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Query reg. nse derivatives loss

PANDURANGA RS (RETIRED BANK OFFICIAL) (24 Points)

25 July 2016

Whether Loss incurred in NSE Derivatives Trade i.e., Call & Options can be set off against Monthly Pension Income, while calculating the Income Tax for FY 2015 - 16, as I am being a Retired bank officer, receiving the Monthly Pension from Bank thro. LIC

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CA. Pratik Kumar Dokania (Professional) (63 Points)
Replied 25 July 2016

Call & Option income/loss is taxable under the head Business income.

Pension is taxable under Salary.

Business loss can not be set-off against Salary income.

So in your case loss from call & Option will not be set-off against Pension income.

2 Like

prasun (accountant) (109 Points)
Replied 25 July 2016

Loss from the activity of trading in derivatives carried out in a recognised stock exchange is not to be treated as speculative
loss -sec.43(5).so I assume it as business loss.business loss can be set off against any income other than salary. since you are receiving pension from lic pension funds is taxable under "income from other sources" as their is no employer - employe relationship. so you can set off such losses.

CA. Pratik Kumar Dokania (Professional) (63 Points)
Replied 25 July 2016

Pension is taxed as Salary, except when received by family.

1 Like

prasun (accountant) (109 Points)
Replied 26 July 2016

sir I have already explained why pension is not taxable as salary.

CA. Pratik Kumar Dokania (Professional) (63 Points)
Replied 26 July 2016

Refer section 17(3) which says:

On retirement, an employee normally receives certain retirement benefits. Such benefits are taxable under the head 'Salaries' as 'profits in lieu of Salaries'.