F&O audit eligibility checker
Three sections of the Income Tax Act can require an F&O trader to get a tax audit: 44AB (turnover over ₹10 cr), 44AD (profit below 6% of turnover under ₹2 cr), and the less-known 44AB(e) loss-year trap (income above exemption + F&O loss + prior 44AD opt-out). Enter your numbers to see which applies, with transparent reasoning.
Salary + F&O net P/L + any other income. Use a negative number if overall income is negative.
Sum of absolute realised P/L across all F&O trades. Not the contract value.
Positive for profit, negative for loss. e.g. -120000 for a ₹1.2 lakh loss.
You opt for 44AD by declaring at least 6% deemed profit instead of maintaining full books.
If you used regular books (not 44AD) in any of the last 5 AYs, answer Yes.
Estimate for your reference, not tax advice. Audit applicability depends on your full facts, prior years, and jurisdiction. Verify with a qualified Chartered Accountant.
The three audit triggers for F&O traders
The 44AB(e) loss-year trap explained
Section 44AB(e) is the clause that catches salaried traders who lost money on F&O. If your salary puts total income above the basic exemption limit (₹3 lakh in the new regime for FY 2025-26), and your F&O business shows a net loss, and you opted out of 44AD at any point in the last 5 assessment years, a tax audit is mandatory. Full explanation in the 44AB(e) loss-year trap guide.
The 44AB(a) all-digital exception: what it covers and what it does not
FAQ
Which section decides if I need an F&O tax audit?
Three sections can trigger it. 44AB(a) is mandatory once your ICAI absolute-sum turnover crosses ₹10 crore. 44AD applies if you are under the ₹2 crore presumptive limit but report actual profit below 6% of turnover, or a loss. 44AB(e), the loss-year trap, applies regardless of turnover if your total income is above the basic exemption limit, your F&O business shows a net loss, and you opted out of 44AD in any of the past 5 assessment years.
Does the all-digital exception mean I never need an audit?
No. The all-digital exception only raises the 44AB(a) threshold from ₹1 crore to effectively ₹10 crore when receipts and payments are at least 95% digital, which most exchange-traded F&O already satisfies. It has no bearing on 44AB(e). A trader with low turnover and fully digital transactions can still face a mandatory audit under the loss-year trap if they have a net F&O loss, income above the exemption limit, and a prior 44AD opt-out.
What is the 44AB(e) loss-year trap and who does it catch?
It catches salaried traders who lost money on F&O. If your salary and other income push total income above the basic exemption limit, your F&O business reports a net loss for the year, and you opted out of the 44AD presumptive scheme at any point in the last 5 assessment years, an audit is mandatory even at a small turnover. This is the trap that surprises people who assume audit only follows from a high turnover.
What turnover figure should I use to check 44AB(a)?
The ICAI absolute-sum turnover, the sum of your realised profit and loss across all trades and settlements, not contract value and not the figure some broker Tax P&L reports show before correction. Use the F&O turnover calculator to get the correct figure before running it through this checker.