Income from future and option

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sandeep (Querist)
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23 September 2013 Can anyon please help me on to consider F&O loss as speculative or non specuative. Most of the sites online say it is non specuative. Can you please confirm.

Thanks in advance

sandeep

Nikhil Kaushik

Nikhil Kaushik (Expert)
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23 September 2013 Dear Sandeep,

Whether a transaction amounts to speculation or not, depends on the provision of section 43(5) of the income tax act.

Generally, transactions in F&O are not considered as speculative due to proviso (d) to section 43(5).

sandeep

sandeep (Querist)
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03 October 2013 Thanks nikhil. It really helped. i made it non speculative in income tax audit. i have another question. How is NSC taxed after 80 C is exhausted. do we pay tax on interest every year?

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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03 October 2013 Dear Sandeep,

If the NSC interest has been reinvested, you can claim exemption under 80C with regards to it. The methodology to claim exemption is as under:

Interest received is included in income from other sources.

Interest reinvested is claimed exemption under 80C.

With regards to exhaustion of 80C, it doesn't matter, you can always claim that you adjusted NSC interest first. Rather, even if you don't adjust NSC interest first, your taxability remains unaffected.

For eg:

(Exemption For NSC Interest Reinvestment)

Income from Salary: Rs 5,00,000
Income from NSC Int:Rs 8,000

Gross Total Income: Rs 5,08,000
Deduction under 80C:
NSC Int : Rs 8,000
LIC : Rs 50,000
Housing Loan: Rs 50,000
_______________________
Maximum Exemption: Rs 1,00,000
Taxable Income: Rs 4,08,000

(NSC Exemption Not Claimed)
Income from Salary: Rs 5,00,000
Income from NSC Int:Rs 8,000

Gross Total Income: Rs 5,08,000
Deduction under 80C:
LIC : Rs 50,000
Housing Loan: Rs 50,000
_______________________
Maximum Exemption: Rs 1,00,000
Taxable Income: Rs 4,08,000