Speculation income
This query is : Resolved
17 April 2012
1. Whether Intraday is speculative income.
2. If yes then whether it is included in minimum exemption limit of 1,80,000 in case of Individual/HUF.
3. Intraday transaction is taxable at which rate i.e. normal or flat 30% because my s/w is calculating intraday profit at normal rate?
2. If yes then whether it is included in minimum exemption limit of 1,80,000 in case of Individual/HUF.
3. Intraday transaction is taxable at which rate i.e. normal or flat 30% because my s/w is calculating intraday profit at normal rate?
18 April 2012
Intra day income is not speculative income since as per definition of speculative transaction it does not include transactions in shares.
Intraday transactions are taxable at normal rate only.
CA.Nilang A Dalal
09374821453
nil_dalal@yahoo.co.in
Intraday transactions are taxable at normal rate only.
CA.Nilang A Dalal
09374821453
nil_dalal@yahoo.co.in
19 April 2012
Dear Sir In definition of 43(5) it is not shares it is derivative so please clarify. I mean to say if any person does not have any holding in stocks or shares then what. the intention is to earn profit in a single day
25 July 2025
Let’s clarify your questions regarding **speculation income**, especially around **intraday trading**:
---
### 🔹 1. **Is Intraday trading speculative income?**
**Yes**, **intraday trading in shares** is classified as **speculative business income** under the **Income Tax Act**.
* As per **Section 43(5)** of the Income Tax Act, a **"speculative transaction"** is one in which a contract for purchase or sale of any **commodity, including stocks and shares**, is settled **otherwise than by actual delivery**.
* In **intraday trading**, **no delivery of shares** takes place — only the price difference is settled. So it fits the definition of speculative transaction.
👉 **Exception**: **Derivatives (F\&O)** traded on recognized stock exchanges are **not speculative** (as per Rule 6DDA & 6DDB), but **intraday trading in equity shares** is speculative.
---
### 🔹 2. **Is speculative income (like intraday profit) included in basic exemption limit?**
**Yes.** Speculative income is treated like **any other business income**.
* So, for individuals and HUFs, it **is included** in computing **total income**.
* If your **total income**, including speculative income, is **below ₹2.5 lakh** (or ₹3 lakh / ₹5 lakh for senior citizens), **no tax** is payable due to the **basic exemption limit**.
---
### 🔹 3. **Tax rate on intraday speculative income — Normal or Flat 30%?**
✅ **Normal slab rates** apply — **NOT a flat 30%**.
* Speculative income is taxed under **"Income from Business or Profession"** and is taxed at **slab rates applicable to the assessee**.
* Your software is **correct** in calculating it at **normal slab rates**.
---
### 🔍 Summary:
| Question | Answer |
| ---------------------------------- | ------------------------------ |
| Is intraday income speculative? | Yes |
| Included in basic exemption limit? | Yes |
| Taxed at slab rates or flat 30%? | Slab rates |
| Derivatives (F\&O) speculative? | No (if on recognized exchange) |
Let me know if you need help in **ITR filing for speculative business** or **tax audit applicability** based on turnover.
---
### 🔹 1. **Is Intraday trading speculative income?**
**Yes**, **intraday trading in shares** is classified as **speculative business income** under the **Income Tax Act**.
* As per **Section 43(5)** of the Income Tax Act, a **"speculative transaction"** is one in which a contract for purchase or sale of any **commodity, including stocks and shares**, is settled **otherwise than by actual delivery**.
* In **intraday trading**, **no delivery of shares** takes place — only the price difference is settled. So it fits the definition of speculative transaction.
👉 **Exception**: **Derivatives (F\&O)** traded on recognized stock exchanges are **not speculative** (as per Rule 6DDA & 6DDB), but **intraday trading in equity shares** is speculative.
---
### 🔹 2. **Is speculative income (like intraday profit) included in basic exemption limit?**
**Yes.** Speculative income is treated like **any other business income**.
* So, for individuals and HUFs, it **is included** in computing **total income**.
* If your **total income**, including speculative income, is **below ₹2.5 lakh** (or ₹3 lakh / ₹5 lakh for senior citizens), **no tax** is payable due to the **basic exemption limit**.
---
### 🔹 3. **Tax rate on intraday speculative income — Normal or Flat 30%?**
✅ **Normal slab rates** apply — **NOT a flat 30%**.
* Speculative income is taxed under **"Income from Business or Profession"** and is taxed at **slab rates applicable to the assessee**.
* Your software is **correct** in calculating it at **normal slab rates**.
---
### 🔍 Summary:
| Question | Answer |
| ---------------------------------- | ------------------------------ |
| Is intraday income speculative? | Yes |
| Included in basic exemption limit? | Yes |
| Taxed at slab rates or flat 30%? | Slab rates |
| Derivatives (F\&O) speculative? | No (if on recognized exchange) |
Let me know if you need help in **ITR filing for speculative business** or **tax audit applicability** based on turnover.
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