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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

About Rohit Pithisaria

Rohit Pithisaria is a Practicing Chartered Accountant from Jaipur and been in practice for more than 7 years. He is actively writing from very beginning of his professional career and is author of various tax articles and blogs.

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