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F&O in ITR 3 (Filing, Audit, Turnover calculation)

Tasmai Dave (29 Points)

07 December 2020

Hi,

I'm filing my ITR for AY 2020-2021.

I had done quite a few options transactions in the financial year and have incurred a loss cumulatively.

What would be the procedure for showing this in ITR 3? I'm filing for my professional income under 44ADA and have a salary too.

My questions are:

1. Where can I show this loss from options trading?

2. Am I liable to get audited?

3. How do I calculate my turnover from options? (To figure out if it's more or less than 1 crore.)

Any help in this regard would be highly appreciated.

Thanks!

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15 Replies

ayusmita (Tax consultant) (5885 Points)
Replied 07 December 2020

1. you can show it as business loss unless you trade say if only 2 to 3 trades
2.if you're income trunover cross 1cr you will
3.calculation depends upon
total favorable and unfavorable difference
premium received on sale of options
the difference in any reverse trade entered
then the expenses

so in my opinion just ask your broker to give you capital gain statement

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Tasmai Dave (29 Points)
Replied 07 December 2020

Thanks, @ ayusmita.

So from what I understand, if I buy an option with lot size 3000 at Rs. 110 and sell it at Rs. 100, my turnover would be 33,00,000:

10*3000= 30,000

and

1000*3000= 30,00,000

Is that correct?

ayusmita (Tax consultant) (5885 Points)
Replied 07 December 2020

Where's you get 1000

Tasmai Dave (29 Points)
Replied 07 December 2020

Oops, sorry. I meant

100*3000= 300,000

That would make my turnover 330,000 correct?

ayusmita (Tax consultant) (5885 Points)
Replied 07 December 2020

No that is not the trunover

But why you need to calculate trunover

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Tasmai Dave (29 Points)
Replied 07 December 2020

I want to know if it's above or below the 1 crore mark. That would help me figure out if I need an audit right?

ayusmita (Tax consultant) (5885 Points)
Replied 07 December 2020

Simply ask your broker to gives you capital gain statement of future and options trading for the year

Then difference the sale n purchase

And show in itr

Ask the. Broker is it includes the expenses too I mean sometimes they do which is wrong

If not deduct your expenses

The trunover of above is the summission of perimium and multiplication of lot value

ayusmita (Tax consultant) (5885 Points)
Replied 07 December 2020

Which platform you using for share trading

Tasmai Dave (29 Points)
Replied 08 December 2020

I use icicidirect. I got the transaction statement and the P&L statement from them.

ayusmita (Tax consultant) (5885 Points)
Replied 08 December 2020

Ask for capital gain statement

It will be easy for you to calculate

The difference between sales and purchase value will be your income which you have to show in your itr

In short period I can't tell you the calculation and same you may not able to understand

So saying

You have to take consideration all things to calculation

So it's easy for you to get from capital gain statement and then deducted the expenses and show in itr

You have to show the income that derived from sales and purchase trunover

For example of your above your trunover will be 630000

Where's as your income is negative

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Tasmai Dave (29 Points)
Replied 08 December 2020

I got the capital gain statement that shows how much profit or loss I had from each trade. However, with the calculation that you've mentioned for turnover, it means that my turnover will easily go over 1 cr as I've done 20-30 such trades.

ayusmita (Tax consultant) (5885 Points)
Replied 08 December 2020

Sir in trading trunover easily crossed to 25 cr when you trading in option and future that doesn't not considered as income or tax audit if you did not make profit income from it above 1cr or 1cr

And you saying in above you make a loss then no need of audit

Tasmai Dave (29 Points)
Replied 08 December 2020

Yes, the turnover is very huge in F&O especially in options. That's why I was wondering why I would need audit when my income isn't anywhere even remotely close to 1 cr. But when I read online the websites said that you need to calculate your turnover this way by adding premium value so I was wondering.