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Derivative trading

Hiten (CA) (275 Points)

07 December 2015

whether trading in derivatives is always consider under PGBP?? ignoring fact that there are only 2-3 transaction of below 50,000 during py

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5 Replies

Nikhil Kaushik (Fellow CA) (85085 Points)
Replied 07 December 2015

well for a very small number of transactions, you may account for the same in capital gains/other income.

Piyush Singhal (CA STUDENT) (22 Points)
Replied 09 December 2015

Derivatives will always be considered as PGBP Income if it is carried out on recognised stock Exchange

Nikhil Kaushik (Fellow CA) (85085 Points)
Replied 09 December 2015

Dear Piyush,

There is no such condition. Whether it is a business or not will always be subject to the facts of each case. Further, even if I take your statement as half correct, the other half will still be wrong as even if you consider derivative trades as business, it is immaterial whether it is traded on a recognized stock exchange or not.

Nikhil Kaushik (Fellow CA) (85085 Points)
Replied 09 December 2015

help yourself with this https://www.livemint.com/Opinion/xd9723x6oEXvV0X1eu5MOO/Derivatives-are-complex-and-so-is-their-tax-treatment.H T M L

Piyush Singhal (CA STUDENT) (22 Points)
Replied 10 December 2015

As per the defination of speculative transaction under Income Tax Act,1961, a transaction in derivatives will not de deemed as speculative transaction if it is carried out at recognised stock exchange.

If the person dealing in such transaction is a businessman then it will be taxable under the head PGBP otherwise income under the head Other Sources