dERIVATIVE (cOMMODITY) ACCOUNTING FOR INCOME TAX PURPOSE

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2010 I would like to know about the tax consequence of treating trading from derivative instrument as business income instead of capital gain.

It is beneficial for low taxed assesse to treat this income as business income.

Please let me know the accounting procedure for same.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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30 December 2010 It will be speuclative business income as per 43(5)

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Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2010 Aditya Sir,
Would you provide me the computing treatment for the same and tax thereof

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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30 December 2010 accounting should be done on mark to market basis.

Guidance note is attached herewith
https://www.caclubindia.com/share_files/guidance-note-on-accounting-for-futures-options-28916.asp

net profit is business income liable for tax.

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2010 tHANKS...
THAT MEANS NORMAL TAX PROVISION WOULD APPLY ONLY EXCEPION IS THAT IT WILL BE COMPUTED UNDER SEPARATED HEAD OF SPECULATIVE BUSINESS INCOME TO BE SET-OFF ONLY FROM INCOME DERIVED FROM IT.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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30 December 2010 yes as per section 73.

Querist : Anonymous

Querist : Anonymous (Querist)

30 December 2010 thanks