audit under IT act

This query is : Resolved

anand (Querist)
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18 November 2007 We are doing daily trades both in Derivatives and Equities which easily touches the gross turnover of Rs 40 lacs in a day or two. Are these accounts are liable for tax audit for filing woth IT dept. If not required on what basis. kndly clarify.

Ankit Dangayach

Ankit Dangayach (Expert)
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18 November 2007 The transactions for the purchase and sale of F&O are completed without delivery of shares and securities. Contract notes are issued for the full value of the asset purchased and/or sold, but accounting is done only for the difference. The amount paid/received is this difference.
For applicability of tax audit under Section 44AB of the Income-Tax Act, 1961, on trading in F&O, the turnover should exceed Rs 40 lakh. Turnover in such types of transactions is the grossing up of the difference of all the trades entered, whether positive or negative. Premium received on sale of option is to be added. Difference on reverse trades is also to be considered. If the turnover so arrived is above Rs 40 lakh, then tax audit would be applicable.So You first See that whether your Total Turnover as per above criteria exceed RS 40 lakhs.

KAAPIL

KAAPIL (Expert)
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18 November 2007 If your total turnover is of difference then only tax audit will be applicable. I request you to clarify in yes/no. What Ankit has stated is to be verified at your end.

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anand

anand (Querist)
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22 November 2007 Yah the difference has not crossed Rs 40 lacs slab. Hence no tax audit.
Thanks for the clarification Mr Ankit and Mr Kabil