Looking for CA for audit and tax preparation related to stocks trading - Bangalore

VJAY

Well-Known Member
#32
Re: Looking for CA for audit and tax preparation related to stocks trading - Bangalor

well, i hope I can reduce your burden a bit here... :)
I think XRAY bro is more than CA is FTT(full time trader) :D
 

canikhil

Well-Known Member
#33
Re: Looking for CA for audit and tax preparation related to stocks trading - Bangalor

I think XRAY bro is more than CA is FTT(full time trader) :D
well then I hope you guys help me trade a bit as I normally go super long on equity :) so some advisory on F&O will be appreciated :)
 

XRAY27

Well-Known Member
#34
Re: Looking for CA for audit and tax preparation related to stocks trading - Bangalor

I think XRAY bro is more than CA is FTT(full time trader) :D
yes bro !!! :D ;)
 

comm4300

Well-Known Member
#35
Re: Looking for CA for audit and tax preparation related to stocks trading - Bangalor

Tarush, once the turnover crosses Rs 1 cr, then all this discussion is not required. You are compulsorily required to get the audit done. The audit in such cases are covered under section 44AB and is more expensive as Chartered Accountants can do only a limited number of 44AB audits whereas there is no limit on 44AD audits.
thanks. I did not know that there were two types of audit 44 AB and AD!

can you please explain the difference.
 

canikhil

Well-Known Member
#36
Re: Looking for CA for audit and tax preparation related to stocks trading - Bangalor

thanks. I did not know that there were two types of audit 44 AB and AD!

can you please explain the difference.
See actually section 44AD is a misnomer. All the audits are carried out under section 44AB only.

Clause (a) and (b) deals with audits wherein turnover exceeds Rs 1 cr (for businesses) and Rs 25 lakhs (for professions). In such audits, the income is not relevant. Audit is carried out on the basis of turnover itself.

In clause (d) audit carried out for businesses where turnover is below Rs 1 cr and profit from business is below 8% and total income is in excess of maximum exempted limit.

I am leaving out clause (c) as it is beyond the scope of our discussion here.

There are two major differences that arise on account of audit under these different clauses.

1. The impact on Chartered Accountant: A chartered accountant is governed by his professional ethics. Now ICAI has restricted a CA to perform not more than 60 tax audits in a year under clause (a) and (b) combined. However, there is no limit on number of tax audits one can sign under clause (d).

Though the above restriction is applicable to the CA, the impact of the same is borne by you. In case your turnover crosses Rs 1 cr, the CA will charge you higher audit fees as he can do only a limited number of clause (a)/(b) audits.

2. Impact on the assessee: The impact here is a major one and the import of the same is yet to be captured by stock trading community.

If you are covered under clause (a)/(b), then you are also required to comply with TDS regulations while making business payments. What it means is that if your turnover crosses Rs 1 cr, then you need to apply for Tax Account Number, and while making payments to brokers (brokerage) etc you need to deduct TDS, and deposit the same with Income-tax department within due dates and file TDS returns. However, if you are covered under clause (d), TDS regulations are not applicable on you.
 

canikhil

Well-Known Member
#37
Re: Looking for CA for audit and tax preparation related to stocks trading - Bangalor

Nikhil boss I had done options trading for a month last year but I incurred losses. I have a taxable salary income. Given your example I need to go for an audit but I am planning to pay 8% of my turnover as a tax flat. Now this is a real pain if I calculate turnover as per Zerodha its substantial but if I calculate as sum of all the difference taken as positive then the turnover is manageble . do we have any definitive answer ?

Also this year I will trade in my huf account which will have no income but for the trading so if my trading income is less than 2.5l I need not do audit, I think this is a good workaround for those small traders who want to escape audits...

I appreciate your efforts nikil...
Dear RK,

Not trying to convince for an audit. But my advice is simple when it comes to losses, get the audit done. Why pay tax when you didn't earn any gains! the losses that you can carry forward will help you mitigate future tax liability and the overall tax saving is normally 5-10 times of the cost of audit.

With regards to HUF, yes, if the income is below Rs 2.5 lacs, there wont be any audit trigger. However, this is subject to your turnover staying below Rs 1 cr. if the turnover crosses 1 cr, then audit is compulsory irrespective of the income or loss.
 

newuser_RK

Well-Known Member
#38
Re: Looking for CA for audit and tax preparation related to stocks trading - Bangalor

Dear RK,

Not trying to convince for an audit. But my advice is simple when it comes to losses, get the audit done. Why pay tax when you didn't earn any gains! the losses that you can carry forward will help you mitigate future tax liability and the overall tax saving is normally 5-10 times of the cost of audit.

With regards to HUF, yes, if the income is below Rs 2.5 lacs, there wont be any audit trigger. However, this is subject to your turnover staying below Rs 1 cr. if the turnover crosses 1 cr, then audit is compulsory irrespective of the income or loss.
Thanks nikhil.
For my case personally I day traded options for a month so turnover won't be high, and I am not planning to trade in individual going ahead and there not much of a loss too so I am not getting into audit thing. I would not have filed form4 return but for tj since my turnover would be in thousands so minuscule.
 

canikhil

Well-Known Member
#39
Re: Looking for CA for audit and tax preparation related to stocks trading - Bangalor

Thanks nikhil.
For my case personally I day traded options for a month so turnover won't be high, and I am not planning to trade in individual going ahead and there not much of a loss too so I am not getting into audit thing. I would not have filed form4 return but for tj since my turnover would be in thousands so minuscule.

Ohk. Then ensure that ITR4s is filed properly. and file the return before due date. :)
 

comm4300

Well-Known Member
#40
Re: Looking for CA for audit and tax preparation related to stocks trading - Bangalor

Ohk. Then ensure that ITR4s is filed properly. and file the return before due date. :)
my final question on this topic:

Tax scrutiny:

when does this happen.
are audit cases also pulled up for scrutiny.

what documents are asked for in this case.

throw some light on this issue please.
 

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