Key Points
More than 4.5 million people traded in equity F&Os in FY22, and they need to mandatorily file their income tax return (ITR) in the current assessment year, irrespective of whether they are individuals with total taxable income below the 2.5 lakh exemption limit or are salaried individuals..
Trading in F&O is treated as business, which means even salaried individuals who dabbled in the derivatives market have to file tax returns in the more complicated ITR-3 or ITR-4, in place of ITR-1 and 2 applicable to them..
Taxpayers who have F&O trades to report are mandated to get a tax audit done by a CA under any of the following two conditions: turnover is over 10 crore or they opted out of presumptive taxation within five years of opting in..
Until last year, for options contracts, sale amount (premium received on sale) was also included along with profits and losses to calculate the turnover..
This will provide major relief to most individual retail traders as including sales amount in turnover calculation would easily push it over the 10 crore threshold of mandatory audit..
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