Futures & options

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 November 2014 Dear Sir,

I have a doubt regarding Future & Options Taxation. If a assesse is having turnover(computed as agreegate of both favourable & Unfavourable amounts of transactions) he got a total Rs.8,00,000/- which Rs.6,00,000/- unfavourable and Rs.2,00,000/- is favourable. If he want to show the actual loss he got to carry forward to next year what are expenses he is used to show in the expendidure side of P&L Account.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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20 November 2014 Futures & options are speculative business. Loss or profit on speculative business can be shown in P&L account. For the purpose of income tax the speculative loss can be carried forward for 4 years for adjustment against speculative gain.

Querist : Anonymous

Querist : Anonymous (Querist)

20 November 2014 Dear Sir,

It seems like you didn'tgetmy query. Iam asking about what are the expenses i can show in P&Laccount for getting Netloss. which is the actualloss.

With Regards,
B.J.N.Bhargav.

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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20 November 2014 dear seetharaman....

F&O is not speculative. refer explanation to section 43(5)

querist, you need to show the actual favorable amounts on the credit side and unfavorable amounts on the debit side of the P&L account

Querist : Anonymous

Querist : Anonymous (Querist)

20 November 2014 Dear Nikhil,

Then what about these provisios. We have to show both favourable & Unfavourable as turnover.
1.The total of positive and negative or favorable and unfavorable differences shall be taken as turnover.
2.Premium received on sale of options is to be included in turnover.
3.In respect of any reverse trades entered, the difference thereon shall also form part of the turnover.

With Regards,
B.J.N.Bhargav.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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20 November 2014 that is for the purpose of computation of turnover with respect to application of 44AB.

Querist : Anonymous

Querist : Anonymous (Querist)

20 November 2014 Dear Nikhil,

So,In case of tax audit of futures & options we don't need to consider the provision of aggregate of positive & negative differance as turnover right?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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20 November 2014 once the audit becomes applicable. you will prepare books as accounting norms.

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Querist : Anonymous

Querist : Anonymous (Querist)

20 November 2014 Thanks Nikhil for your valuable suggestions.