Re: Looking for CA for audit and tax preparation related to stocks trading - Bangalor
Dear Nikhil,
Nice to see your replys...I have some querry .all reference with traders
1.as per you who need audit of accounts?Please explain with one rough example
2.If we made loss this year/last year to carry these losses to next year need audit? :confussion:
3.if any trader income blw 2lac/2.5 lac he need to give IT return
4.please post one detailed post regarding IT return for traders ...who need it return?,what details he need to keep for return?etc....
5.is now days (e-days)need to keep contract notes of every trades?:confuse:
6.Is it brokers P/L statement not enough for file return?
1. Who needs an audit?
Lets continue with lemondew example.
Case 1.
Turnover 50 lakhs, gains Rs 50000, any other income: Nil
Audit not required as condition of income exceeding maximum exemption limit not fulfilled
Case 2
Turnover 50 Lakhs, gains Rs 50000, any other Income: Salary Rs 250000
Audit required as condition of income exceeding maximum exemption limit and profit less than 8% fulfilled
Case 3
Turnover 50 lakhs, losses: 5 lakhs, any other income: Interest : Rs 5 lakhs
Audit not required as losses will get set off against Interest income resulting in maximum income not exceeding maximum exempted limit.
Case 4
Turnover 50 Lakhs, losses 5 lakhs, any other income: interest Rs 2.5 lakhs, salary Rs 3 lakhs
Audit required as only Rs 2.5 lakhs losses are set off against interest and remaining losses are to be carried forward (set off against salary not allowed). So income exceeds exempted limit.
2. Audit required for carry forward of losses?
Audit is required if the conditions specified in section 44AD(5) are met
In case audit is not applicable, you need to just file ITR4 with losses provided for in the return and carry forward.
3. Ideally no. But advisable to file return even if the income is below exempted limit. helps in documentation of income.
4. I am preparing a detailed note. will be posted soon.
5. With regards to contract notes, I will always advise that you keep all of them on your own hard drive for ready reference. However, physical copy is not required. Income-tax Act as well as Information Technology laws allow for e-records.
6. In some cases broker's P&L is sufficient. But will depend on the specifics of each case. for eg, in case you are dealing with 2-3 brokers, you need to consolidate the data into a single P&L.
Also the ledger account that the broker maintains are from his accounting perspective. You need to reverse it to make it yours. For eg: what is shown as credit in broker's books is a debit in yours. But again it is subjective as each broker maintains different styles of reporting ledgers.
Having said the above, I agree with lemondew that 139(9) notices are issued but according to us that happens more on account of :
1. wrong interpretation of 44AD(5) by the department; and in come cases,
2. incorrect filings by the assessee.
So even where you are not getting hit by 44AD(5) audit, it is important that tax filings are done properly.