Discussion on section 44AD of IT Act

[DSM]

ST,

It's each trade as told by my CA... (and a view that even IT would take as it is beneficial to the dept) But this is just my/my CA's view. There could be different interpretations....

Turnover = Sum of Profit + Loss that is clear now.What is still not clear is whether this sum of profit plus loss is computed on profit/loss of each trade and then summed up or done on scrip wise and settlementwise ( zerodha backoffice calculates on settlement wise/scripwise and not tradewise...but that is subject to interpretation and no clear view ( even ICAI is ambiguous on it ) .We should ask zerodha to give us turnover based on both basis.If we are below the limit in both we are on a sure wicket.

Smart_trade

 

[Smart_trade]

ST,

It's each trade as told by my CA... (and a view that even IT would take as it is beneficial to the dept) But this is just my/my CA's view. There could be different interpretations....

That appears to be a correct view...but how to calculate loss/profit on per trade basis unless the broker backoffice gives that data is going to be very labourius task for traders.Many CAs I talked to also hold the view that it is to be done tradewise and not settlement and scrip wise.

Smart_trade

 

[lemondew]

ST da,

After a lot of search I figured out CA who is willing to audit for minimum amount of 5K if the transactions in FO are limited and turnover is not very high and we have not done a profit of 8% turnover. Hopefully this should help all retail traders to do an audit and stay away from unnecessary tax non compliance as we know retailers who do options dont make 8% turnover. Futures they might be making but most are making losses.

Do you think I can invite him here for any clarifications to provide. It would be good if seniors like you / pratapvb and all also involve.

That appears to be a correct view...but how to calculate loss/profit on per trade basis unless the broker backoffice gives that data is going to be very labourius task for traders.Many CAs I talked to also hold the view that it is to be done tradewise and not settlement and scrip wise.

Smart_trade

 

[Smart_trade]

ST da,

After a lot of search I figured out CA who is willing to audit for minimum amount of 5K if the transactions in FO are limited and turnover is not very high and we have not done a profit of 8% turnover. Hopefully this should help all retail traders to do an audit and stay away from unnecessary tax non compliance as we know retailers who do options dont make 8% turnover. Futures they might be making but most are making losses.

Do you think I can invite him here for any clarifications to provide. It would be good if seniors like you / pratapvb and all also involve.

If he is willing to help our members by answering questions, doubts then he is most welcome. He can start a new thread and answer tax related questions there.

Smart_trade

 

[ajayca9]

Hi,

I can clarify any doubts relating to taxation of equity and F&O transactions.

Beside the the charge mention is indicative for issue of report in 3CD form of the Income Tax Act, 1961. There is another requirement of maintaining books of account u/s 44AA which cost extra. This can not be done by CA who is doing audit as it not allowable under code of ethics of Chartered Accountant Act 1949. However anyone is willing I can suggest experience accointant in this subject.

ajayca9

 

[ajayca9]

The discussion on forum tantamount to advertising and not allowed as per rule of ICAI. You can mail me specific queries.

AJAY

 

[mmca2006]

The discussion on forum tantamount to advertising and not allowed as per rule of ICAI. You can mail me specific queries.

AJAY

I beg to differ here , I don't think any discussion is same as advertisement . Of course as per ICAI , advertisement for professional work is strictly prohibited , Discussion about a provision of income tax Act is not soliciting professional work.

 

[lemondew]

Being mostly trading on options I dont ve to worry about per trade and so on. As I ve to just take the entire sell side. Any ways doing an audit would be much better as charges arent too high and would be safe and not worry about how much turnover is settlement wise or tradewise am I in border or crossing 1 cr and so on.

That appears to be a correct view...but how to calculate loss/profit on per trade basis unless the broker backoffice gives that data is going to be very labourius task for traders.Many CAs I talked to also hold the view that it is to be done tradewise and not settlement and scrip wise.

Smart_trade

 

[hupadhya]

The below link(remove spaces to view) is ICAI Guidance note on Tax Audit which clarifies how to calculate turnover for both intraday, derivatives & delivery based for Audit purpose. Please refer page no.25 (topic 5.14).

http: //220.227.161.86/ 34728gn-taxaudit-dtcicai. pdf#sthash. AWNkQBlG. dpuf

 

[lemondew]

One more thing I was told is that if I do audit

Apart from this the profits earned can be offset against the business expenses incurred.

office rent, telephone, internet, computer bills plus staff.

Does it mean suppose I make profit of 1 lac in a year and show business expenses of 1.25 lacs. Can i show it as loss of 25 k and carry forward the loss?