Trading in nifty options

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 June 2013 Hi
I am planning to trade in nifty options. I would like to know income tax implication of such trading. Could somebody help me on this.
Thanks

CMA Gul S

CMA Gul S (Expert)
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06 June 2013 hi,

Day trading given the nature of trading, high churn and very small period of holding will be treated as Business Income and will be taxed accordingly. It does not matter if day trading is of futures/stock/indices futures.

While taxation of gains from Investment is a grey area as of now and its tax-treatment, depending upon certain factors, may be clasified as Capital Gain/ Business Income, Day Trading without any doubt will be classified as Business Income. Hence, forget about LTCG@10% on your gains and be ready to pay tax as per your income slabs. Ofcourse, you can claim rebate for STT paid during the financial year against your business income and in case of a no. of Day traders, this amount of STT is usually more than the tax liability on trading gains.

As regards speculative business, now trading in derivatives is not treated as speculative business as per the Income Tax Act. Hence, an assessee can set-off loss arising out of such derivatives trading with other business profits which was not allowed earlier.

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