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Calculating F&O turnover for tax audit

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Under the ICAI Guidance Note on tax audit, F&O turnover is the total of favourable and unfavourable differences, that is the absolute sum of profits and losses on each trade. Contract value is not turnover, and option premium is not added after the 2022 revision.

Provisions

Sec 44AB, Income-tax Act 1961 (now Sec 63, Income-tax Act 2025); Sec 43(5), Income-tax Act 1961

Analysis

Example: 200 trades with total profits of ₹6 lakh and total losses of ₹8 lakh give turnover of ₹14 lakh, not the ₹5 crore of contract value. This number decides whether a tax audit is needed. Keep the trade-wise working, because AIS may show larger figures that you will need to explain.

Close

  1. Download trade-wise P&L from the broker
  2. Add the absolute value of each profit and loss
  3. Report turnover in the ITR-3 schedule
  4. Keep the working for any query

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