Your broker’s “turnover” is not Section 44AB turnover. This computes it the ICAI Guidance Note way, tests audit applicability properly, splits speculative from non-speculative income, and tells you which losses survive.
SEBI found 91% of individual F&O traders lost money. Almost all of them must still file — and most compute turnover wrong.
Your contract note may show crores of notional value. Section 44AB turnover is nothing like that. Per the ICAI Guidance Note on Tax Audit, Revised 2026 (para 5.11), for derivatives it is “the total of favourable and unfavourable differences in case of squared off transactions” — the absolute sum of your wins and losses. Reverse trades are included. Open positions at year end are not; they enter in the year you actually square off.
A great many trader-facing sites say intraday equity turnover is the total sale value. That is wrong. Sale value applies to delivery-based trades. Intraday is non-delivery, therefore speculative, and para 5.11(a) puts it on the same differences basis as derivatives. Getting this wrong can inflate your turnover by two orders of magnitude and push you into an audit you never needed.
Under the Income-tax Act 1961 there is no clause that triggers audit simply because you made a loss. Audit follows from turnover crossing the threshold, or from Section 44AB(e) — and 44AB(e) only bites if you had actually opted into Section 44AD earlier and are now declaring below the presumptive rate with total income above the basic exemption. Many traders pay for audits they do not need. Equally, many CAs audit these cases defensively, so expect a difference of opinion.
This one costs real money. Carried-forward F&O (non-speculative) loss can be set off against speculative income. But intraday (speculative) loss can never be set off against F&O profit. Traders net the two together constantly and get the direction backwards. F&O losses carry forward 8 years; speculative losses only 4, and only against speculative income.
Worth saying plainly: the ICAI Guidance Note is professional guidance, not statute. Courts have treated it as a reasonable basis, but it does not bind an assessing officer. Where your numbers sit close to a threshold, the safe course is a considered position on file, not a calculator output.
The calculator does the arithmetic. TaxSphere — our free case-law library, 1,184 authorities and the Act in full — has the judgments, the circulars and the statutory text for the same provision.
