Currency derivative

This query is : Resolved 

20 November 2009 Respected All,

Profit or loss from currency derivative will be speculation income or business income.

Please give the relevant supporting.

Regards,
Jyoti

20 November 2009 Profit or loss from currency derivative(if Regular basis) will be speculation Business income.

25 November 2009 BUT AS PER SECTION 43(5)(d), profit or loss from trading in derivatives will not be speculative transactions.

Currency derivative is also a derivative.

So why it is not business income instead of speculation business income.


17 December 2009 According to Section 43(5)(d), an eligible transaction in respect of trading in derivatives referred to in clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956, would not be speculative transaction.

And clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 defines derivatives as
Derivative includes: -
a. a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security;
b. a contract which derives its value from the prices, or index of prices, of underlying securities;

17 December 2009 Hence derivatives as defined in Section 43(5)(d) does not include currency derivatives and any income from currency derivatives would be speculative income.



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