Speculation loss

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Ankit Kedia (Querist)
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04 July 2012 I HAVE SPECULATION LOSS IN SHARES. I HOLD SHARES AS AN INVESTMENT AND NOT AS BUSINESS.
SO WHAT WILL BE THE TREATMENT OF SPECULATION LOSS???

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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05 July 2012 From your information it seems that you have indulged in DELIVERY based transactions.

Such transactions are NOT speculative transactions for Income Tax Purpose.

Gain/loss from such transactions is covered under Capital Gains.

1. If the shares are long term and STT has been paid on sale, then such loss has no treatment and is a dead loss.

2. If shares are short term, then such loss is Short Term Capital Loss and can be set off against Short Term Capital Gain or Long Term Capital Gain.

Short term capital loss which cannot be set off can be carried forward for 8 Assessment Year and can only be set off against income under the head Capital Gain.

Ankit Kedia

Ankit Kedia (Querist)
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07 July 2012 THANKS MR SIDHARTH BHARDWAJ FOR YOUR REPLY.
BUT SIR THE SPECULATION LOSS WHICH I AM TALKING ABOUT HAS COME FROM SAME DAY PURCHASE AND SALE OF SHARES I.E. FROM INTRADAY TRANSACTIONS. NO DELIVERY IS ASSOCIATED WITH IT.
SO WILL THE TREATMENT WILL BE THE SAME OR DIFFERENT????

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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09 July 2012 Ok since you have undertaken intraday transactions, it is a SPECULATIVE BUSINESS.

Income will be computed under the head Income from Business or Profession.

Income will be computed as per normal provisions.

STT paid shall be allowed as deduction. Also, commission and other expenses shall also be allowed.

Loss from speculation business can only be set off against income from speculation business.

It CANNOT be set off against any other income.

Such loss which is not set off will be carried forward for 4 assessment years and after carry forward can only be set off against income from speculative business.

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Ankit Kedia

Ankit Kedia (Querist)
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10 July 2012 Sir so will I have to file the return in
ITR-4??
And want to confirm again that I hold shares as Investment purpose and not for business purpose.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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11 July 2012 1. Intraday trading can NEVER be for investment purpose. It is speculative purpose.

Shares purchased with the intention to hold them for a long term will be investments.

2. You will have to file ITR 4.

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