TMI BlogComputation of Turnover for the purpose of tax audit u/s 44AB - Speculation Business or Derivatives, futures, and options or Delivery based transactionsX X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions as per the Income Tax Act, 1961 alongwith the Guidance Note issued by the ICAI Speculation Business It means a transaction in which a contract for the purchase or sale of any commodity including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips. Thus, in a speculative transaction, the contract for sale or purchase which is entered into is not completed by giving or receiving delivery so, as to result in the sale as per value of contract note. In the case of an assessee undertaking speculative transactions there can be both positive and negative differences arising by settlement of various such contracts during the year. In such trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Speculative transaction Derivatives, futures and options Turnover = Aggregate of Positives Negatives, the difference amount will be the Turnover Turnover = Total of Favorable Unfavorable differences shall be taken as Absolute Turnover. Premium, if received in case of Options shall also form part of turnover Example 1 - For Speculative Business Transactions Qty Buy Sell Realized Turnover A 58 9,52,850 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 1,69,07,303 1,69,65,638 58,335 58,335 Aggregate of Positive Negative shall form part of turnover i.e., Turnover = ₹58,335 Example 2 - For Derivatives Futures Transactions Qty Buy Sell Realized Turnover A 58 9,52,850 9,59,435 6,585 6,585 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38 58,335 92,473 Sum of Net Profit 75,404 Sum of Net Loss 17,069 Absolute Profit 92,473 Turnover = Absolute profit i.e., Turnover = ₹ 92,473 For Intraday the same example 2 will be applicable. In case of Option , if premium is there then such premium is to add in Absolute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 2 - Premium received on sale of options is also to be included in turnover. However, where the premium received is included for determining net profit for transactions, the same should not be separately included regarding treatment of premium received. - Since the end result as per option (i) and (ii) will remain same. Full Text : Section 44AB - Audit of accounts of certain persons carrying on business or profession Income-tax Act, 1961 Manual - Audit of accounts of certain persons [Tax Audit] Manual - Meaning of term Speculative Transaction Manual - Losses in Speculation Business - Section 73 - FAQ - Frequently Asked Questions, TMI Short Notes , Experts comment, opinion Tax Management India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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