![]() ![]() ![]() Also, there is no need for an audit if you have only capital gains irrespective of turnover or profitability. If you are declaring them as capital gains or investments, there is no need to calculate turnover on such transactions. So if you bought 100 Reliance shares at Rs 800 and sold them at Rs 820, the selling value of Rs 82000 (820 x 100) can be considered as turnover.īut remember that the above calculation of turnover for delivery trades is only applicable if you are declaring equity delivery based trades also as a business income. It says:įor all delivery based transactions, where you buy stocks and hold it more than 1 day and sell them, the total value of the sales is to be considered as turnover. The article on, Section 5.12 of this guidance note has a guideline on how turnover can be calculated. One article of great help though is the guidance note on tax audit under Section 44AB by ICAI (Institute of chartered accountants of India, the governing body for CA’s). The method of calculating turnover is a debatable issue and what makes it a grey area is that there is no guideline as such from the IT department. Read below on how business turnover can be calculated – ![]() Turnover = Buy-side value + Sell-side value = 800,000 + 810,000 = 1,610,000/-īut it is not the contract turnover the IT department is interested in they are interested in your business turnover.Nifty goes to 8100, you square off the 100 Nifty.I am sure the first thing that came to your mind after reading turnover is contract turnover, i.e Note: The turnover value has been changed to 5 crores after the introduction of the Finance Bill 2020, effective from the FY 2019-2020 an audit is only required to be conducted if the turnover crosses the 5 crores limit. (This limit was extended to Rs 5 crores for FY 2019 – 20). Section 44AD – If the turnover is less than Rs 2 crore, and if profit less than 6% of turnover and total income exceeds basic exemption limit (this section applies only if person’s taxable income other than the loss from trading is more than the taxation slab) An audit is not required if turnover is less than Rs 5 crores but your total income is within the taxable limit of Rs 2.5lks.This is in the case of digital transactions, and stock market trading is 100% digital. Note, the Rs.5 Crore limit is applicable from the next financial year i.e. Rs 5 Crores mark – Turnover for the year crosses the Rs 5 crores.Your tax liability does not get affected by your turnover. Turnover is only to determine if a tax audit is required or not. Reiterating – the requirement of calculating turnover arises only when treating trading P&L as a business income (An audit is not required if you only have capital gains income irrespective of the turnover). To determine if an audit is required or not, we need to first determine the turnover of your trading business. In the previous chapter, we discussed briefly on tax audit, and when it is required if you are declaring trading as a business income. ![]()
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