Total value of few F&O contracts cross the limit of 44AB i.e. Rs. 100 Lakhs. This is not good if a F&O trader is asked to go for audit on the basis of this trunover being value of future contracts. Future contracts are settled with the difference of price prevailing at the time of buy & sell. How to calculate Turnover of Speculation, F&O and Share Trading for the purpose of audit u/s 44AB. Please reply.
What is turnover for speculation, F&O and share trading for audit u/s 44AB?
Turnover or Gross Receipts in respect of transactions in shares , securities and derivatives should be determined in the following manner :
1. Speculative Transaction – In a speculative transaction, the contract for sale or purchase is settled otherwise than by actual delivery. Contract is squared by paying out the difference which may be positive or negative. The aggregate of both positive and negative differences is to be treated as “Turnover”.
2. Derivatives, Futures and Options :- In case of derivatives , turnover shall include:
• Total of Favourable and Unfavourable Differences
• Premium received on sale of options
• Difference in respect of reverse trade .
3. Shares- In respect of delivery based transactions such as purchase or sale of stock, the total value of sales should be considered as turnover provided the stock is held as stock in trade.