NISM Certifications · NISM-Series-VIII: Equity Derivatives · Accounting and Taxation
A trader buys 1 lot of Nifty futures of 75 units at 24,000 and squares it off at 24,120 on the same day. Ignoring charges, what is the turnover for tax audit purposes, using the favourable-difference method?
Turnover for a futures trade is the absolute profit or loss on squaring off, not the contract value. Here the gain is 120 points times 75 units, which equals Rs 9,000, so that is the turnover for tax audit purposes.
- ARs 9,000Correct
- BRs 1,80,00,000
- CRs 1,80,09,000
- DRs 1,80,18,000
Explanation
For futures, turnover is the absolute sum of profits and losses on each trade. Profit = (24,120 - 24,000) x 75 = 120 x 75 = Rs 9,000. Notional contract value is not used, so the Rs 1.8 crore figures are wrong.
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