Turnover-Audit Query/Option Traders(Re-

[mmca2006]

thanks for getting confused by me....

Well i am not CA or MBA in financial subjects...

1. Mr.X has loss (say 3 L) and his turnover is 50L (less than 2 CR).

2. Now in order to avoid tax audit cost which is around 15k, you are suggesting him to opt for choosing presumptive tax...well so one has to show profit of 6% ( or 8% ).. means he has to pay tax of minimum 10% of 6% of TO..

6% of TO comes around 3L , so you are showing profit of 3L where as you are in loss of 3L (this is called manipulation for me, this may not be manipulation by law, but by etics of doing business)

since X shows profit of 3L , X going to pay 30K income tax.

also X not carrying forward loss, which also has potential of saving another 30K (assume that X is in profit in any one of 7 upcoming years)


Please note that this is what my understanding about , i may be partly wrong, or whole wrong... where you are finding me wrong, correct me ( plz dont just tell that i am wrong)

It is always better to go for presumptive tax @8 % u/s 44AD not only to avoid Audit but also to avoid maintenance of Books of accounts....more over for 3 lac profit , tax will be calculated after considering basic exemption limit Rs 250000/- ... not straight @ 10% --Rs.30000/- It is just my view from my past experience ..

 

[vijkris]

Can anybody give a template of how to maintain book of accounts?

i.e, columns, rows etc.
software...?

thanks

 

[aja]

I have not made any such comments about calculation of turnover in case of options trading. This is just to clarify.

Smart_trade

It was headstrong's CA's view where he said(CA)that if premium side is not taken for TO calculation,then also no problem as its a grey area.They someone shared Zerodha's Taxation link.There are 2 ways of TO calculation mentioned.
Its upto traders wish how he calculates TO,is upto his wish,but tax should not be evaded ,says Zerodha Nithin

So the point is which way is correct when both CA's have different views.
At last a trader is going to suffer.

 

[traderniftybull]

It is always better to go for presumptive tax @8 % u/s 44AD not only to avoid Audit but also to avoid maintenance of Books of accounts....more over for 3 lac profit , tax will be calculated after considering basis exemption limit Rs 250000/- ... not straight @ 10% --Rs.30000/- It is just my view from my past experience ..

Yes, I also posted on similar lines, (in my post, now deleted)
And just for information, though exemption limit is 2.5 lakhs, but no tax is payable if total income is below 3 lakhs (without 80C etc deductions), now.

 

[mmca2006]

Can anybody give a template of how to maintain book of accounts?

i.e, columns, rows etc.
software...?

thanks

Google " compulsory books of accounts u/s 44AA" Regarding software I prefer TALLY but for Tally posting accounting knowledge is required.

 

[aja]

It is always better to go for presumptive tax @8 % u/s 44AD not only to avoid Audit but also to avoid maintenance of Books of accounts....more over for 3 lac profit , tax will be calculated after considering basis exemption limit Rs 250000/- ... not straight @ 10% --Rs.30000/- It is just my view from my past experience ..

Yes Bhai,

You know I'm always in loss i.e., <8%
But after adding my FD interest,I dont fall in audit case.That is what my CA doing for me from last few years.Hope he's not filing wrong return.

That what I am doing from last few years.Though I'm in a loss,I am declaring 8% of TO as my profit.
i.e,

Declaring 8% as a Profit+FD Interest=Income-Exemption Limit-80C=Tax to be paid on this amount.

Now paying a very small tax on that amount.I have not done audit since I started Trading.

@Marimuthu,Prince and Other friends-

Declaring 8%(now 6%) is not illegal or manipulating anythings.Its the Rule by IT Dept only.

Then when do we need to do audit?
We do audit when-
1)Turnover is above 1Cr(Now 2Crs)
2)You want to Carry Forward your loss.
If loss is say 4L and next year you make 8L profit,then you can adjust this 4L loss from a previous year.Then tax will be amost NIL after all deductions.

But if I dont want to do audit or I am a small trader then this 44AD is a Real Vardaan and a big relief.

 

[aja]

So,why all this confusion raised?
Well,With very due Respect to CANikhil-
He's a nice and supportive guy,he replied many of our queries.But due to his busy routine,he didnt answer few queries thus all this confusion raised as others started posting links from here and there.But they were not speaking from their own Filing Experience.

Also,CANikhil's thread had some flaw which I noticed-

Thats a nice thread by Nikhil Bhai.But first page itself is confusing.
Why?
Because he quoted 44AD limit there(which was 1 Cr),but did not cover the trading turnover of an individual with example.



Here he quoted 44AD limit only and on that basis he said Audit is required.

The fact is-
Case 2
Turnover is Below 1 Cr
Gains: Rs 50000 (assumed)
Salary: Rs 250000
Total=Rs 300000

may be someones trading turnover is just 5L(assumed)
8% of 3L=40000.

So,Audit not required at all.

He demonstrated 8% of 1Cr only,that is why that thread has repeated queries with lot of confusion.He ignored trading turnover of individual.

Dear Aja,

Yes. there is an error in the example to the extent that I should have also mentioned that I am assuming turnover large enough to make actual profit less than 8% of the turnover.

 

[aja]

In a real life,I dont have friends who doing Trading.I visited few CA's to take 2nd Opinion,but there also I found contradictory answers.Strange,There are many CA's w/o F&O trading knowledge.That is Why,I just wanted to know from some of you who are filling returns.

Thus,Declaring 8% or Ding Audit is upto the Individual's Choice.Nothing Illegal or against IT Rule.Both have their Pros n Cons.

 

[traderniftybull]

Yes Bhai,



That what I am doing from last few years.Though I'm in a loss,I am declaring 8% of TO as my profit.
i.e,

Declaring 8% as a Profit+FD Interest=Income-Exemption Limit-80C=Tax to be paid on this amount.

Now paying a very small tax on that amount.I have not done audit since I started Trading.

@Marimuthu,Prince and Other friends-

Declaring 8%(now 6%) is not illegal or manipulating anythings.Its the Rule by IT Dept only.

Then when do we need to do audit?
We do audit when-
1)Turnover is above 1Cr(Now 2Crs)
2)You want to Carry Forward your loss.
If loss is say 4L and next year you make 8L profit,then you can adjust this 4L loss from a previous year.Then tax will be amost NIL after all deductions.

But if I dont want to do audit or I am a small trader then this 44AD is a Real Vardaan and a big relief.

I hope that your point of concern, has been resolved and you dont need any help. Its good then. But even still you need any sort of help from me/us, you may post the details of your case.

BTW
I am not sure, whether if one carry forward his losses, then he can (is allowed to) set off his losses in one go
OR
he has to divide his losses in certain number of parts and to take set off one part each in each year.

 

[mmca2006]

I hope that your point of concern, has been resolved and you dont need any help. Its good then. But even still you need any sort of help from me/us, you may post the details of your case.

BTW
I am not sure, whether if one carry forward his losses, then he can (is allowed to) set off his losses in one go
OR
he has to divide his losses in certain number of parts and to take set off one part each in each year.

If you have sufficient profit to absorb your loss ,you can do it next year , else you can carry forward absorbed business loss up to 8 years