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Income from trading of shares

manish jain (sr associate) (63 Points)

26 September 2015

Hi,

Income received from trading of shares is speculative income or income from capital gain?.....

Also, kindly define which type of income or losses covered under speculation.

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9 Replies

Udgam Koomar (Tax Technologist) (1949 Points)
Replied 26 September 2015

Do you do it intraday coz income from intra-day trading is considered as speculation income & will be taxed under PGBP. While speculation losses can be set off only against speculation gains, non-speculation business losses may be set off against short/long-term capital gains. Any type of Income where actual delivery does not happen comes under SI. Similar thread /experts/speculative-income-14581.asp AND /forum/speculative-non-speculative-business-57258.asp

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manish jain (sr associate) (63 Points)
Replied 26 September 2015

Thanks for the reply.....kindly clarify if i bought a share and taken delivery of the stock. After one week if i sell the stock than it will be considered as capital gain instead of speculative income as i have taken the delivery.

Kindly suggest whether my understanding is correct or not.

Miss Rinkal (Student) (1309 Points)
Replied 26 September 2015

That will either be business income or capital gain. That depends on the intention of the assessee whether it has held the share as stock or as investment. But since delivery has already taken place, it is not a speculative transaction

Miss Rinkal (Student) (1309 Points)
Replied 26 September 2015

Intra day trading of shares and commodity derivatives - agricultural commodity are speculative businesses

manish jain (sr associate) (63 Points)
Replied 26 September 2015

Thanks Rinkal....

I am little confused about the investment or stock held by the assesee. Can you please explain in detail....

Thanks in advance!!!

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Akhil (Financial Analyst) (31 Points)
Replied 27 September 2015

Futures and option is not speculation, if done through recognised stock exchange, as it is specifically excluded from definition. Only intra day is speculative. All other transaction in shares will be taxable as pgbp or capital gains depending upon volume, trading frequency etc

manish jain (sr associate) (63 Points)
Replied 27 September 2015

Thanks akhil...how we determine this is pgbp or capital gain i mean how much frequency or volumn should be there in order to know this segregation of income.

sri naveen (Student CA IPC / IPCC) (23 Points)
Replied 27 September 2015

The delivery may be symbolic and includes delivery affected by mere transfer of delivery orders according to trade practice. Exception.hedging contract entered into by manufacturers and merchants in course of business to guard against the loss through price fluctuations are excluded from speculative transactions