For those trading in Derivatives, Futures & Options – How to Calculate Turnover to see if Tax Audit is applicable or not.

Guidance Note on Tax Audit u/s 44AB of the Income Tax, 1961 issued by ICAI helps us in understanding with how to calculate Turnover. Paragraph 5.14(b) deals with the same and the same is being reproduced for your reference.

“Such transactions are completed without the delivery of shares or securities. These are also squared up by payment of differences. The contract notes are issued for the full value of the asset purchased or sold but entries in the books of account are made only for the differences. The transactions may be squared up any time on or before the striking date. The buyer of the option pays the premia. The turnover in such types of transactions is to be determined as follows:

(i) The total of favourable & unfavourable differences shall be taken as turnover.
(ii) Premium received on sale of options is also to be included in turnover.
(iii) In respect of any reverse trades entered, the difference thereon, should also form part of the turnover.”

Scrip Buy Amt Sell Amt Profit/(Loss)
A Fut 500000 490000 (10000)
B Fut 500000 505000 5000

Turnover (10000+5000) = 15000

CA Anoop Gupta
Mobile 9999019123

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