08 July 2017
if a salaried person trade in f&o and his sale is 3.50 crore and incur loss then what will his turnover and what sale and purchase take in profit and loss A/c
08 July 2017
Guidance note of Tax Audit U/s 44AB issued by ICAI (Institute of Chartered Accountants of India). This Guidance Note at Point 5.14, part (b) guides about the calculation of turnover of derivatives, futures & options.
The turnover in such types of transactions is to be determined as follows: 1. The total of favourable and unfavourable differences shall be taken as turnover. 2. Aggregate of both positive as well as negative differences will be taken together to calculate turnover in case of derivatives, futures & Options transactions. Or in simple words both profits and losses will be added to calculate the turnover. 3. Premium received on sale of options is also to be included in turnover. 4. In respect of any reverse trades entered, the difference thereon, should also form part of the turnover.
For example:
If 3000 units (2 lots; Lot size1500 units) of futures of Tata Motors are bought at Rs. 400 and sold at Rs. 410, the positive difference of Rs.30,000 (10*3000) will be the turnover for tax purposes.
In case of options trade, suppose call of 2 lots or 3000 units of Tata Motors are bought at Rs. 140 and sold at Rs. 135 the turnover will be calculated in two parts. Firstly the loss (140-135=5) of Rs.15,000 (5*3000) will be negative difference and added to total turnover. Secondly the premium received on sale ie. Rs. 135*3000 = 40500 being premium received on option will also be added to turnover. So in this example of F&O trading total turnover will be:
Profit in Futures trade Rs. 30,000 Loss in Options trade Rs. 15,000 Premium received on sale of Options Rs. 40,500 Total Turnover Rs. 85,500
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