Short term capital gains

I don't know about BTST but i want to share practical case regarding f&o.
Generally f&o consider as speculative income as per sec 43(5) of income tax act 1961 and we filed return of our client as considering speculation income but he received notice from department because his f&o sales goes exceed 100cr so as per notice he have saw f&o transactions as business income.

Thanks Mayur. 

 what is the threshold above which speculative income becomes buisness income? And does speculative income qualify as short term capital gains?   

1.   F & O income from recognized exchanges will not be treated as non speculative income as per income tax. unlike normal intraday puchase and sale of shares.

2. Intraday purchase and sale will be treated as speculative income

3. in intra day transactions and in F & O transactions there is no actual delivery of shares to/ from ur demat account or there is no transfer of tittle to or from your name.  then there is no involvement of ur asset. because os absence of asset transfer it cant be treated as capital gain.

Better to show f&o transactions as business income irrespective of turnover

The income tax Act says that F&O trade is considered as a non-speculative business. Intra-day stock trades are treated as a speculative business.

Benefit of showing business income.

1. Loss can be set off against all heads except salary
2. Expense can claim as deduction like rent of office , demat charges, depreciation of laptop or computer used for this business, broker commissions, electricity bill of office, mobile recharge or telephone bill, data pack or internet recharge etc.
3.If losses are not fully set off in the same year, you can carry them forward for 8 years. However, in the following 8 years, it can only be set off from non-speculative business income.

Audit requires incase turnover exceeds 1cr
If there's loss from f&o then audit requires irrespective of turn over

If accounts are not audited, a minimum penalty of 0.5% of turnover may be levied (maximum Rs1.5 lakh).

Thanks sudalaimuthuraja 

 

Thanks again Mayur :)

Hi sudalaimuthuraja 

3. in intra day transactions and in F & O transactions there is no actual delivery of shares to/ from ur demat account or there is no transfer of tittle to or from your name.  then there is no involvement of ur asset. because os absence of asset transfer it cant be treated as capital gain.
 

So is F&O speculative ? (because of abscence of asset transfer)

 

Though the nature is looks like speculative as per income tax act it will not be treated as speculative income if its done through recognised stock exchange

I want to club F&O and short term trades (shares) under short term capital gains. Is it possible? 

F & O Cant be treated as short term capital gain or Loss.

Thanks Raja for the clarification

So F&O is neither speculative nor short term capital gain/ loss. 

Under what category can it be placed, other than Buisness income?

thanks

 

it will bw treated as non speculative business income

Raja Thanks again for your clarification.

regards