Options Trading - Taxation related queries

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Ashish Patil (Querist)
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03 July 2010 I am a salaried person & doing shares trading since 3 years. I m in following trade 1) Shares short term trading 2)Shares intra day trading 3)Futures short term trading 4)Futures intra day trading 5)Options short term trading & 6)Options intra day trading.
My queries are
1)Can I consider all the above trades as one & tax them at one rate if yes what will be the tax % rate.
2)Whether profit/losses of normal shares trading can be adjusted against profit/losses of futures and options trading.
3)How the turnover should be consider for Futures trading and for Options trading.
4) Under which form should be IT returns be filed
It will be great help any body solve this query. Thanks in advance

CA. Anoop Gadia

CA. Anoop Gadia (Expert)
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15 July 2010 Consequently the tax treatment for profit/loss in all three are different.

CASH DELIVERY
Delivery is deemed as investment
in an asset. Therefore Capital gains rules apply.
On short term investment i.e. shares bought in cash segment and sold before completion of 1 year from date of purchasing, you have to pay 15% of profits as STCG Tax (10% for AY 2008-09/FY 2007-08)
On long term investments i.e. shares sold after 1 year of holding the long term tax applies which currently is NIL.
Any loss is allowed to be carry forward and set off for 8 years

CASH INTRADAY
Intraday trading in Cash segment is deemed as speculation, same as lottery or betting on horse racing.
The tax rate applicable on profits from speculation income
is flat 30%.
Any loss is allowed to be carry forward for 4 years, to be set off against future speculation profits.

DERIVATIVES/F&O
Dealing in FnO is treated as Business. Thus normal business taxation rules apply as they would to any other business. The rate of Tax is as per Slab applicable in the respective year. In current year, income upto 150,000 is exempt. Above it the Slab rates come into effect.
Any loss again is allowed to carry forward for 8 years and set off against other heads of income or future income.

The exempt income slab Rs. 150,000 is available to every individual. i.e. If your total income does not exceed rs. 1.5 L you are not liable to any tax, irrespective of the nature of income being Capital gain or Speculation income or Business Income. Above that the tax rates come into effect.