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Question ID : 41151


Hello members, My client is a salaried person and also borne loss of Rs.7.00lakhs from Derivative transactions on a turnover of Rs.14lakhs (turnover arrived considering sum of positives and negatives in trade). As per section 43(5), this is non-speculative business. But other than business loss his Total Income(salary after deduction) is less than the maximum amount not chargeable to tax (i.e. below Rs.2.50lakhs). So, My question is: Whether to set off and carry forward the loss of Rs.7lakhs, tax audit is mandatory? or whether I can file the return simply by showing loss from business and If yes ,then can the same be carry forward? Can loss from F&O be set off with Capital Gains?

Posted by JYOTI MAHAJAN on Sep 21, 2021

Filed Under AUDIT

Answer ID : 81333

Loss from business cannot be set off against salary income per section 71(2A). Tax audit is not mandatory since turnover for 44AB , in your case, is Rs. 1.40 lakhs only. Show loss as such and file the return. Loss can be carried forward. F & O loss can be set of with capital gains in the same yea. But c/fd F &O loss cannot be set off against capital gains.

Posted by B.CHACKRAPANI WARRIER on Sep 23, 2021
Answer ID : 81339

Tax audit is not required as income is less than threshold limit specified under section 44AB. Return can be filed simply by showing Loss from the transaction. Loss from non-speculative derivative transactions can be set off as business loss against any other head off income except salary. If loss carried forward to next year, it can be set off against business income only.

Posted by CA. chunauti dholakia on Sep 23, 2021