Save Rs 588 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Trading in Commodity market whether Speculative Income or Normal Business Income

504 views

Save Share

VATSA BHANUSHALI

21 Points Posted on 21 September 2023

Hello All,

With respect to futures and options of commodity and currency market whether they should be shown as speculative business or Normal Business Income?

Thanks.

Replies (2)

Quick Summary

This discussion clarifies whether income from commodity and currency futures and options trading should be classified as speculative or normal business income. It explains that eligible transactions on recognised exchanges, like MCX and NCDEX, are generally considered non-speculative. This means losses can be offset against other income and carried forward, and Commodity Transaction Tax is a deductible business expense.

Ashwin Kumar

CA ipcc

315 Points Posted on 21 September 2023

Speculative business

Aashok Kumar Sharma

Finance/Compliance Consultant

77856 Points Posted on 08 November 2026

Commodity and currency derivatives are non-speculative:
• Sec 43(5) proviso (e): eligible transactions in commodity derivatives on a recognised association (MCX, NCDEX) are not speculative. Currency derivatives on recognised exchanges are also treated as non-speculative (proviso (d) for derivatives on recognised stock exchanges, including currency futures and options on NSE/BSE).
• So F&O in commodities and currencies is non-speculative business income, like equity F&O. Losses can be set off against other income (except salary), and carried forward 8 years.
• Commodity Transaction Tax (CTT) paid is deductible as a business expense.
• Intraday equity cash trades remain speculative.