Answer

1. F

   Facts

   Under the ICAI Guidance Note on Tax Audit, F&O turnover is the total of the absolute values of profit and loss on each trade, not the contract value. After the 2022 revision, the premium on sale of options is not added separately.

2. P

   Provisions and law

   • Sec 44AB (now Sec 63)Tax audit if business turnover exceeds ₹1 crore, or ₹10 crore where cash receipts and payments are each within 5%
   • ICAI Guidance Note on Tax Audit under Sec 44AB (2022 revision)Method of computing turnover for derivatives and speculative trades
3. A

   Analysis

   If you made 300 trades with profits of ₹9,00,000 on some and losses of ₹12,00,000 on others, turnover is ₹21,00,000, though contract value may run into crores. This turnover decides whether tax audit applies. Use the broker's trade wise P&L to add absolute values.

4. C

   Conclusion

   1. 1Download trade wise F&O P&L from the broker
   2. 2Add the absolute value of each trade's profit or loss
   3. 3Do not add contract value or separate option premium
   4. 4Use the total as turnover for audit and ITR

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.