income from derivatives

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 July 2011 dear sir,
i'm a salaried person working in a PSU.i have income from trading in derivatives of index and equities.i want to know that which form of itr to be filled.it is legal to show business income when i'm an employee.can i consider it income from investment and show as short term capital gain in itr-2.how to calculate the value under consideration in case of derivatives as contract values are very high.can i use the margin kept as the value for acquisition.
pl.help asap.
thanks

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

20 July 2011 You have to show the income from trading in futures as business income. You can take the profit/loss in individual futures directly in spite of showing purchase and sales figures..

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( If total of all profits and losses without considering the +, - sign is 60.00 lacs Tax Audit is required.)

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Intra day share trading profit is speculative business income.

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However in reference to delivery based transactions in shares you can show income under the head Capital Gains. But in case of volume is high, it is better to consider the same as also business income.

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Normally PSU employees are allowed to do investment in shares. You have to check about your business from your own sources.

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You have to file your Return in ITR 4

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

20 July 2011 If u are trading frequently, income has to be offered under the head PGBP. In view of that, ITR-4S is the appropriate form. If the terms of employment permits u to do business, no harm in trading in derivatives otherwise u may be in trouble.