Futures & Options (F&O) Tax Audit

Looking for a Chartered Accountant who can handle your Futures & Options (F&O) Tax Audit and ITR filing with speed and accuracy? At Legal ADDA, we specialize in the audit of F&O trading clients and offer end-to-end compliance services for traders in the stock and share market. Whether you need an income tax audit, bookkeeping for F&O transactions, or online filing of Tax Audit Reports with ITR preparation, we provide it all — conveniently from a CA near you. Our one-stop solution covers everything from accounting and finalizing books of accounts (Profit & Loss A/c, Balance Sheet, etc.) to obtaining a DSC, Filing of the tax audit report (3CB-3CD) and filing your ITR. Get your F&O Tax Audit completed within 24 hours with our exclusive combo package — F&O Tax Audit + Accounting + Finalization + DSC + ITR Filing — all for just ₹14,000

Get F&O Tax Audit Package | In Just ₹14000/-

Futures & Options Tax Audit by Chartered Accountant (CA)

Every Futures & Options (F&O) trader whose turnover exceeds the specified limit is required to get their Books of Accounts (F&O transaction records) audited by a Chartered Accountant before filing their Income Tax Return for the financial year. In most cases, F&O traders easily cross this turnover limit because the value of transactions per trade is generally very high. As a result, many F&O traders fall under the Income Tax Audit requirement.

Under Section 44AB of the Income Tax Act, all individuals, businesses, or entities exceeding the turnover threshold must complete a tax audit through a Chartered Accountant (CA) and submit the Tax Audit Report on the Income Tax e-filing portal. At Legal ADDA, we provide the nearest Chartered Accountant (Tax Auditor) for your F&O Tax Audit for Financial Year 2024–25 (AY 2025–26). Connect with us today, and we will complete your accounting, audit, and ITR filing within 24 hours.

What are the Documents required for Futures & Options (FO) Tax Audit?

List of Documents required for Future and Options Tax Audit & ITR Filing.

1. Bank Statement (All Accounts)

2. Future & Options Trade Transactions Statement

3. Profit and Loss Account from DEMAT Broker

4. Capital Gain Report (Tax Report) From Broker

5. DEMAT & Trading Account Ledger Statement

6. Investment & Deduction Details

7. Other Income Details (Salary, Normal Business, Interest Income, House Rent)

8. Loan Statement (if Any)

9. PAN Card, Aadhar Card and Digital Signature (DSC if Available)

Who Is Mandatorily Required to Get a Tax Audit for Futures & Options Trading?

Any individual, person, business, or company meeting the conditions below is required to get their accounts audited by a Chartered Accountant (CA) as per the Income Tax Act. This audit is called a Tax Audit (Income Tax Audit).

For normal business, including Futures & Options (F&O) trading (considered as a regular business), the regular tax audit limits apply. The method of turnover calculation is different and unique for future and options transactions (check the turnover calculation method for F&O).

Tax Audit is compulsory for F&O traders or transactions in any of the following cases:

Turnover exceeds ₹10 crore
- If your F&O turnover (calculated as per prescribed rules) exceeds ₹10 crore in a financial year, a Tax Audit is mandatory, regardless of whether you have made a profit or a loss.

Turnover exceeds ₹1 crore but is up to ₹10 crore, with cash transactions exceeding 5%
- If your turnover is between ₹1 crore and ₹10 crore and your total cash receipts or cash payments are more than 5% of total transactions, a Tax Audit is mandatory.

Turnover up to ₹2 crore but profit less than 6% (Presumptive Scheme not opted)
- Under Section 44AD, if your turnover is up to ₹2 crore and your declared profit is less than 6% of turnover, and you have not opted for the presumptive taxation scheme, you must get a Tax Audit.

Note: A Tax Audit is mandatory if you meet any one of the above conditions.

For professionals such as Chartered Accountants, Doctors, Company Secretaries, Architects, Engineers, etc., the Tax Audit limit is ₹50 lakh turnover/sales/gross receipts.

Exemptions from Tax Audit for F&O traders (FY 2024–25)

In the following situations, a Futures & Options (F&O) trader (taxpayer/assessee) is not required to get a Tax Audit under the Income Tax Act:

1. Turnover up to ₹10 crore and at least 95% digital transactions (cash ≤ 5%)

If your total business turnover (including F&O, calculated as per prescribed method) is ₹10 crore or less, and both cash receipts and cash payments are 5% or less of the total transactions, a tax audit is not required—even if you have made a loss.
Note: In most cases, F&O trades already meet this 95% digital condition since they are done through banks or exchanges. But, if you adjust/consider expenses which is not paid by bank, then Tax Audit will required.

2. Turnover up to ₹1 crore

If your total business turnover is ₹1 crore or less, you are outside the scope of Section 44AB and do not need a tax audit—
except if you fall under the presumptive taxation rule (Section 44AD) where you declare lower profit and your taxable income is above the basic exemption limit (see Point 4 below).

3. Opting for Presumptive Taxation under Section 44AD (where applicable) and declaring profit of at least 6%/8%

If you are eligible to use Section 44AD and choose this scheme, you do not need a tax audit if:

Your declared profit is at least 6% of turnover for digital receipts, or 8% for cash receipts, and
Your turnover is within these limits:
- Up to ₹2 crore, or
- Up to ₹3 crore where cash receipts/Payments are 5% or less (effective from AY 2024–25 and also for FY 2024–25).

Important: Many experts consider F&O trading as an eligible “business” for 44AD (since it is not specifically excluded), so this benefit can be claimed. However, some disagree, so keep proper documentation if you rely on this option to avoid a tax audit.

4. Declaring profit lower than 6%/8% with Turnover up to ₹1 Crore, but total income within basic exemption limit

If you declare profit below 6%/8% under Section 44AD, you still do not need a tax audit if your total income is within the basic exemption limit:

Old regime: ₹2.5 lakh (for individuals below 60 years)
New regime: ₹3 lakh

This is allowed as per the exact wording of Section 44AD(5).

Tax Audit Applicability Chart

Sr	Scenario	Turnover	Profit	Cash/Digital	Audit Requirement	Notes
1	Turnover exceeds ₹10 crore	> ₹10 crore	Any	Any	Applicable	Audit mandatory regardless of profit/loss
2	Turnover ₹1–₹10 crore, cash > 5%	₹1–₹10 crore	Any	Cash > 5%	Applicable	High cash usage triggers audit
3	Turnover ≤ ₹2 crore, profit < 6% (Presumptive Scheme not opted)	≤ ₹2 crore	< 6%	Any	Applicable	If presumptive scheme not used
4	Turnover ≤ ₹10 crore, digital ≥ 95% (cash ≤ 5%)	≤ ₹10 crore	Any	Cash ≤ 5%	Not Applicable	Most F&O traders meet this digital condition
5	Turnover ≤ ₹1 crore	≤ ₹1 crore	Any	Any	Not Applicable (unless 44AD low profit & income > exemption)	Outside Section 44AB unless 44AD(5) applies
6	Opting for 44AD, declaring ≥ 6%/8% profit (within limit)	≤ ₹2 crore (or ≤ ₹3 crore if cash ≤5%)	≥ 6% (digital) / ≥ 8% (cash)	Cash ≤ 5% for ₹3 crore limit	Not Applicable	Eligible for presumptive scheme under 44AD
7	Profit < 6%/8% but total income ≤ basic exemption	Any	< 6% / < 8%	Any	Not Applicable	Exempt if income ≤ basic exemption limit

How to Calculate Turnover for Futures & Options (F&O) Traders

For F&O traders, turnover is NOT the total value of buy/sell trades.
Instead, turnover is calculated as the absolute sum of profits and losses from all trades, along with certain additional amounts.

Turnover Includes:

Absolute Profit & Loss
- Add up all profits and all losses separately (ignore the positive or negative signs) and then total them together.
- This means even losses are added as positive numbers for turnover purposes.
Option Premium Received
- The total premium received from selling options is included in turnover.
Differences on Reverse Trades (if any)
- For example, if you square off a trade on the same day with a difference in price, that difference is counted in turnover.

Formula:

Turnover = (Absolute Profits + Absolute Losses) + Option Premium Received + Reverse Trade Differences (if any)

Example – Step-by-Step Margin-Based Trades:

Futures Trades:

Trade 1: Buy ₹1,000 → Sell ₹1,500 → Profit = ₹500
Trade 2: Buy ₹2,000 → Sell ₹1,800 → Loss = ₹200

Turnover from futures = ₹500 + ₹200 = ₹700 (loss added as positive)

Options Trades:

Premium received from selling options = ₹1,200

Total Turnover = ₹700 (Futures) + ₹1,200 (Options) = ₹1,900

Tax Audit Charges for F&O (Package: ₹14000/-)

We specialize in Futures & Options (F&O) bookkeeping. We help clients get their accounts audited by the nearest available Chartered Accountant for Income Tax Audit and file their Income Tax Return (ITR) for F&O activities.

Our F&O Client Package includes:

Preparation of Books of Accounts with complete account finalization
Preparation of the final Profit & Loss Account and Balance Sheet
Preparation of Computation of Income Tax (with tax planning)
Tax Audit for F&O trading – including CA Audit Report (Form 3CB-3CD) filed on the Income Tax Portal
Preparation and filing of ITR for F&O clients

(The Combo also includes a Digital Signature Certificate, if required for the Tax Audit or ITR filing.)

Process of Futures & Options Tax Audit For FY 2024-25 (AY 2025-26)

Follow simple 4 steps to get your audit compliance fulfilled by expert CA. We are serving across India.

Step 1: Send Documents

Send us the required documents. The main documents are the Tax Report and Transaction Report, which can be obtained from your stock broker (or broker apps such as Zerodha, Groww, Angel One, Upstox, Kotak, etc.).

Step 2: Accounts Ready

Based on the documents and details you provide, we will prepare your Books of Accounts, Final Profit & Loss Account, Balance Sheet, and Computation of Income.

Step 3: CA Review/Audit

Our Chartered Accountant (specialized in F&O audits) will prepare a draft Tax Audit Report. We will share the draft report and final accounts with you for review. You can check the details and give us your approval for filing.

Step 4: Filing of Auditt & ITR

Once approved, we will submit the Tax Audit Report on the Income Tax Portal and file your ITR. Also, we will send you a physical courier containing your CA-signed Tax Audit Report, P&L A/c, Balance Sheet and Documents.

Futures & Options Tax Audit (CA) Service Near You

Futures & Options Tax Audit Consultant: Legal Adda

Service Location: Serving clients across India. Get a scanned copy of your Audit Report instantly, and receive the physical Audit Report via courier or post.

Audit Report Details: Duly signed and sealed by a Chartered Accountant on their official letterhead, with a valid UDIN for the Audit Report.

Address: 310, (403 & 412) Anand Milan Complex, Opp. Jain Derasar, Navrangpura Cross Road, Ahmedabad – 380009, Gujarat.

Service Offered: Futures & Options Tax Audit Consultation.

FAQs on Tax Audit for Stock Market Traders

I have a loss in Future & Options trading. Do I need to get an Income Tax Audit?

It depends on your turnover, profit percentage, and whether you opt for the presumptive taxation scheme under Section 44AD.

Tax Audit will apply if (any one condition trigger)

Your Turnover (Calculated as per F&O Method) is Higher than 10 Crore.
Turnover is ₹1 Crore to ₹10 Crore and Cash Payment/Transaction is higher than 5% of total transactions.
Tunover is up to ₹2 Crore and your declared profit is less than 6% of turnover (and you have not opted for presumptive taxation).
Your turnover is below ₹1 crore but your profit is less than 6%/8% and your total income is above the basic exemption limit.

If none of the above apply, a Tax Audit is not required—even if you made a loss.

Legal ADDA