Profit / loss for sale purchase of commodities
This query is : Resolved
02 August 2010
Profit / Loss from trading of commodities is speculative transaction or non- speculative transaction and under which head to be taxable and loss can be set off any other income and clerfication of Section 73
02 August 2010
Profit / Loss from trading of commodities is speculative transaction and loss cannot be set off any other income as per Explanation to Section 73.
02 August 2010
Speculative transaction is one which is settled without actual delivery. As per Section 43(5) of the Income Tax (IT) Act, 1961, there are three basic ingredients of speculative transactions.
* The contract is for purchase or sale of stock, share or commodity.
* The contract is periodically or ultimately settled.
* The settlement is completed without actual delivery or transfer of commodity or scrips.
Hedging contracts and trading in the Futures & Options market are exceptions to this section and are now not considered as speculative transactions.
The derivatives transactions should be carried out on a stock exchange recognised by the Securities and Exchange Board of India. Recognition for derivatives trading has been given only to the National Stock Exchange and the Bombay Stock Exchange.
As the MCX is not a recognised stock exchange, profit/loss in commodity trading will be treated as speculative profit/loss. Under Section 73 of the IT Act, speculative loss can be set off only against speculative gain. The balance can be carried forward till four AYs.
* The contract is for purchase or sale of stock, share or commodity.
* The contract is periodically or ultimately settled.
* The settlement is completed without actual delivery or transfer of commodity or scrips.
Hedging contracts and trading in the Futures & Options market are exceptions to this section and are now not considered as speculative transactions.
The derivatives transactions should be carried out on a stock exchange recognised by the Securities and Exchange Board of India. Recognition for derivatives trading has been given only to the National Stock Exchange and the Bombay Stock Exchange.
As the MCX is not a recognised stock exchange, profit/loss in commodity trading will be treated as speculative profit/loss. Under Section 73 of the IT Act, speculative loss can be set off only against speculative gain. The balance can be carried forward till four AYs.
02 August 2010
In addition to above MCX Stock Exchange of India Ltd. is also a recognised stock exchange in India except BSE & NSE on which currency futures are traded.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- House Property Reporting in ITR
- Supply through E-commerce Operators
- TDS Claim year
- Sales amount in Gstr1
- TDS Challan Code
- Relief u/s Section 89
- Rent lease agreement
- Taxation on LTCG for property sold after 24JUL2024
- Merchant Export Accounting
- Is E Way Bill Valid If Transport ID Not Mentioned in PART A But Vehicle details mentioned in PART B
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
