Future & option income/loss

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2012 hi,
1. is it mandatory to show F&O loss in ITR
2. Whether F&O transactions are business income/speculative income/capital gain for a salaried person (who is not a sub broker/employee in a brokerage house/professional trader),
3. act says "speculative transaction" means a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips:

Provided that for the purposes of this clause—

(a) a contract in respect of raw materials or merchandise entered into by a person in the course of his manufacturing or merchanting business to guard against loss through future price fluctuations in respect of his contracts for actual delivery of goods manufactured by him or merchandise sold by him; or

(b) a contract in respect of stocks and shares entered into by a dealer or investor therein to guard against loss in his holdings of stocks and shares through price fluctuations; or

(c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; 34[or]

34[(d) an eligible transaction in respect of trading in derivatives referred to in clause 35[(ac)] of section 236 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised stock exchange;]

shall not be deemed to be a speculative transaction."

but nowhere it is written that derivatives dealing is a business income, is anywhere in Indian Income tax act it is mentioned please share it with all

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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20 July 2012 It is mandatory to show all the business transactions having certain tax implications
in the ITR through the prescribed procedures.
.
If you read clause (d) it reads as derivative transactions carried out in a recognised stock exchange are not treated as speculative transactions.
.
Please note that transactions of only those derivatives are exempt which are covered under the clause referred hereinabove of S 236 of the SCRA ,1956.
It does not cover the derivatives of commodity exchange.
.