What is Intraday Turnover Calculation?

Intraday turnover calculation can be named as a collective term for all the trading activities that take place in a single day. All the stock and investment purchases and sales made during that day are covered in this. Compared to traditional investments, in which one needs to hold the assets for a longer period, intraday turnover consists of fast moves, where trades are being made and settled during the same trading session. Traders use rapid price swings to catalyse decision-making and action to take advantage of opportunities and maximise profits. Let's now understand how to calculate intraday turnover, intraday trading turnover formula in the case of turnover in intraday trading India. 

How to Calculate Intraday turnover?

The intraday turnover calculation is simple, investors need to just follow the steps mentioned below:

• Equity Intraday Trading: Turnover is calculated as the absolute profit or loss made on intraday trades. It is the difference between buy value and sell value (ignoring whether it is profit or loss)  
• Equity Delivery Trading: Turnover is considered as the total sale value of shares sold. Only the sell side is taken into account for delivery-based trades  
• Futures Trading: Turnover is the sum of absolute profits and losses from all futures trades. Both positive and negative differences are added without netting off  
• Options Trading: Turnover is the absolute profit and loss from options trades. As per revised methods, only the differences are considered (premium is not added separately) 

Example of intraday turnover calculation   

Notes 

• Closed Trades Only: Turnover is calculated only for positions that are squared off within the financial year  
• Absolute Values Used: Profits and losses are added as absolute values; they are not netted off  
• Segment-Specific Method: Each segment follows a different calculation approach, so mixing methods can lead to incorrect reporting  
• No Premium Addition in Options: As per revised practices, premium received is not added separately to turnover  
• Important for Taxation: Accurate turnover calculation is essential for determining tax liability and audit requirements 

After understanding how to calculate intraday turnover, the article further explains the absolute profit for trading turnover calculation. 

Also Read: How to Calculate F&O Turnover

Absolute Profit for Trading Turnover Calculation 

When we talk about intraday turnover calculation, absolute profits play an important role as it is not just about adding profit and losses, instead it adds up the positive and negative variations that come from trading. The two main approaches that are mostly used as intraday trading turnover formula are Trade wise method and Scripwise method. Through these methods, special perspectives are provided in the assessment of intraday trading, like a comprehensive understanding of profitability and risk control. 

Trade -Wise Turnover Method: 

In the tradewise turnover method, absolute profit is calculated by summing up the absolute profit and loss from each trade throughout the financial year. Here is an example turnover in case of intraday trading: 

Imagine a trader made several trades within a financial year. For example:  

Trade 1: On January 25, 2023, the trader got 300 units of a company for INR 120, and on January 26, 2023, he sold them for INR 110.    
Trade 2: On February 25, 2023, the trader got 250 units of a company, for INR 50, and on February 26, 2023, sold them for INR 55. 

Let's now determine the absolute profit: 

Profit from Trade 1: (110 - 120) * 300 = (-3000) Loss   
Profit on Trade 2: (55 - 50) * 250 = Rs. 1,250 Profit   
Sum of the absolute values of Absolute Profit = Rs. 4,250 

Scripwise Turnover Method: 

In this method, the absolute profit is evaluated by adding up the absolute values of the profit and loss from each scrip (or stock) throughout the financial year. Let’s continue with the same example: 

Net Loss from the company = -3,000 (loss from Trade 1) + 1,250 (profit from Trade 2) = -1,750 

Absolute Profit = |-1,750| = INR 1,750 

It's important to note that while the profit or loss remains the same under both methods, the intraday turnover calculation can vary significantly. The trade-wise method provides a more detailed assessment but may be more complex, whereas the scrip-wise method offers simplicity in the calculation. It is essential to understand absolute profit for accurate trading turnover calculation, helping traders to analyse financial performance effectively. 

Trading Turnover Calculation for Tax Audit Applicability 

When we talk about taxes, understanding the trading turnover is important, as tax authorities use these figures to determine if one will need a tax audit or not. The rules can change depending on the location, but the basic idea is the same everywhere i.e., if turnover extends a certain limit, then they are subject to a tax audit. Let's break down how trading turnover calculation is done for different types of trading: 

Equity Intraday Trading: 

Here is equity intraday trading:  

For Equity Intraday Trading, the turnover is calculated simply as the absolute profit. 

Tradewise Turnover: INR 1,050 

Scripwise Turnover: INR 650 

Equity Delivery Based Trading: 

Here is equity delivery-based trading:  

For Equity Delivery Based Trading, the turnover is calculated as the Sale Value. 

Tradewise Turnover: INR 1,540 

Scripwise Turnover: INR 980 

Equity / Currency / Commodity Futures & Options Trading 

Here is Equity / Currency / Commodity Futures & Options Trading: 

For Futures Trading, the turnover is calculated as the Absolute Profit. 

Tradewise Turnover: INR 11,255 

Scripwise Turnover: INR 6,905 

It's important to keep in mind that tax rules can change, so it's always a good idea to stay updated and consult with a tax professional to ensure compliance with regulations.  

Conclusion

To sum up, understanding how much one trades in a day is important for traders as it helps them to make more stable financial decisions by following the rules regarding taxes. By doing accurate calculations, traders can do great in the turnover in intraday trading India. To improve their trading experience and financial performance, try out a reliable online trading app for doing informed intraday trading in India.