Has anyone done a tax audit for showing a loss in derivative trading in India?

Has anyone done a tax audit for showing a loss in derivative trading in India?

Well, this is one of many absurd tax laws that we have to bear with. Audit needs to be done if profit in FnO(considered as business income ) is less than 8 % of turnover , turnover being less  than 1 crore.
If you file return declaring loss / profit < 8 % and fail to do audit , your return may be rejected and you might get a notice from the IT dept. I am no expert in legal aspect of  taxation , but I read somewhere that the penalty for non-compliance is 0.5 % of turnover subject to a max of 1.5 lac( sec 271B).

The cost of audit can be anywhere between 8k-20k . This estimate is based on quotes from CAs when I needed it. Get familiar with all the concepts and try convincing the CA that its a fairly simple audit , not involving more than a couple of days work.
You will need a digital signature ( your CA should get it done for you ) for filing ITR. For calculating assets, liabilities you will need to furnish your CA your bank statements , Other investment statements. For  turnover , profit/loss  you will need statements from your broker. Some broker provide a consolidated statement showing turnover and profit/loss .. otherwise you will need Statements that can help you calculate the same.


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