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Tax rate for speculative business (Income Tax)

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This query is : Resolved

Author : Anonymous

( Author )
19 July 2010

Suppose an individual has been doing intra-day trading of shares and F&O...what would be the tax implication for FY 2009-10?

Kindly let me know the tax rate for speculative business (such as shares trading) - is it flat rate of 30% or taxed as per income tax slab of the individual?


CA. BIJENDER KR. BANSAL

( Expert )
19 July 2010

The day trading involves transactions in shares purchase and sale without taking delivery. Under the Income tax Act, the transaction without delivery is called “Speculation ” . How does it effect your total income?While the speculation income of Day Trading is added as Normal Income and taxed as per tax slab.However,the Speculation loss in day trading will only be adjusted with other speculation income

i.e it will be taxed as per tax slab.


B.Chackrapani Warrier

( Expert )
19 July 2010

The profit / loss of futures and options is not speculative vide proviso (d) to section 43(5) of the Income tax Act,1961.


CA. BIJENDER KR. BANSAL

( Expert )
19 July 2010

As per proviso d of section 43(5) following transaction is not be deemed to be a speculative transaction.

an eligible transaction in respect of trading in derivatives referred to in clause 67[(ac)] of section 2 68 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised stock exchange;]

shall not be deemed to be a speculative transaction.

69[Explanation.—For the purposes of this clause, the expressions—
(i) “eligible transaction” means any transaction,—

(A) carried out electronically on screen-based systems through a stock broker or sub-broker or such other intermediary registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye-laws made or directions issued under those Acts or by banks or mutual funds on a recognised stock exchange; and

(B) which is supported by a time stamped contract note issued by such stock broker or sub-broker or such other intermediary to every client indicating in the contract note the unique client identity number allotted under any Act referred to in sub-clause (A) and permanent account number allotted under this Act


now whether intra day tranaction in future & option is eligible transaction as per proviso d of section 43(5) or not . Please feedback on it.



Aditya Maheshwari

( Expert )
19 July 2010

An eligible transaction in respect of trading in derivatives if F & O in shares and currency and hence not speculative business.


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