F&O traders: the four things most online guides get wrong about your taxes.

It depends on how the ₹80L is computed. If that is the absolute sum of all settlement P&L (the correct CBDT method), you are below the ₹2 crore threshold for non-presumptive businesses and do not require a tax audit under section 44AB — provided you are not subject to any other audit trigger. However, you must still file ITR-3, declare the business loss and maintain books to carry it forward. If the ₹80L figure represents only gross profits (ignoring losses), the actual absolute turnover may be higher and the threshold analysis changes.

No. Business losses (including non-speculative F&O losses) cannot be set off against income from salary under section 71. However, they can be set off against any other business income in the same year — for instance, consulting income, freelance income or professional income. If there is no other business income to absorb the loss, it is carried forward for up to 8 assessment years and set off against future business profits. The carry-forward requires filing ITR-3 on time — a late filing forfeits the carry-forward.

Section 234C imposes interest at 1% per month (simple) on the shortfall in each instalment. For the June instalment (15% of total liability), if you paid nothing, interest runs from June 15 to the date you pay — typically March. For the September instalment (cumulative 45%), the interest clock restarts on the September 15 shortfall. The total 234C interest is computed instalment-by-instalment and can be material relative to a modest trading profit. Section 234B interest separately applies if total advance tax paid is less than 90% of final liability.

No. Notional contract value is not the turnover figure used for the s.44AB audit threshold. The CBDT has clarified that for futures and options, the relevant turnover is the absolute value of all settlement profits and losses — i.e., the sum of all winning trades and all losing trades without netting. On a ₹50cr notional book with tight P&L, the absolute settlement turnover may be ₹50L or less. This distinction is critical because using notional value incorrectly would require an audit where none is needed.

Section 44AD is available only to eligible assessees engaged in eligible business, and it specifically excludes persons whose income is chargeable under the head 'profits and gains of business or profession' if they are engaged in the business of plying, hiring or leasing goods carriages, or other specifically excluded businesses. More relevantly, section 44AD requires the assessee to maintain that the profit is at least 6% or 8% of turnover. For a loss-making F&O trader, presumptive taxation is unavailable because the statute requires declaration of at least the prescribed minimum profit. A trader opting for 44AD with actual losses would be incorrectly declaring taxable income.