Income from derivatives

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This query is : Resolved

Satya Mahesh (Querist)

28 October 2012 Helo, please tell me weather income from trading in futures & options is taxable as Speculation business or Non speculative Business. Can we also show it in as capital loss or gain

CA Pooja Agarwal

CA Pooja Agarwal (Expert)

29 October 2012 you need to provide ful details..
nature of your business/purpose ,duration of investment in shares& options and other necessary details

piyush goplani

piyush goplani (Expert)

29 October 2012 in case of Futures, it will not be taxed under the head Capital Gians, since there is no transfer or delivery
so it will come under Income from Other sources or under the Income form business or Profession

In case of options:
in case of an trader taxation will be akin to the FUTURES
but since there is an extinguishment of rights a Investor can be taxed as income from Capital gains and the premium will be allowed as Cost of purchase

thanks

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)

03 November 2012 As the transaction itself indicates future and options it clearly indicates that you are not going to take any delivery of the traded scripts and you do not know whether there will be any profit or loss on the final day of transaction taking place so it is unpredictable therefore, it is just gambling and speculation. Therefore, it is to be treated as speculation profit or loss. You may show this as income from other sources also but if it is loss then the correct way to show this is speculation only.

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