TAXATION OF DERIVATIVE TRADING

This query is : Resolved

SURINDER SINGH (Querist)
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10 May 2010 A PERSON WHO FREQUENTLY DEALS IN SHARES HAS CONDUCTED FOLLOWING TRANSDACTION IN DERIVATIVE TRADING in 2009-10

Co. name expiry date p qty p.value s.qty s.value n. value Mark value
ABAN F. 31/12/2009 5200 6429388 5200 6398060 -31328
ABB 26/11/2009 500 383365 500 385009 1644
AXIS BANK 25/02/2010 450 479346 450 485003 5657
BANK NIFTY28/01/2010 1700 15199208 1700 15236263 37055
HDIL 30/04/2010 ---- ---
774 221320 -3412 224732

TOTAL Purchase 2491307
sales 22725655 9616

Transaction in cash segment
co. name p.qty p.value s.qty s.amt
ADHUNIK 445 48491 445 50162 ASSAM CO.100 220000 100 211000
RNRL 5000 314878 -- ----
mark value 311250
My queries are
Is 44AB audit applicable since derivative sales crosses 40 lacs

What is net profit/loss in derivative segment AND in cash segment - chargeable under business income heading

Do we need to prepare separate trading a/c for derivative and cash segment

Is there any good book on taxation for derivatives and shares trading

THANKING YOU

Aditya Maheshwari

Aditya Maheshwari (Expert)
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10 May 2010 Accounting for derivatives is done on mark to market basis and the full turnover of purchase & sale is not taken into account.

If the profit + loss of mark to market along with other sales crosses Rs. 40 lakhs then person liable for audit u/s 44AB.

In case segment delivery is considered as turnover.