Commodity trading loss can set off against normal business

If future option commodity trading and loss can set off against normal business
Replies (8)
Quick Summary
This discussion clarifies whether losses from commodity trading, particularly futures and options (F&O), can be offset against normal business income. While some interpretations suggest F&O trading is speculative and losses cannot be set off, the consensus reached is that F&O trading is generally considered non-speculative. Therefore, losses from F&O can be set off against other business income and carried forward for up to eight years, excluding income from salaries.

No trading speculative loss is a specified income and such income cannot be set off against normal business income. Such loss of specified business can be set off against such specified business of other assessment years
Future and option is derivatives hence I think is not speculation business
However, there are case laws which prohibit the carry forward and set-off of loss from F&O transactions stating share derivative transactions carry the character of speculative transactions for section 73 and any loss arising therefrom will be characterised as loss from speculative business and same cannot be set-off against normal business income
As per section 43(5) future and options are not consider as speculation
But as per it act derivatives are under speculative activities including futures
But in exception to the section 43(5) clearly provides that such derivatives are not speculative transaction
Yes you are right there was a confusion,

Speculative business income:Income from intraday equity trading is considered as speculative.
Non-speculative business income:Income from trading F&O (both intraday and carryforward) on is considered as non-speculative business. F&O is also considered as non-speculative as these instruments are used for hedging and also for taking/giving delivery of underlying contract.

As per the Section 71 of the Income Tax Act, loss in respect of such business can be set off against any other heads of income including income from speculative business but excluding income under the head “salaries” of that year.

As per Section 72 of the Income Tax Act, if there is any such loss which is not set off against the above said incomes, such losses are eligible to be carriedu forward and set off against the other incomes excluding income from salary for a period of 8 subsequent assessment years in the manner as specified in the above order of set off.

Loss in respect of Speculative
Thanks conclusion I am able to set off against normal business

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