Share/currency/fo profit/loss taxability

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2015 I had a below listed Profit & Loss in the FY. 2014-15. I want to know under which heads of income should I recognise the each profit/loss.
Also inform me the tax liability ?

1. Share Trading Profit (Delivery Base) Rs. 40305/-
2. Share Trading Loss (Intraday) Rs. 45084/-
3. Derivative Profit Rs. 64737/-
4. Currency Loss Rs. 71595/-

Can the losses be setoff against the profit ?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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04 July 2015 should you being knowing all this as basic taxation?

Querist : Anonymous

Querist : Anonymous (Querist)

06 July 2015 Yes I know all the basics.

Querist : Anonymous

Querist : Anonymous (Querist)

06 July 2015 Yes I know all the basics.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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25 July 2025 Here’s a detailed breakdown of how each item you mentioned is generally treated for tax purposes in India, along with the taxability and set-off rules:

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### 1. **Share Trading Profit (Delivery Based) — Rs. 40,305**

* **Nature:** Capital Gains (Long-term or Short-term depending on holding period)
* **Tax Head:** Capital Gains
* **Explanation:**
If shares are held for more than 12 months before sale, gains are **Long-Term Capital Gains (LTCG)** (which may be exempt up to Rs. 1 lakh per year; gains above taxed at 10% without indexation).
If shares are held for 12 months or less, gains are **Short-Term Capital Gains (STCG)**, taxed at 15%.
* **Set-off:** Losses from other capital assets (except unlisted shares for LTCG) can be set off against capital gains. Losses from intraday trading are treated differently (see below).

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### 2. **Share Trading Loss (Intraday) — Rs. 45,084**

* **Nature:** Business Income (Speculative Business Loss)
* **Tax Head:** Income from Business or Profession
* **Explanation:**
Intraday trading is considered **speculative business** under income tax. Losses here are **speculative losses**.
* **Set-off:** Speculative losses can only be set off against speculative profits, and can be carried forward for 4 years to be set off against future speculative profits only.
* **Cannot be set off** against capital gains or non-speculative business income.

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### 3. **Derivative Profit — Rs. 64,737**

* **Nature:** Business Income (Non-Speculative Business)
* **Tax Head:** Income from Business or Profession
* **Explanation:**
Derivatives trading (F\&O) is treated as **non-speculative business**. Profits here are business income and taxed as per slab rates.
* **Set-off:** Losses in derivatives can be set off against any other business income (speculative or non-speculative) and carried forward for 8 years.

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### 4. **Currency Loss — Rs. 71,595**

* **Nature:** Can be either Capital Loss or Business Loss depending on transaction nature
* **Tax Head:** Capital Gains or Business Income
* **Explanation:**

* If currency loss is due to currency trading (Forex trading as business), treated as **business loss** (non-speculative).
* If due to conversion on investments or capital assets, it can be capital loss.
* **Set-off:**

* Business loss can be set off against other business income or salary, etc.
* Capital loss can be set off against capital gains.

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### Summary of Set-Off Rules:

| Type of Income/ Loss | Set Off Against | Carry Forward |
| ----------------------------- | ------------------------------------ | ------------------------------------- |
| Capital Gains (Delivery) | Capital Gains | 8 years (capital losses) |
| Speculative Business Loss | Speculative Profits only | 4 years |
| Non-Speculative Business Loss | Any Business Income | 8 years |
| Currency Loss | Depends on nature (business/capital) | As per business or capital loss rules |

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### Your case — Can the losses be set off against profits?

* **Intraday loss (speculative) Rs.45,084** — can only be set off against speculative profits, **NOT** against delivery-based share trading profit or derivatives profit.
* **Currency loss Rs. 71,595** — depends on whether it’s business or capital loss; if business loss, it can be set off against derivatives profit.
* **Share Trading Profit Rs. 40,305** and **Derivative Profit Rs. 64,737** — taxable as explained above.

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If you want, I can help you prepare a **tax treatment summary** or **computation sheet** for your FY. Would you like that?

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