Is a tax audit required for income earned from trading?
Taxpayers earning income from equity intraday and F&O must report it as business income in their ITR (Income Tax Returns).
A tax audit is required if one of the following conditions are fulfilled:
- Sales/ gross receipts/ turnover for a financial year exceeds Rs. 1 crore.
- Sales/ gross receipts/ turnover for a financial year exceeds Rs. 10 crores, if cash receipts are limited to 5% of sales/ gross receipts/ turnover and cash payments, are limited to 5% of aggregate payments.
- Income earned is reported as business income.
A tax audit is not required if you have only capital gains (and no losses), irrespective of turnover or profitability.
Payments via cheque and bank draft are considered as a cash payment.
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