What is the income tax implication of a gain on a FX forward contract that was booked in Jan 2010 and realized in Jan 2011 (slightly less than 1 year)? This is for an Indian resident.
a. Will the gain be added to taxable income and taxed according to tax slab ?
b. Will it be treated as a short term capital gain ?
c. Does it depend on why the hedging was done in the first place ? In other words, will the treatment be the same as the underlying foreign currency transaction that was hedged ?
d. Is it tax-free (that would be lovely :-))?
e. Any other tax treatment ?
Thanks in advance for your responses.
CAclubindia
