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Tax audit applicability incase of loss in F&O.

07 August 2023

Turnover as per income tax method is less than 1 crore and having loss of ₹2lakh in F&O trading. so tax audit applicable or not if I do not want to opt section 44AD ? Can I carry forward loss by filing ITR 3 without audit ?

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6 Replies

sabyasachi mukherjee (27099 Points)
Replied 08 August 2023

Lets explain the provision of Sec 44AD
1.Eligible assesse -resident individual, resident Hindu undivided family or a resident partnership firm
2. has not claimed deduction under section 10A, 10AA, 10B,10BA , 80HH, 80RRB
3. SHOULD BE ENGAGED IN BUSINESS WHOLESALE TRADING, CIVIL CONSTRUCTION , OR ANY OTHER CIVIL CONSTRUCTION
A) PERSON CARRYING ON PROFESSION AS REFERRED TO IN SECTION 44AA(1)
B)PERSON EARNING INCOME IN THE NATURE OF COMMISSION OR BROKERAGE
C)A PERSON CARRYING ON AGENCY BUSINESS
D) A PERSON IN BUSINESS OF PLYING , HIRING OR ANY OTHER BUSINESS
4. TOTAL TURNOVER- RS.2 CRORES
5. ESTIMATED AT 8% PROFIT.

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Eswar Reddy S (CFO- at NHTF) (58259 Points)
Replied 08 August 2023

Audit is not applicable.

You may opt for 44AD and declare 8%

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (166294 Points)
Replied 08 August 2023

Yes, you could have carry forward the loss by filing ITR 3, without tax audit; but only if had you filed the ITR before 31.07.2023. Now loss cannot be carry forward.

4 Like

RAJA P M ("Do the Right Thing...!!!") (127911 Points)
Replied 08 August 2023

@ Sukhwani,

As per Your query the time limit of filing is ended on 31/07/2023 . After the date losses can't c/f.

But, In your case Audit not applicable and You can file ITR 3 without opting sec 44ad.

2 Like

Krishnamurthy B. (VP - S/w Architecture) (53 Points)
Replied 23 September 2023

Another option... Just get your ITR Audited under 44AB and carry forward your loss instead of foregoing it...

A 44AB audit will cost 15-18 K (that's my CA in Bangalore - will depend on your Auditing CA and where you live).

So, see how much F&O loss you have left to carry forward after CYLA setoffs against other incomes. If it is more than 45-50K, then above may be better. Else, you can forego that loss and file a late return, but check that there are no other consequences of filing the late return for your case... (Getting your ITR audited under 44AB and filing before 30-Sep will mean it is filed in time; so no consequences of late filing.)

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Suresh Kumar (Account) (403 Points)
Replied 24 September 2023

Originally posted by : Dhirajlal Rambhia
	Yes, you could have carry forward the loss by filing ITR 3, without tax audit; but only if had you filed the ITR before 31.07.2023. Now loss cannot be carry forward.