NISM Certifications · NISM-Series-VIII: Equity Derivatives · Accounting and Taxation
A trader earns a turnover-relevant F&O profit. For a futures trade, turnover for tax audit purposes is computed as:
Turnover for futures and options trading is the absolute total of favourable and unfavourable differences on settled contracts, meaning profits and losses are both added as positive numbers. It is not net profit and not the notional contract value.
- ATotal of all sale values only
- BAbsolute total of favourable and unfavourable differencesCorrect
- CNet profit or loss on the trade
- DContract value multiplied by number of trades
Explanation
For futures and options, turnover is the sum of absolute profits and losses on settled contracts (favourable plus unfavourable differences). Net profit would understate it, and notional contract value is not used. Premium on options sold is added in option cases as per ICAI guidance.
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