calculated by adding both positive and negative differences. So calculate profit from speculation and loss from speculation and sum them up to find the turnover and then compare it with the threshold limit.

  6. HOW TO PREPARE TRADING AND P/L A/C OF SPECULATIVE BUSINESS OF SHARES????……..

    • Rohit Pithisaria

      The following things will be part of your Trading account
      1) Sales and Purchase of shares in cash market
      2) Premium received and paid for options
      3) Net Profit from future and Net loss from futures

  7. hi, my delivery turnover excedded 1.10 coror and fno 50 lakhs and intraday 30 lakhs and my lossed would be
    1.5 lakhs and net income is 2 lakhs so net is 2-1.5= .50thousand can I have go for audit or simply file itr4

    • Rohit Pithisaria

      The turnover exceed the limit specified u/s 44AB so you are required to get your account audited.

      • No the turover what you mentioned is not actual turnover as per Intraday Turnover. Your turn over is just 3.5 lacs (i.e loss 1.5 and profit 2 lacs) , so you need not to go for audit under 44AB

        • Prateek Agarwal

          For delivery turnover the whole of sale or purchase is taken as turnover. so you have to get your accounts audited.

  8. Hi Friends,

    anyone can help me trading tax & scutiny

  9. My wife trades in F&O. Her turnover being less than 1Cr, is it correct to fill ITR 4S and paying 8% presumptive tax?

  10. Hi,
    Futures trading turnover < 1 Cr. Net loss Rs 1.5 Lacs.
    Total income from all sources is below taxable limit i.e. < Rs. 2.5 Lacs.
    Will audit be still required for carrying fwd loss?

    Thanks

  11. will tax audit be required in this case. 44AB or 44AD
    Future option turnover 50lakh
    net loss -15 Lakh
    Books are maintained.

    • Prateek Agarwal

      Because you are showing less than 8% profits, so you are required to get your accounts audited.

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