Audit u/s 44AB of the I. T. Act

[Kishor Deshpande]

One of my client is dealing in shares. However, he is doing his share transactions on delivery basis, intraday basis and f&O basis. So, for the sack of consideration of turnover for the purpose of audit u/s 44AB  of the IT Act, how the turnover is considered for all the above mentioned three types of transactions.

[CAGOPALJI AGRAWAL]

Delivery based transactions would be taken into consideration based on sale and purchase prices while non delivery based transactions would be based on difference prices for the purpose of turnover.

[Anuj Gupta]

The delivery based transactions should be taxed as capital gains(short term or long term). However if the turnover is high then the ITO may even bring the same under PGBP. The intraday transactions shall be treated as speculative transactions and the net Sales shall be the turnover. For the purpose of F & O transactions the net total of all the gains and losses shall be taken as turnover.

AI Summary

Turnover under section 44AB: delivery by gross sales, intraday as speculative net sales, F&O by net gains. Computation of turnover for audit under section 44AB distinguishes transaction types: delivery-based transactions use aggregate sale and purchase consideration and are typically capital gains (subject to being treated as business if turnover is high); intraday trades are speculative with turnover as net sales; F&O/non-delivery transactions use the net total of all gains and losses as turnover.