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Tax Audit U/s 44AB for Day Trading

Amit Kumar Agarwal (Practice) (132 Points)

03 September 2009

A person is engaged in Day Trading of shares. This is treated as Speculative Business. Is this person required to get his account audited if turnover exceeds Rs. 40,00,000.00? How will this amount of Rs. 40,00,000.00 be calculated?

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11 Replies

Debashis Mandal (Business & Tax Consultancy) (341 Points)
Replied 03 September 2009

Respected Amitji,

U/S - 44AB of Income Tax Act.1961 if any business gross sales, Turnover, receipts are above Rs.40 lacs then this accounts are to be Audited under Income Tax Act. ie Tax Audit.

Thanks

Debashis

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Amit Kumar Agarwal (Practice) (132 Points)
Replied 04 September 2009

Actually I want to know what is included in this Forty Lacs in case of day trading- is it difference of purchase and sale price of shares or is it net sale price of shares?

VARUN (PCC STUDENT) (523 Points)
Replied 04 September 2009

it includes gross receipts ......

Amit Kumar Agarwal (Practice) (132 Points)
Replied 04 September 2009

What is gross receipt of share trading business?

VARUN (PCC STUDENT) (523 Points)
Replied 04 September 2009

sale price of shares ...

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Debashis Mandal (Business & Tax Consultancy) (341 Points)
Replied 05 September 2009

Dear Amit,

Here r 2 things - Gross Receipts or sales

Sales means the Shares which u sold to square off the Transaction & Gross Receipts r the total amount u taken as margin or profit, so conflect is here, Law has not so clarified about the term of sales, so far i studied, so it can be taken from case laws or some assumptions may be possiable, as per law the word used is sales or turnover not amount realised, so from my point of view it is ur sales value & not the margin amount u recd.

Debashis

Dharmesh k. Dubey (Student) (188 Points)
Replied 15 September 2009

hi amitji ,

here the net difference between the purchase and sales price of shares wd been taken for calculation of turnover , nd this mit ur gros receipt also0.

santhosh (CA) (636 Points)
Replied 15 September 2009

Yes Dharmesh is Right !

Debashis Mandal (Business & Tax Consultancy) (341 Points)
Replied 15 September 2009

Sorry I was wrong, Now i am attaching some of my downloading for your reference

Attached File : 20 tax audit for share trading.doc downloaded: 938 times

C A GROUP COACHING (COACHING ) (2487 Points)
Replied 24 September 2009

For shares trading ( Delivery or F & O or Day Trading ) Tax audit becomes applicable only if the net Income exceed (Difference to Sales /Purchase ) exceeds 40Lkhs. & Not your trading T/O else every person dealing or trading in shares would have been in Audit.