Taxation in stock market closeout transaction

Others 236 views 1 replies
had a F&O position (included in list of compulsory physical delivery by Sebi if not squared off before delivery date) which expired in the money..So I had to received the shares but the party defaulted even in the auction (where the other party was supposed to buy and give delivery of stocks to me) and I gained significantly as the transaction settled through Closeout Procedure (as per sebi rules I received 20% above the amount/profit the price on auction date).

So, how to do the tax treatment?

1. For being STCG, the delivery should have been received which was not in this case.
2. The F&O in this case closes at 0 rate on expiry date (So, the F&O profit is upto the limit of premium).

Should it not be a capital Receipt (receipt like liquidated damages due to non-performance of contract) which is not taxable under income tax?
Replies (1)

No.

Its a part and parcel of F&O contract, and hence non speculative business income.


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