You are liable to maintain your books of accounts if your annual profit from trading is more than \u20b92.5L or your trading turnover exceeds \u20b925L.<\/span><\/p>\n Regarding audit applicability, since all transactions are digital in the case of stock market trading, the turnover limit for audit applicability is \u20b910 crore. Hence, if your trading business turnover exceeds this limit, you must get a tax audit done.<\/span><\/p>\n First of all, books of accounts include documents and books used in the preparation of financial statements like the P&L statement and balance sheet. According to the Income Tax Act, these include journals, ledgers, cash books, and expense receipts of a business.<\/span><\/p>\n Generally, stockbrokers provide users with multiple reports such as Tax P&L reports, trade books\/order histories, holdings statements, contract notes, etc. These reports, along with your bank statements and business expense receipts, will help you furnish details and maintain your books of accounts.<\/span><\/p>\n For any business, a journal is a log of everyday transactions, while the ledger groups these transactions into different accounts or categories. Traders can use documents like bank statements, trade books, contract notes, and expense receipts to make journal and ledger entries. Note that different brokers may name their reports differently, but any report with trade-level data should help you out.<\/span><\/p>\n Lastly, a cash book is a record of cash transactions that come in and go out. This can be maintained using your bank statements.<\/span><\/p>\n These books of accounts, along with the tax P&L report from your broker, will help you fill in details of your balance sheet and P&L statement while filing your ITR.<\/span><\/p>\n Also remember, that these books need to be maintained for a period of six years from the end of the relevant assessment year, as the assessing officer may request them in case of a notice or scrutiny assessment.<\/span><\/p>\n Trading turnover is calculated by taking the total of the absolute value of profits and losses.<\/span><\/p>\n Absolute value means looking at the number without worrying about positive or negative signs.<\/span><\/p>\n For example, if you have three trades with profits of \u20b950 and \u20b930 in the first two and a loss of \u20b940 in the third one. In this case, your turnover will be \u20b9(50 + 30 + 40) = \u20b9120.<\/span><\/p>\n Zerodha’s tax P&L report mentions your intraday trading turnover in the ‘equity’ tab. For F&O, the individual turnover for options and futures trades is given in the F&O tab. Similarly, each broker provides this information separately.<\/span><\/p>\n To calculate your total trading business turnover, you’ll have to summate your intraday, futures, and options turnover.<\/span><\/p>\n If you have any tax queries, comment below, and we will get them answered.<\/i><\/b><\/p>\n The above questions are answered by Surbhi Pal from Quicko. This is for informational purposes only. Consult your tax expert for individualized advice.<\/span><\/i><\/p>\n \u00a0<\/p>\n","protected":false},"excerpt":{"rendered":" I understand that I must file an ITR 3 income tax return as I have trading income. However, while filing the form, I must choose whether I am eligible to maintain accounts and whether I am obligated to get an audit done. How do I know if this applies to me? You are liable to […]<\/p>\n","protected":false},"author":242540,"featured_media":381014,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[477],"tags":[845,844,846,843,806,847],"class_list":["post-381013","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-varsity","tag-audit","tag-books-of-accounts","tag-fy23-24","tag-itr","tag-trading","tag-turnover-definition"],"yoast_head":"\nIf books are required, are the trading reports provided by my broker enough?<\/b><\/h4>\n
How do I calculate the turnover of my trades? Which figure from my broker’s P&L statement should I use?<\/b><\/h4>\n