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Profit on short selling of shares

Lila (Job) (520 Points)

20 August 2021

How profit earned on short selling of shares is taxed. On purchase of shares to cover the transactions, will it be treated as STCG or normal business profit or speculation profit?

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6 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193931 Points)
Replied 20 August 2021

Check frequency of transactions. If frequent, go for speculative business income.

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Lila (Job) (520 Points)
Replied 20 August 2021

Not very frequent...can it be treated as STCG / STCL..

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193931 Points)
Replied 20 August 2021

Being short sell, advisable to declare under IFOS.

Samantha J (1236 Points)
Replied 21 August 2021

It's speculative business income.It doesn't depend on frequency.It is a transaction wherein delivery of shares was not taken.Thus by definition it's speculative business income.

Vishal Mittal (Banker) (31 Points)
Replied 24 August 2021

As it's a transaction of short selling, it will be settled not by actual delivery of shares. So, it's a speculative transaction and therefore, should be shown as speculative business income.