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Audit of Speculation Business-Shares, Futures and Options Trading

Audit under section 44AB is required when turnover exceeds Rs. 1 crore. But in case of speculation business, shares trading and futures/options, turnover is determined in the following manner.

1) Speculation Business – The aggregate of both positive and negative differences is to be considered as the turnover.

2) Intra day trading of shares –  The aggregate of both positive and negative differences is to be considered as the turnover.

3) Delivery based trading of shares – Sale value or purchase value whichever is high is considered as turnover.

4) Futures – The aggregate of both positive and negative differences is to be considered as the turnover.

5) Options – Premium received on sale of options is also to be included in turnover.

Eg:-

PurchasesSales Difference (Profit or Loss)Trade 1 2,00,0002,50,000 50,000Trade 21,75,0001,50,000 25,000Total of differences considered as turnover75,000

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