Tax Audit – Limits & Applicability, FnO cases
S-44AB of IT Act, 1961 (as amended through Finance Act, 2021)
LIMITS ARE AS UNDER:-
1. Business where turnover exceeds Rs. 1 Cr in any PY
Limit is Rs. 10 Cr where aggregate receipts/ payments in cash do not exceed 5% of said receipts/ payments
(both Conditions satisfy individually)
Note- non-account payee cheque/ bank draft is treated as cash
2. Profession where Gross Receipts exceed Rs. 50 Lacs in any PY
Opting for Presumptive Tax Provisions?
Audit Required if:-
1. Business Income Claimed to be lower than Profits deemed u/s 44AE/ 44BB/ 44BBB in any PY
2. Income from Business/ Profession Claimed to be lower than Profits deemed u/s 44AD/ 44ADA in any PY & TI > Basic Exemption
Limits will be as under:-
Business – S-44AD – Rs. 2Cr
Profession – S-44ADA – Rs. 50Lac
Dealt in F&O transactions but have no Idea about the applicability of Tax Audit?
Normal business turnover is based on sales & thus reaching the limit takes time.
[pt_view id=”14aacd06vd”]
But in F&O it reaches the limit easily as each lot is valued high, Limit is reached easily.
S-43(5) of the IT Act, 1961 has excluded transactions of F&O (Equity) from speculative transactions. However, the exemption is available only for equity.
F&O (commodities) are Speculative in Nature.
i.e. F&O (equity) income will be treated as Normal business Income
Any expense done in connection to this business will be allowed as an expense and can be claimed while preparing Tax computation.
For computing the T/O limit, the following things should be added:
- a. Profits from the trade
- b. Loss from the trade
- c. Premium received from the sale of Options
- d. In the case of Reverse Trade, the difference should also be added
(Limit as applicable in other cases discussed earlier)
NOTE: In the case of Delivery Based Transactions, Gains would be treated as Capital Gains.
Recent Posts
- CBDT to Display Foreign Assets & Overseas Income in AIS and Form 26AS
- ITR-1 vs ITR-2 vs ITR-4 for AY 2026-27: How to Choose the Right Income Tax Return Form
- Who Qualifies as a Relative Under the Income-tax Act, 1961?
- GST at 9: Nine Years of India’s Biggest Tax Reform – Achievements, Challenges & The Road Ahead
- Penalties and Prosecution Under the Income-tax Act, 1961: A Complete Guide for Taxpayers (AY 2026-27)
- July 2026 Statutory Compliance Calendar: Important Due Dates Under GST, Income Tax, FEMA, SEBI, PF/ESI & Companies Act
- ITR AY 2026-27: Complete Income Tax Compliance Calendar Every Taxpayer Should Follow
- Complete Guide to Salary Tax Benefits for AY 2026-27: Exemptions, Deductions & Perquisites Explained
- CBDT Compulsory Income Tax Scrutiny Guidelines FY 2026-27: Understanding CS-01 to CS-06 and When Your ITR Can Be Selected
- Advanced Income Tax E-Filing Guide for HNIs, NRIs, and Business Owners (AY 2026-27)