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Future & option related query itr

21 December 2015

sir, i am filing return of a individual of F and O , fav and unfav difference is around 11 lakhs loss is around 2 lakhs, so tax audit is applicable or not, if yes thn can we file return u/s 44ad i.e.8% of 11 lakhs but he also have a capital gain, how we show that in return

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CA Hariprasad Nayak (Chartered Accountant) (221 Points)
Replied 07 January 2016

Hi Narendar Singh,

Below is the extract of Guidance note on tax audit issued by ICAI (2014 version) while dealing with the threshold limit for 'Turnover' for the purpose of tax audit (Page 25)

"(b) Derivatives, futures and options: Such transactions are completed without the delivery of shares or securities. These are also squared up by payment of differences. The contract notes are issued for the full value of the asset purchased or sold but entries in the books of account are made only for the differences. The transactions may be squared up any time on or before the striking date. The buyer of the option pays the premia.

The turnover in such types of transactions is to be determined as follows:

(i) The total of favourable and unfavourable differences shall be taken as turnover.

(ii) Premium received on sale of options is also to be included in turnover.

(iii) In respect of any reverse trades entered, the difference thereon, should also form part of the turnover."

From the above, it is clear that the turnover has not exceeded in your case. Hope the above clarifies your first part of the question as to applicability of tax audit.

Your second part of the question is not very clear. Could you please eloberate?

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